Most people think that if they are injured in an auto accident, they file a claim with the other driver’s insurance and get paid for their damages. They may need a lawyer, especially if there is a dispute over who was at fault, but at the end of the day they expect a check for vehicle damage, medical expenses, and pain and suffering related to their injuries. Once upon a time, back in the early 1980’s, that’s the way it was. But over the years health care provider liens have eroded a plaintiff’s right of recovery under personal injury law.
Today, lawyers for both plaintiffs and defense negotiate their way through a minefield of lien law with every case they handle. In some cases, the lawyer spends more time working on the lien issues than working on the actual case. Health care provider “liens” impact a lawyer’s decision on whether to take your case as well as the defense lawyer’s decision on whether his client can settle the case. This article is intended to inform you about health care provider liens and how they impact your rights as a consumer and as a potential injured person. The laws we are going to discuss here apply to all sorts of personal injuries. They apply to injuries from faulty products, medical malpractice, getting hurt on private property, and others. To keep things simple, we will limit our discussion to auto accidents, but bear in mind that all personal injury claims are subject to these laws.
Health care provider liens are medical collection rights created by statute. They are the product of lobbying in the state legislature by the health care industry over many years. The statute authorizing Health care provider liens is A.R.S. §§ 33-931 through 33-936. The statutes allow health care providers who treat your injuries to record a lien on the proceeds of any personal injury recovery you may obtain from your accident.
The law makes a distinction between hospitals and other providers like doctors, clinics, -and chiropractors. That distinction is set out in § 33-932. Liens filed by hospitals and ambulances are effective if they are recorded in the county recorder’s office 30 days before the parties agree to a settlement or 30 days before a judgment is paid. What does this mean for you?
Let’s suppose you are injured in an auto accident when the other driver (Mr. X) runs a red light and hits your car. You are taken by ambulance to a hospital. You are treated in the emergency room, have x-rays and blood work done and then sent home. Your case is in litigation for 2 years before you finally settle with Mr. X and his insurance company. Your health insurance paid your medical bills, so you are unaware there may be liens against your settlement. The hospital and ambulance company can take their time in recording their liens. So long as the lien is recorded at least 30 days before you enter into a settlement agreement, it is valid. The liens would be what are commonly referred to as “balance billing” liens. The hospital is seeking to collect the difference between what your health insurance paid and its “reasonable and customary charge” for the services it rendered.
We all know that health insurance plans pay a discounted rate to hospitals, and hospitals have contracts with the various health plans where they agree to accept the discounted rate as payment in full. If you have medical bills that are not covered by insurance, the hospital or doctor will bill you “the reasonable and customary charge” for the service. That charge will be a lot more than what an insurance company agrees to pay for the same service.
If you go to the hospital for gall bladder surgery, your insurance company pays the bill at the discounted rate. You may have to pay deductibles and co-pays, but beyond that the hospital accepts the amount the insurance company pays as payment in full.
However, If you go to the hospital for a broken leg from a contested auto accident, the hospital collects its discounted payment from the health insurance carrier. Then, it records a lien for the balance of its “reasonable and customary charges”. The hospital knows it’s treating you for an accident, and your file is flagged to file a lien against any accident claim you file.
Other health care providers have the same right to record a lien for the difference between what insurance paid and their “reasonable and customary” charge, but they have a limited time to do so. Doctors, clinics, chiropractors, physical therapists and other non-hospital health care providers have 30 days from the date they first begin treating you to record their lien.
If they fail to record the lien in time, are you off the hook? Probably not, and this is why. A related statute, A.R.S. § 33-934, allows the health care provider to enforce its lien against Driver X or his insurance company. Defense lawyers are well aware that if you fail to pay a health care provider lien, their client may get stuck with the bill. For this reason, the lawyer for Driver X will insist that you agree in writing to pay the lien before any settlement agreement is reached.
There are several areas of legal uncertainty in the arena of health care provider liens. Those uncertainties give the experienced personal injury lawyer ammunition to negotiate for a discount on the lien. For instance, the lienholder must allow a percentage discount for the cost of acquisition. You had to hire a lawyer, pay litigation costs and legal fees to collect the money from driver X. The health care provider asserting the lien must reduce the lien by a percentage to account for those costs.
These statutory liens are different from lien forms that doctors, clinics and chiropractors may have you sign when they treat you for an accident. Those are contractual agreements and are treated differently under the law.
Once you have settled your personal injury claim and paid the health care provider liens, A.R.S. § 33-936 requires the health care provider to release the lien within 30 days of your payment in satisfaction of the lien. The lien release is recorded with the county recorder’s office. Failure to release a lien subjects the health care provider to a $100.00 penalty as well as any actual damages caused by its failure to release the lien.
Food for Thought
There are several important ideas to take away from this discussion.
1. Think twice before you sign any contract type lien forms at a doctor’s or chiropractor’s office. There are some health care providers out there who tell injured people not to make a claim to their health insurance. Instead, they offer to wait for payment until you settle your case. Then, they have you sign an onerous lien document agreeing to pay whatever inflated rate they choose to charge. Such health care providers know they can collect more money with such a lien than by billing your health insurance plan and arguing with your lawyer about a balance billing lien.
2. Make sure all liens get settled at the end of your case and that lien release forms get recorded. Recorded liens are a blight on your credit. If you apply for a home loan or other forms of credit, outstanding health care provider liens will show up on the credit check and may impede your ability to borrow money. Talk to your lawyer. Ask him or her for copies of all recorded liens and the corresponding lien release forms.
3. Keep track of health care charges after an accident. Soft tissue injuries can last for a long time. Back pain and neck pain are very common. Accident patients are often tempted to treat with therapists and chiropractors long after the health insurance stops paying. It is not uncommon for a patient with back pain to rack up more than $10,000.00 in chiropractor bills, often not covered by insurance. Those charges can result in huge liens that make it difficult to get your case settled. Know exactly what the charges are. Make sure the treatment is advancing your recovery and not just making you feel better temporarily.
"Title 33 Property," Arizona State Legislature, www.azleg.gov/arsDetail/?title=33
Blankenbaker v. Jonovich, www.omlaw.com/uploads/docs/Blackenbaker_v._Janovich.pdf