[Editor's Note: The following guest post was submitted by Neama Rahmani runs a personal injury law firm, West Coast Trial Lawyers. We have no financial relationship. It might seem odd that I would run a post by a trial lawyer and especially one on which patients to treat. I put this post into the “boosting income” category. One of the best ways for a physician to boost her income is to increase clinical income and seeing patients with medical liens is one potential way of doing that. Take a look at the post and see if you think it could apply to your practice.]
As a Harvard graduate and a partner in a personal injury law firm that has represented thousands of motor vehicle accident and crime victims in personal injury cases, I want the best for my personal injury clients regardless of their ability to pay. When clients don’t have health insurance, medical facilities and doctors will sometimes agree to accept delayed payment for a patient’s treatment until after the personal injury claim is resolved. Medical liens ensure that medical providers who agree to delay collection of their bills get paid for their services.
What Are Medical Liens?
Pursuant to California Civil Code §3045.1, a healthcare provider licensed in California that furnishes emergency medical care to accident victims injured by a negligent or wrongful act of another has a statutory medical lien against the compensation paid by the at-fault party for damages. Emergency medical service providers must follow strict protocols to assert a lien in a personal injury case. Hospital liens require the patient’s proper name and address, the name and address of the hospital, and the dates service was provided. If the patient has health insurance, the hospital must bill the insurance company before filing a lien against the patient.
Statutory medical liens are not uncommon. An injured patient who secures a personal injury settlement or jury verdict may have to repay the parties who paid for his or her medical care. Worker’s compensation, state worker’s fund, can place a lien on the personal injury settlement. Medicare and Medicaid must be paid back from money recovered from a third party.
Who Are the Doctors That Accept Medical Liens?
Most doctors will not treat patients without health insurance or cash payments. Doctors who treat patients on liens really care about their patients. Doctors who accept liens in lieu of payment for their medical services do not work on a contingency basis like we personal injury lawyers do. Doctors who treat patients on liens expect to get paid in full. Patients sign an agreement that they are responsible for the total amount of their medical bills. The agreement is a legally binding contract.
Why Do Some Doctors Treat Patients on Medical Liens?
The biggest advantage of performing health care services on medical liens is that you can bill at “customary” rates, which are more reasonable than what health insurances pay based on their in-network and out of network self-established rates.
The biggest disadvantage of treating patients on medical liens is that there is no guarantee that payment will ever be received on the medical liens. You may recover less than the cost of the treatment you provided. It takes years to recover compensation on some medical liens with many frustrations before the accident case settles. Personal injury medical liens may result in non-payment, slow-payments, or partial interim payments. Your accountant or bookkeeper manages these cases.
If you're a young physician with high expenses early in your career, waiting on payment may be cost prohibitive. But if you can afford to wait, treating patients on lien basis may provide extra cash flow after the cycle of the initial personal injury cases resolve and you receive payments for your services.
5 Considerations for Accepting Medical Liens
#1 Properly Document Agreements, Conversations, etc.
As healthcare providers expand their use of medical liens to increase their revenue, they find a variety of different documents referred to as medical liens. Make sure the patient’s attorney, not just the patient signs your lien. Make sure the signed lien is returned to the attorney and a second copy of the signed agreement is mailed to the patient. File fax confirmation or post office receipts proving the lien was sent. Maintain a log with the dates and times of all conversations with the patient.
#2 Follow Correct Procedures
In conversations with the attorney, inquire about worker’s compensation and uninsured motorist compensation. Inform the patient that the personal injury attorney has the fiduciary duty and a duty to disclose the status of the case and payments received to you.
California Civil Code Section 3289(b) allows you to include interest on the past due balance in your medical lien. Do not sign the agreement until both the patient and the personal injury attorney have signed it at the bottom. You do not win arguing with attorneys. You treat patients. Make sure your office staff follows your procedures when treating patients on medical liens.
#3 Consider Using a Referral Service
Third-party services connect accident victims with physicians who work on liens. Doctors pay these services a flat monthly fee for referrals. The referral service gets no bonuses or commissions. They have no idea when or how much you will be paid.
Referral services have seen an increase in doctors who want to work on medical liens. Referral services market doctors nationwide by geographic area. We work with doctors who write prompt and thorough medical reports with the information needed to get a personal injury settlement. The referral service makes sure that their doctors are present for deposition when required.
When a healthcare provider enters into a medical lien agreement with a patient and attorney, the injured victim agrees to reimburse all the medical bills out of settlement funds. The personal injury lawyer creates a fund and disburses payments to the medical providers and the client with a detailed accounting when the personal injury case settles. We attorneys expect no fee if we don’t win a case, but the patient still owes you the amount of your bill.
Referral services locate and develop lists of caring medical providers who will treat patients on medical liens without immediate payment. This service provides technologically seamless combinations of attorneys, patients, and doctors. A well assembled medical team with all the services our patient needs is accomplished in minutes.
These types of referral services are available in Arizona, California, Florida, and Illinois. If you meet high standards, you can be listed as a preferred provider with these referral services. Preferred providers are those recommended by personal injury attorneys for their ability to provide outstanding service, write accurate and timely medical reports, and willingness to testify in depositions and trials, if necessary.
