How Medical Liens Work In Car Accident Injury Settlements

Most people don’t realize that when they’re injured in a car accident, there are various medical liens that I’m legally obligated to pay out of their settlement or jury verdict.

If you carry health insurance or Medicaid and your health insurance company pays any of your medical bills from your car accident, then they have a “lien” on your case.

A medical lien is something you have to pay to a company that has paid out medical bills on your behalf.

Federal And State Law Govern Medical Liens

Let’s say that you have Blue Cross Blue Shield or Anthem as your health insurance company.

Many of these medical liens are governed by ERISA, which is a federal law that allows Anthem to recover back what they paid out in medical bills if you recover a settlement, such as in a car accident.

For example, Anthem pays your chiropractor $1,000.

Anthem would have a medical lien on your car accident settlement.

So, if you recover $10,000, then $1,000 of that $10,000 has to be paid back to Anthem pursuant to ERISA law.

How Colorado Law Applies To Medical Liens

An example of a state governed medical lien in Colorado are hospital bills.

In Colorado, hospitals have a priority lien on your settlement money.

If you were not injured in a car accident or did not recover a settlement, then you will not have to pay back the hospital.

But, if you do recover a settlement against an at-fault driver, then the hospital that treated you has a lien against your settlement.

This is governed by Colorado Revised Statutes, section 38-27-101.

What Colorado Hospital Lien Law Requires

The Colorado statute requires hospitals to first submit all reasonable and necessary charges for hospital care to your property and casualty insurer and primary medical payer before creating a lien.

If no payers of benefits are identified for you due to lack of insurance, a lien may be created.

If a hospital is notified of a payer of benefits after it creates a lien, the hospital must make good-faith attempts to submit reasonable and necessary charges to the identified payer.

After a hospital satisfies these requirements, the hospital has a lien for all reasonable and necessary charges for hospital care upon the net amount payable to you out of the total amount of any recovery collected, whether by judgment, settlement, or compromise.

Your Rights Under Colorado Law

An injured person who is subject to a lien in violation of this section may bring an action in a district court to recover two times the amount of the lien attempted to be asserted.

The lien of attorneys and counselors-at-law has precedence over and is senior to the hospital lien.

This article does not apply to any hospital charges incurred after the date of any judgment, settlement, or compromise.

Why You Cannot Ignore Medical Liens

You or I cannot ignore a medical lien.

If you decide to ignore the medical lien, then the hospital or your health insurance company can take you to court to recover their money.

Your health insurance company can also take me to court as well, as I have a legal and ethical obligation to honor all liens out of a settlement.

What I Can Do About Medical Liens

In some cases, I can negotiate these liens and pay back less than the total lien, thus putting a little more money in your pocket.

Again, a medical lien is very dangerous and if you ignore them, you can be sued in court.

As stated above, I have an ethical and legal obligation to search and pay back all liens on your case.

How I Handle Medical Liens For My Clients

First, I thoroughly review all your medical bills to identify any liens on your settlement money.

Hospital bills receive special attention since they must be properly recorded as hospital liens under Colorado law.

Any written liens that you may have signed and agreed to in order to get medical treatment are honored completely.

Careful examination of all liens in your case ensures they were properly billed and contain no excess charges.

Every health care provider receives a phone call from me to obtain an accurate balance of what is owed.

Validation of each lien’s legitimacy allows me to negotiate whenever possible so you receive more money in your eventual settlement.

Federal liens from Medicaid and Medicare require thorough investigation as they take priority over other claims.

Finally, all medical liens are resolved out of your settlement so you promptly receive your net settlement amount.

Medical Liens Are Similar To Contractor Liens

If you hire a contractor to do work on your house, and you do not pay this contractor, then he will have a lien and will file a lien against your property with the proper agency in your city.

This lien, if not paid, will gather interest and start to increase as time passes by.

If you try to sell your house without paying this contractor lien, then it will not be possible to sell your house.

This contractor lien is recorded and in order to sell your house, you must pay the lien in full or negotiate the lien.

If not, then any potential buyer cannot get clear title to your house and you will be unable to properly sell your house.

The same principle is true with regards to medical liens.

If you or I do not honor and pay the medical liens out of your settlement money, then the insurance company will not agree to write you a settlement check for your car accident.

Letters Of Protection For Medical Treatment

A lot of doctors, health care providers, MRI facilities, physical therapists, etc. will accept what is called a “letter of protection” from me.

I will draft and sign a letter of protection so that you can treat with a health care provider or have an MRI, for example.

This is done in situations where you may not have any insurance or med pay insurance to cover your medical bills.

