A hospital lien can vary depending on the state where it is imposed. It is important to understand how hospital liens work and what due process rights one may have. When an individual is involved in an accident and is injured, allegedly caused by another, this is sometimes called “third party liability or ‘TPL.’ EMTALA prohibits hospitals from refusing to provide care on the condition of insurance. Instead, hospitals must treat and stabilize any patient admitted to its emergency room. In a personal injury case where an injured patient has health insurance, one might presume it might be easy to determine the medical charges and the net value of the medical care based on the amount paid by the health insurance, adding in any out-of-pocket costs paid by the plaintiff. However, there are two other factors to consider.
Collateral Source Rule and Hospital Lien
- If the patient has insurance, collateral in many jurisdictions stipulates that the only admissible amount in litigation is the amount charged, not what is paid by insurance. In other words, insurance may not be used as a collateral source to value a plaintiff’s medical care. There is then often a dispute over the appropriate use, al customary, and reasonable (UCR) charges.
- If the patient does not have insurance or does not use their insurance, a hospital may file a lien. A hospital lien may be established in some jurisdictions that entitles them to a portion of any award as the result of litigation regarding the third party who caused an injury to the plaintiff. In some jurisdictions, there have been several rulings regarding whether a hospital lien is a collateral source or not. Also, in some jurisdictions, there have been rulings regarding whether a factoring company that purchases liens at a discount is a collateral source.
What Is a Hospital Lien?
Hospital Lien State Standards
California Hospital Lien
The California Hospital Lien Act (HLA) (See California Civil Code sections 3045.1 to 3045.6), hospitals may claim repayment for all “emergency and ongoing” medical care provided to an injured patient who was injured in “an accident, or negligent or wrongful act.” The hospital could place a lien on the alleged tortfeasor “to the extent of the amount of the reasonable and necessary charges of the hospital.” (See Civ. Code, § 3045.1; see also Gov. Code, § 23004. Note that this is different than the ‘allowed amount’.
Hospital liens impose a duty on a defendant to pay the hospital for emergency and ongoing services provided to an injured patient who has sued the third party for causing the harm. a defendant who settles with a patient without honoring a perfected hospital lien remains liable to the hospital for the cost of care provided. (Civ. Code, § 3045.4.)
Texas law requires that hospitals provide treatment to anyone in need of emergency medical attention. So, what happens when a person receives medical care that they are not insured for and cannot pay for on their own? In the State of Texas, these types of debts are handled through medical liens.
Under Texas Property Code 55.002(a), hospitals are automatically granted a lien against ‘a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person.’ Liens allow hospitals that provide emergency care to uninsured patients to claim a portion of any legal award that the patient might receive for the accident.
Liens are attached to a personal injury claim, providing a hospital with the ability to claim a percentage of a settlement or verdict claimed from the negligent party or their insurance company. A lien is typically sent as a notice to the person who received treatment.
Lien Limits in Texas
Texas provides limits to liens and what hospitals can do with them. Foremost, a hospital can only place a lien on costs associated with an injured patient’s first one-hundred days of treatment. Emergency room physicians, who frequently charge for care separate from hospitals, are only able to place a lien on the first seven days of a person’s care. Medical care providers cannot place a lien on individuals who received care in a county with a population of less than 800,000. Finally, liens do not apply to excessive charges or ones above a reasonable rate for care.
For example, the size of a lien may be reduced through negotiation.
Florida is a distinctive state with respect to hospital liens because it does not have an all-inclusive state hospital lien statute. Florida allows independence to enact hospital lien statutes to the individual counties within the StateState. Florida had a lien law that was found to be unconstitutional in 2012. See Shands Teaching Hospital & Clinics, Inc. v. Mercury Ins. Company of Florida, In Shands.
As of December 2020, the only counties in Florida with lien statutes are:
Subrogation is a key provision of New York Standards with respect to hospital liens. For example, if a driver of another car hits your car, you sue the driver and then settle with the driver’s insurance for $100,000. But a health insurance company has paid $18,000 in medical bills related to your injuries. The insurance company may claim a lien or right of subrogation against the settlement for $18,000.
In, 2010 New York General Obligations Law section 5-335 abolished health insurance liens against personal injury settlements, with certain exclusions. These are Medicaid, Medicare, and ERISA (Employee Retirement Income Security Act), which are governed by Federal law. After GOL 5-335, some health care insurers now claim to be bonafide ERISA-protected policies when they are not. As a result, such plans may attempt to assert a lien against your settlement even though they are not entitled to one.
Liens May be Difficult to Resolve without an Expert Witness and an Attorney
Liens are sometimes problematic in personal injury and third-party liability because a health plan or ERISA plan may only adjudicate a medical claim for payment after a lien is released. This is because hospitals may make more from the lien value on a personal injury claim than if they submit a claim to an insured’s health insurance. On the other hand, we have seen attorneys file complaints against hospitals for tortious interference with an insured’s health plan in retaliation.
Claimants who urgently need a settlement and want to move on with their lives may believe that they must accept losing a large potion of the settlement to a hospital lien. However, this is not always true. Plaintiffs who have the help of an experienced expert witness in medical billing and medical coding can value medical care. It may also be helpful to be represented by an attorney. Although it may seem that only plaintiffs and their attorneys are interested in the value of the lien, defense attorneys are as well. Defendants want to establish a fair assessment of the value of the medical care, which may be a lower value than the lien. In turn, at the time of an expert deposition, the plaintiff may have an interest in this same value to negotiate the lien at the conclusion of the litigation.
Due process under the Fourteenth Amendment can be broken down into two categories: procedural due process and substantive due process. Procedural due process, based on principles of “fundamental fairness,” addresses which legal procedures are required to be followed in state proceedings. Relevant issues, as discussed in detail below, include notice, opportunity for hearing, confrontation and cross-examination, discovery, basis of decision, and availability of counsel. Substantive due process, although also based on principles of “fundamental fairness,” is used to evaluate whether a law can be applied by states at all, regardless of the procedure followed. Substantive due process has generally dealt with specific subject areas, such as liberty of contract or privacy, and over time has alternately emphasized the importance of economic and noneconomic matters. In theory, the issues of procedural and substantive due process are closely related. In reality, substantive due process has had greater political import, as significant portions of a state legislature’s substantive jurisdiction can be restricted by its application.
Although the extent of the rights protected by substantive due process may be controversial, its theoretical basis is firmly established and forms the basis for much of modern constitutional case law. Passage of the Reconstruction Amendments (13th, 14th, and 15th) gave the federal courts the authority to intervene when a state threatened fundamental rights of its citizens, and one of the most important doctrines ﬂowing from this is the application of the Bill of Rights to the states through the Due Process Clause.
The Emergency Medical Treatment and Labor Act (EMTALA) is a federal law that requires anyone coming to an emergency department to be stabilized and treated, regardless of their insurance status or ability to pay, but since its enactment in 1986 has remained an unfunded mandate
Under the Affordable Care Act, out of pocket maximums do not apply to out of network charges. So, if an injured patient receives care from a hospital that is in the patient’s network of insureds, but one of the physicians is out of network, that physician’s bill may result in an additional out of pocket cost to the insured injured patient. (See also Allowed Amount).
In fact Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) added mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan (GHP) arrangements as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation, collectively referred to as Non-Group Health Plan (NGHP) or NGHP insurance.