Navigating the health insurance industry is complicated, and very few Tampa Bay consumers realize that they can be on the hook for injuries that are someone else’s fault. If another party’s negligence injures you, healthcare providers can hit you with a medical or healthcare lien to recoup the costs of your care and treatment.
Negligence victims from a car accident, slip and fall, or bicycle crash don’t think about liability when they’re hurt and worrying about lost income, recovery time, and long-term physical damage. In these situations, the last thing on their minds is a claim against them by their care providers.
This scenario is why many accident victims pursue a personal injury lawsuit against the at-fault party. The real and intangible costs are high, and you need someone to be your advocate through the process. Taking action against an at-fault party that harms you helps you recover the losses from your injuries.
What are Hospital or Medical Liens?
A hospital lien goes by several names—healthcare lien, provider lien, or medical lien—and is the right of the creditor (the hospital) to recover from the debtor (the injured person) money for unpaid medical treatment. For personal injury cases, the lien only applies to the settlement or verdict award. Hospitals and other providers file these liens to recoup some of the expenses associated with your emergency treatment.
A hospital lien allows your providers (hospitals, doctors, labs) or your health insurer to seek reimbursement for the costs of treating your injuries if the negligent party can’t or doesn’t pay. Medical liens are a significant reason you need an attorney after an accident.
You may file a claim against the other person’s liability insurance or the individual to pay your expenses, either through a settlement or a jury trial. Otherwise, you are responsible for all your medical bills, and you will not receive any compensation for long-term losses. It takes an experienced attorney to lead you through the legal maze and fight for your compensation.
Why Don’t Healthcare Providers File a Claim With Your Insurer?
Lien laws allow hospitals and providers to file claims against a victim’s potential compensation rather than file claims against their health insurer.
Insurers negotiate rates for healthcare costs with hospitals and other care providers, and these rates are typically much less than the rack rate. They bill uninsured patients up to four times as much for services.
Insurance Policies Are Often Not in Your Favor.
Many insured people don’t realize that their health insurance policy likely has a provision allowing a provider to file a claim against you, the insured. This claim precludes the insurer from having to pay the bill.
Rather than negotiate the lien and pay the bills, insurers contract the lien out to a third-party agency to collect from you. The collection agency has little incentive to negotiate the lien since their payday is attached to your compensation. In this scenario, your insurer sues you for expenses you incurred from someone else’s negligence.
Some hospitals ask patients to sign an agreement for the provider to file the lien while they are in the emergency room, awaiting treatment. The wording on the release form is usually misleading, asking if the victim wants the hospital to bill their insurance, even if the accident wasn’t their fault. This cleverly worded statement, presented to someone who is injured, frightened, and often alone, gives the hospital permission to bypass the insurer altogether and file the lien.
Thankfully, Florida statutes prevent hospitals from filing medical liens for charges above what your insurance company would pay; they must honor the negotiated rates. This statute clarifies that the insurer is responsible for the treatment costs, not the victim.
If you don’t have insurance, then the hospital has the right to recover its costs from the proceeds of your personal injury settlement via a hospital lien. Some counties in the state have laws that allow providers to file a lien against your settlement award in a personal injury suit and recover those costs when the guilty party settles.
Why Florida Allows Medical Lien Laws?
States in the U.S. started allowing healthcare liens in the 1930s to ensure hospital reimbursement when they treat indigent or uninsured patients. In Florida, legislation passed in 1951 allowed hospitals in counties with more than 325,000 residents to file liens against patients.
Medical liens are still controversial, but the Florida Supreme Court upheld the local lien ordinances in Shands Teaching Hospital v Mercury Insurance Company in 2012. Florida maintains county control over hospital lien ordinances, and some counties only permit liens if the hospital is a non-profit organization.
The Healthcare Provider’s Viewpoint
While most Floridians believe the health care system is a train wreck and that the cost of health care is unreasonable and not transparent. But, these same people want—and deserve—a well-funded health care system that meets their needs, especially in emergencies. Hospitals argue that they can’t function without patients who pay for their care, so they attempt to recover their operating costs.
Hospital administrators argue that the lien process prevents duplicating benefits, which helps keep costs down. In some cases, your insurer files a lien against you for payments they made on your behalf.
How Medical Liens Work?
