[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.]
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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.
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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.
Neama Rahmani, President & Co/Founder West Coast Trial Lawyers
#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.
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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:
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• 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.
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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!
This topic came up recently in our town. See article below, this seems like a very slippery ethical Slope,
I’d rather make less and sleep well at night.
https://www.cleveland.com/court-justice/2019/05/knr-jet-setting-doctor-made-millions-off-clients-in-price-gouging-scheme-plaintiffs-allege.html
Yikes!
I didn’t even know this was a thing. Is it state specific? I’m always surprised to hear about ways in which people try to recoup money. In my state I recently learned about a law that allows for someone to sue a patient who has unpaid medical bills from when they were a child, as if the child had anything to do with it. They will garnish wages and it seems quite unfair.
Hey, thank you for the reply.
It is not state-specific.
In some states it is called lien, in others its called letter of protection.
No! So much no!
Pay me for my services, promptly and in full. No way would I entangle myself with this rigamarole, mess and ridiculousness.
Harvard trained personal injury lawyer …. what a waste of a top-notch education
This lawyer is the kind that colludes with unscrupulous pain doctors to do as many epidural and RF ablation on patients that got into a “fender bender” to increase damages and injuries. Then the pain doc can charge thousands of dollars for a five minute epidural injection. For some reason the patients never get better before their lawsuit…this is guy is the lawyer that will sue you for extra money once he finds out you are a doctor.
I have to agree with JD above. This seems like a great way to never get paid, or waste so much time and money in finally getting paid that it is a net loss or net break even at best. A very bad idea here in my opinion. So many better ways to make money than this.
Also this statement “Most doctors will not treat patients without health insurance or cash payments. Doctors who treat patients on liens really care about their patients.” implies that anyone who won’t treat a patient for free doesn’t care about their patients. I have so many problems with this statement. Even if it was not the writer’s intention, these two sentences are awful and perpetuate falsehoods against physicians that actually want to make a living….which is pretty much everything this website is about.
My sister (A JD) explained it best when she was going through law school. The legal profession is centered on monitoring how money changes hands after an injury (broadly defined “injury”). The single most important part of their profession is ensuring some of that money lands on their own desk, to the exclusion of anyone else if necessary.
There is certainty risk involved and there is no guarantee that physicians will ever receive payment if the legal case is unsuccessful. That being said, if there is a successful settlement or judgment, the contractual lien requires that the physician be paid before funds are disbursed from the attorney’s trust account.
So glad to be EM…can’t say no to a patient anyway so there’s no temptation.
This concept actually had me for a bit, just another way to try for payment on the back end, then I hit the paragraph about how agile providers “know exactly how accurately to testify.” Is that really a question?? You testify fully truthfully / accurately at all times so you can live with yourself and sleep at night.
Maybe it’s because my only legal experience is courts martial where the “jury” (panel) is usually very senior/decently educated officers and NCOs but…If juries are too dumb to understand something, then stop picking dumb juries! Don’t lie to them, even just small hidden almost truths.
What’s the line about how long it’ll take a Harvard grad to remind you they attended Harvard? Still, three words in is impressive.
Like others, not a fan of this, but like WCI always says, take what you find useful and leave the rest. A brief counterargument at the bottom might be helpful to frame this better, especially for a topic new to many doctors and one that seems rife with controversy.
I think I injured myself with my eye roll at that first line.
Although not for me, I appreciate the article.
This is an interesting niche of medical practice. It’s one that I personally would run from, though. The thought of operating on a patient who is embroiled in a personal injury case, with no guarantee of payment for tens or hundreds of thousands of dollars of care? Not so appealing.
However, it seems like there is somewhat of an ecosystem around it, and it’s always interesting to peer into different worlds.