#4 Consider Using a Financial Intermediary
Your medical liens can be assets. Financial intermediaries are national medical-lien service finance companies that may finance large medical bills. Emergency treatment is understandable and palatable to both sides of an accident case, but back surgery, knee replacement, or other expensive procedures are often disputed by the at-fault party. A financial intermediary pays the doctors, the surgical center, or the rehabilitative hospital directly at a discounted rate and takes over their medical liens.
The financial intermediary can help you:
• Improve your cash flow
• Eliminate or reduce financial risk
• Expand your business
• Buy equipment for your office
• Find peace of mind
Intermediaries look for an insurance policy with high limits to cover costs and work with a trustworthy personal injury lawyer who obtains good settlements and/or verdicts in personal injury cases. If you work with a financial intermediary, your bills get paid and the intermediary holds the lien in the personal injury case.
Financial intermediaries can purchase medical liens from a range of medical facilities and providers who treat personal injuries, such as, orthopedic surgeons, pain management specialists, diagnostic imaging technicians, physical therapists, hospitals, surgery centers, etc. Financial intermediaries, also called medical receivable firms, can:
• Improve your cash flow
• Reduce your administrative costs
• Underwrite your entire portfolio of medical liens
• Refer more medical lien cases to you
#5 Subrogation Liens
Accident victims don’t expect their insurance companies to take an adversarial legal position against them. Patients who file personal injury lawsuits because of another person’s negligence or deliberate wrongful acts often don’t realize that their health insurance company can file a lien against their settlement to recover money paid for treatments received for injuries arising from the accident. In fact, federal and state benefits programs (Medicare and Medi-Cal/Medi-Caid), a hospital, or any medical provider can file a lien against a personal injury settlement.
A subrogation lien is simply a demand for repayment from the proceeds of a personal injury case. Requiring the accident victim to repay insurance funds expended on his or her behalf is the process of subrogation. The virulence and strength of the subrogation claim depends on the subrogation clause in the health insurance policy and the facts of the case. Subrogation clauses in health insurance policies are prohibited in some states. The state where the accident occurred has jurisdiction over the personal injury case.
North Carolina prohibits subrogation claims. California allows subrogation but not greater than 50% of the insured’s net recovery, after attorney’s fees and costs are deducted. The laws of the state where the accident occurred govern the accident, and the state has jurisdiction over the accident.
Advantages of Medical Liens
From an accident victim’s point of view, it’s a relief to have access to necessary treatment, which can keep the patient from becoming permanently disabled. Unfortunately, it is not always possible to get all the treatment a patient needs on liens.
The advantages of working with a trustworthy doctor on a medical lien are many. The doctor carefully presents the medical evidence necessary to prove causation, a very important element to establish to win a personal injury case. An experienced doctor who works on medical liens knows how to prove causation, that is, how the collision caused the injury. The doctor does not need authorizations from an insurance company if there is no insurance company involved.
Our law office refers catastrophically injured patients to trustworthy doctors on medical liens. The nature and extent of the victim’s injuries are documented. Treatment begins, and a demand can be made for damages. The third-party claims adjuster will either pay or dispute liability and/or the amount of the damages. Personal injury claims can resolve in months or litigation can take years to complete.
Negotiating a Settlement
Once treatment begins, personal injury lawyers demand reasonable damages. The claims adjuster either denies the claim, agrees to pay the demanded amount, or offers less than the demanded amount, which triggers negotiations.
After establishing liability, in discussions with the adversarial claims adjuster, qualifying medical expenses is difficult because the adverse party invariably argues that some of the treatment is not necessary or unrelated to any injuries arising from the accident. Treatment for diagnostic purposes is as medically necessary as treatment for therapeutic purposes. A knee replacement may have resulted from the accident victim’s obesity. Causation for dental work is difficult to prove.
California’s collateral source rule allows an injured party who received compensation for medical expenses from an insurance company to recover full compensation for the same medical expenses from the at-fault third-party. The adverse party often argues that the accident victim should not receive such a double recovery. California statute provides that the injured person’s damages should not be reduced by the amount of that person’s own insurance compensation.
California law prevents uninsured drivers from receiving compensation for pain and suffering even if the other driver totally caused the accident. There are some exceptions, however. For example, an uninsured driver can recover pain and suffering in an accident caused by an intoxicated driver pursuant to California Civil Code Section 3333.4.
We evaluate the strengths and weaknesses of the case in discussions with the at-fault party's claims adjuster. Preparing a case for litigation and winning in a jury trial is not a guarantee. Therefore, the risks involved with jury trials encourages both sides to attempt to settle through good faith negotiations. We negotiate the maximum possible compensation for the case based on your testimony and medical records.
Personal Injury Litigation
Preferred providers keep detailed notes, which we use as evidence in personal injury trials. They take pictures of injuries and create various notations for use as evidence in court. Agile preferred providers know exactly how accurately testify to establish patient’s injuries and connect those injuries to the accident.
Even in the best of circumstances, juries are impossible to predict. Jury trials sometimes bring out inconsistencies in your case. In a jury trial you can find yourself reconciling a CAT scan with a test score in a brain injury case. It's up to a jury to decide whether the accident victim has a concussion, and if so, how much to award the patient for his or her injury.
What do you think? Have you treated patients on a medical lien? What was your experience? Would you recommend it? Would you consider accepting a medical lien? Do you think taking these patients is likely to increase or decrease your income? Sound off below!