If you have no insurance to cover your medical bills, then I can send this letter of protection to your treating doctor.

Your treating doctor will use this letter so that he gets paid out of your settlement.

Benefits Of Letters Of Protection

This is to your benefit because your doctor will wait to be paid until your case settles.

Without lien rights, your doctor would make you pay upon each visit and this could be expensive to you and you may not be financially able to pay $150 per visit or whatever your doctor charges per visit.

This way, with a letter of protection, your treating doctor will only charge you after your case is finished and settled.

Again, I am legally obligated to pay your doctor and medical bills out of your settlement money.

Understanding Subrogation vs. Liens

Many people confuse subrogation with liens, but they are different legal concepts that can both affect your settlement.

Subrogation is when your health insurance company steps into your shoes and has the right to pursue the at-fault driver directly for money they paid on your behalf.

This means your insurance company can actually sue the other driver’s insurance company to recover what they paid for your medical bills.

A lien, on the other hand, is a legal claim against your settlement money that must be paid when you receive your settlement.

Both subrogation and liens can exist in the same case, which is why it’s crucial to have an experienced attorney who understands how these interact.

Your health insurance company might pursue subrogation against the at-fault driver while also maintaining a lien against your settlement.

The key difference is that subrogation allows your insurance company to go after the other party directly, while a lien is a claim against money you receive.

Red Flags to Watch For With Medical Liens

Several warning signs indicate improper or inflated medical liens that you should be aware of.

Duplicate billing is a common problem where the same service is billed multiple times or where both your health insurance and the provider attempt to collect for the same treatment.

Charges that seem excessive compared to typical rates for similar services in your area should raise concerns.

Medical providers who refuse to provide detailed billing records or itemized statements may be hiding inflated charges.

Bills that include services you never received or treatments that occurred after your accident settlement should be questioned immediately.

Providers who demand payment of their full lien amount without any negotiation may be attempting to collect more than they’re legally entitled to receive.

Interest charges or administrative fees that weren’t part of your original treatment agreement should be scrutinized carefully.

Any lien that wasn’t properly filed according to Colorado law requirements may not be valid and enforceable.

Medical providers who threaten immediate legal action without following proper lien procedures are often trying to intimidate you into paying improper charges.

Need Help With Medical Liens On Your Car Accident Settlement?

Hopefully, this article adequately explains medical liens and how they work in a car accident case.

If you have any questions, please contact me and I would be more than happy to answer any type of question involving this very important topic.

With over 32 years of experience handling car accident cases in Colorado, I understand the complexities of medical liens and how they impact your final settlement amount.

I make sure that all liens are properly handled so that you receive the maximum amount possible from your settlement.

Frequently Asked Questions About Medical Liens

How long do medical providers have to file a lien?

Medical providers typically have a limited time frame to file their liens, which varies depending on the type of provider and applicable state or federal law. Hospitals in Colorado must follow specific procedures outlined in the state statutes, while federal programs like Medicare have their own timelines.

What happens if my settlement isn’t enough to pay all the liens?

When your settlement amount is insufficient to cover all liens, the liens are typically paid in order of priority established by law. Hospital liens often have priority over other medical liens, and attorney liens are senior to hospital liens under Colorado law. I negotiate with lien holders to reduce amounts whenever possible.

Can medical liens be negotiated or reduced?

Yes, many medical liens can be negotiated down from their original amounts. My experience allows me to effectively negotiate with healthcare providers and insurance companies to reduce lien amounts, putting more money in your pocket.

Do medical liens accrue interest over time?

Some medical liens may accrue interest depending on the terms of your treatment agreement and applicable law. This is why it’s important to resolve liens promptly after settlement.

What if I disagree with a medical lien amount?

If you believe a medical lien is improper or inflated, I can challenge it on your behalf. This involves reviewing the billing records, treatment notes, and ensuring the lien was properly filed according to legal requirements.

Are there liens I’m not responsible for?

Yes, if you didn’t receive a settlement or judgment related to your injuries, you typically won’t be responsible for paying back medical liens. The lien rights are tied to your recovery from the at-fault party.

How do Medicare and Medicaid liens work?

Federal programs like Medicare and Medicaid have special recovery rights that often take priority over other liens. These programs have sophisticated systems for tracking and recovering payments, making it crucial to address them properly.

What happens if my attorney doesn’t handle liens properly?

Attorneys have an ethical and legal obligation to identify and pay all valid liens from your settlement. If liens aren’t handled correctly, both you and your attorney can face legal consequences from the lien holders.