— TDD
I’ve certainly had patients in the ED that weren’t really hurt badly, that knew they weren’t hurt very badly, that I knew weren’t hurt very badly that we still did imaging on because they were talking about lawsuits. You know if they’re willing to sue the other driver that they’re willing to sue you. I mean, heck, they already know a personal injury attorney. Defensive medicine? Absolutely. And with the usual expense and radiation consequences.
been there, done that, hated it. there is indeed an ecosystem and if you play the game (keep lawyers happy) it is lucrative and perpetually feeds your practice. this patient population is well described in neuropsych literature: malingering, symptom magnification, and secondary gains. there is a strong incentive to keep the case going and max out the award; most hide this fact under the guise of practicing “defensive medicine”. But you are only the treating physician and if you wind down the case and not give in to their demands they’ll move on to a different physician that will do what they want.
It is not for everyone, but some physicians have developed a successful practice by devoting a percentage of their care to treating personal injury patients.
Maybe I’m too idealistic, but something about this feels not right to me. It feels that what is being presented is basically a strategy for “using” financially disadvantaged patients who don’t have the means to pay for treatment, taking advantage of their powerlessness in the midst of an emergency, in order to extract from them a binding agreement to pay MORE for their care than a typical patient who has the economic advantage of basic health care insurance. I realize that the “I” in the “WCI” page focusses the discussion on financial considerations…BUT what about the “WC”? I have always understood the mission of these posts/discussions as helping those who wear the white coat get a fair shake on wall street and taxes, but this post feels different– it’s pitting doctors against patients for financial gain, and in my heart I do not believe that is why the majority of doctors wear their white coat.
I’m trying to understand what you are arguing. Are you arguing doctors shouldn’t see these patients, that they shouldn’t be paid via personal injury lien, or that nobody should discover what a personal injury lien is from The White Coat Investor website?
I think the article does more than just present information about how personal injury liens work…it is a solicitation to draw more docs into this murky territory, obviously for the ultimate financial gain of the author. I guess my point is that all this scheming should not pass the ethical sniff test of most docs, and is really not in the spirit of why most become physicians. Also, Jim, it seems a bit off-mission from just helping docs get a fair shake, to helping docs take advantage of vulnerable patients and/or game the system to take advantage of the litigants that may be sued by an unscrupulous patient. When you’re just trying to help docs get a fair shake and shore up their personal finances, the doc is the protagonist/ underdog who one could root for. Engaging in the type of activity described is the kind of thing that can give docs as a group a bad name, staining all the good work that most do. You said yourself, you categorize this post in the “augmenting your income” category. I ask, “at what ethical cost?”
Agree with you, this is for people to game the system, charge $5000 for an epidural steroid injection knowing it isn’t indicated but just for some extra $$$ so it will rack up the attorney fees and their cut of the payment. happens all the time in the pain world with these greedy trial lawyers
So you’re arguing docs should not do this then. Fair enough. That’s what the comments section is for.
Jim –
In light of this link (https://www.cleveland.com/court-justice/2019/05/knr-jet-setting-doctor-made-millions-off-clients-in-price-gouging-scheme-plaintiffs-allege.html) – I’d love to hear the author explain to us all how the practices discussed in this article are ANY different from what he is advocating.
Could you ask him to join the conversation?
-JD
This is not a solicitation. This is simply a discussion of how physicians can treat patients in personal injury cases, where the patient has no health insurance or other means to pay for the treatment upfront. Though the patient does ultimately pay more for the treatment at the end of the case, it gives him or her access to medical treatment he or she would otherwise not be able to receive.
Is this essentially the same as a Letter of Protection (LOP)? I practice in Texas
Yes. It is one and the same. Just referred by different names in different states.
I didn’t know about personal injury liens before reading this article. This was definitely informative. This type of method of payment for medical services probably won’t win popularity contests, as many physicians would prefers to be paid promptly for their services and not have to chase money down the road.
It is the White Coat Investor’s mission to educate physicians on financial matters, even rare ones or ones you have no intention of facing personally. The author of the article definitively has a positive bias for this tool, but that is to be expected from somebody who took the time to write an article about it.