Suppose you’re in a car accident and the other driver is at fault. Your insurance pays your medical bills with your PIP (Personal Injury Protection) coverage for the maximum of $10,000.00. Your health insurance pays another $15,000.00. Per F.S. 627.736, your injuries and medical costs are severe enough for you to pursue a claim against the other driver. After winning a settlement, you win another $125,000 in damages. State law now requires you to repay the health insurance company for a portion of the $15,000.00 already paid damages. Your PIP carrier, however, does not have a right of subrogation for the $10,000.00, and thus, no lien.
Experienced personal injury lawyers engage with the hospital or insurer to negotiate the lien as much as possible, ensuring that the maximum recovery goes to the victim.
Two Types of Insurance
During this process, you encounter two types of insurance. The other party’s auto liability insurance pays your medical bills, but your health insurance likely pays upfront until your claim resolves. After the fact, your insurer will pursue the auto insurer to recover their costs in a process called subrogation, so the other insurance company makes them whole.
How Your Insurance Affects Medical Liens?
The kind of health insurance you have may affect your liability for medical liens.
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that establishes the guidelines for retirement and health care plans in private businesses. Although the stated goal of ERISA is to protect employees and the money they contribute to their 401(k) and health insurance plans, companies will use the law to recover their costs in a personal injury settlement. If your insurance paid for any of your care, your insurer could file an ERISA lien against your compensation settlement.
This process depends on the funding status of your health insurance. If your employer is small, you will likely pay your premiums directly to the insurance company, which pays out any claims. This kind of plan allows small businesses to offer health insurance to employees without taking on the administrative costs associated with a self-funded plan. These plans are subject to Florida law regarding hospital liens and reimbursements.
Larger companies can hire benefits administration staff and offer self-funded health insurance plans where workers pay the premiums to the company; any claims come out of company funds. Federal law and ERISA govern healthcare liens filed under this type of plan, meaning that you are more likely to have to return some of your settlement funds to your health insurer if there’s an ERISA lien.
Can ERISA Liens Include Attorney’s Fees?
Whether ERISA liens include attorney’s fees is a matter of great debate in the legal and healthcare communities. Plaintiffs and attorneys argue that the provider’s or the insurer’s settlement amount should not include these fees. Federal law applies to these ERISA cases, which defers to the original contract. Hiring an attorney after an injury can help you navigate this complicated process. Attorneys can translate the legal vernacular into English and ensure you get your full settlement.
What if I Have Medicare, Medicaid, or Veterans Insurance?
If you have government-issued health insurance, they can also file a lien to recover your treatment and care costs after you settle your claim.
Medicare has an automatic lien against any personal injury compensation. Medicare liens are superior to any other liens, meaning they have first rights to any payment from the settlement. Unlike private insurers, Medicare does not negotiate settlements.
How to Report Your Claim Resolution to Medicare?
Once your claim resolves, let Medicare know the settlement amount. You have 60 days to file the report. Medicare can fine you up to $1,000 per day after this 60-day window, so don’t wait. You can go to the Medicare website to report your award online. They may take up to 120 days to respond to the lien. They’ll send a payment demand letter about a month later. You’ll pay that amount out of your settlement proceeds.
After attorney’s fees, Medicare can recover the entire settlement amount if the amount is less than what Medicare paid out.
How Does a Medical Lien Affect My Personal Injury Case?
Lawyers on both sides can argue personal injury cases with a medical lien claimed against the plaintiff.
If there’s a medical lien against you, it reduces your money after your case resolves. If you agree to $150,000 from the other party, and the hospital lien against you is $30,000, you take home $120,000. The lienholder gets paid before you receive any money.
What if You Crash With an Underinsured Driver?
Florida law requires all drivers to carry liability insurance, although the minimum amount is only $10,000, and bodily injury coverage is optional. If an underinsured or uninsured driver causes the accident, your insurance pays your medical bills. They will sue the driver to recover their costs, and the medical lien will stay attached to you until your insurance settles their claims.
Managing a medical lien is a complex and challenging task, and you need an experienced attorney on your side to ensure that you keep as much of your settlement as possible. Negotiating lien amounts, damages, and other costs requires a deep knowledge of the state’s insurance, medical, and legal statutes—something a personal injury lawyer can provide. Consult an attorney before you speak to anyone regarding your medical claims or liens.