Learning the existence of a tool (or payment method) doesn’t mean we should necessarily start using it , but it does mean that we will understand how it fits in the broader picture if we come across a situation where somebody decided to use it. For example, lines of credit can help people start companies, but most people end up hanging themselves if you give them enough rope.
Exactly. This is not for everyone, just an option for some physicians to choose to incorporate into their practice.
This article was informative. The linked article posted by S Cleveland even more so.
My first thought reading the WCI post was “With the Medicaid expansion, Medicare, employer insurance and Obamacare, who are all these poor people who have no insurance?”
Then I read the linked article.
A critical part of the scam is getting the plaintiffs to waive their health insurance coverage. By doing this, they avoid the embarrassing possibility that the insurance company would deny the proposed treatments. For example, an endless series of trigger point injections.
By waiving insurance, the law firm can have unscrupulous docs do all manner of unnecessary procedures, bill at inflated prices and let the attorneys claim far higher medical expenses. All to support a higher settlement.
Far from helping patients who do not have insurance, you are helping a law firm cheat the defendant by inflating costs.
I loved the part about a family practice doctor whose “… costs are reasonable and in line with other providers in the area.” This crook was making $1 million a year. Jeez. If that is a typical income, I wonder why FP’s are always complaining about their low pay.
Some patients have no health insurance, and no other means of paying for treatment while a case is pending. Others have health insurance, but choose to see doctors outside their network, or do not want to deal with health insurance subrogation at the end of the case. Subrogation would be a entirely new article all together.
Not worth the risk. Also what does being a Harvard graduate have to do with this post?
It’s a way of letting you know he couldn’t get into Yale law.
Ha!
I have seen hundreds of patients on liens. You basically treat the patient as you would with any other with the caveat that EVERTHING you are doing will be scrutinized by both plaintiff and defense attorneys. Therefore, just be ethical and honest and try to help the patient get better. Don’t work with shady lawyers. Only work with lawyers that truly want the best for the patient and will allow you to treat patients ethically. From a financial perspective, the liens will pay significantly higher than the rates negotiated through insurance companies. On average, I would say 2-5x the normal rates, depending on how much money is available at settlement and if you are asked to take a reduction on your charges. It typically takes, 6 months to 2 years to get paid (of course, there are outliers). I would say I have been paid on about 90% of the liens and so 10% I have not been payed. I never try to collect from the patients if the case goes bad. I view personal injury liens as just diversification of my payer mix.
Thanks for sharing your experience. It provides an important counterbalance to the piling on above!
“Most doctors will not treat patients without health insurance or cash payments.”
Yeah okay. This Harvard lawyer should take a walk through a Harvard-affiliated hospital ER and see what it’s like.
Apparently not primarily aimed at ERs. They want someone who has the time to rack up lots of charges on patients who do not need so much attention for medical reasons. They want patients who are not at risk for short term deterioration and who will show up for the extra procedures. The legal cases can take years to resolve and the lawyers want lot of medical bills, best if they can claim ongoing need for care.
We do lots of Medicaid and uninsured in the ED. Medicaid is just another form of insurance. They get treated the same as anyone else. The uninsured, if they cannot sign up for Medicaid, get ER treatment but is a struggle to arrange their outpatient care. With Medicaid expansion, there are fewer uninsured patients who are not eligible for Medicaid.
I would like to know more about the referral services agencies? This is new to me, Where can I find more information?
Treating patient who is incentivised to NOT get better is not my cup of tea
Yea, that’s an issue for sure.
Comment section on this post is just pitiful. White Coat and author note this issue is an intriguing way to boost income. Clearly not for everyone. People respond with ad hominem attack with little substance. I know they say “can’t make everyone happy” but yikes…. If you have genuine criticism, voice it. If not, lay off the personal attacks and move on with your life.