Written By Chris Dolan and Nancy Avila Villatoro
This week’s question comes from Anonymous who asks: Are my medical providers entitled to a portion of my settlement?
Great question. Let’s create an example where you are in your car stopped at a red light, and the driver behind you is distracted, does not press the brakes in time, and rear-ends your car. You are injured and require medical treatment. The ambulance arrives and transports you to the nearest emergency room. You have health insurance that will cover your treatment. Are the hospital and the medical providers that provided you treatment entitled to seek payment from you for the treatment you received, even though you have health insurance?
Statutes provide that a hospital treating an injured person shall have a lien on the claim or recovery of the patient against the tortfeasor causing the injury or on any claim or recovery arising from the injury. Courts must determine the conflicting interests of hospitals, injured patients, attorneys, insurers, and sometimes the public in proceeds that often may be insufficient to satisfy all parties.
In California, if you pursue a personal injury claim, the law states that hospitals can recoup the cost of care provided by asserting a lien on your personal injury action. According to the California Legislature, a hospital may assert a lien for any “emergency and ongoing medical care” under the Hospital Lien Act for reasonable and customary charges. (Cal. Civ. Code, § 3045.1.) Therefore, a hospital may be entitled to recover for all the care provided to you. (Newton v. Clemons (2003) 110 Cal.App.4th 1.)
The Hospital Lien Act “compensates a hospital for providing medical services to an injured person by giving the hospital a direct right to a certain percentage of specific property, i.e., a judgment, compromise, or settlement, otherwise accruing to that person.” Newton v. Clemons, (2003) 110 Cal. App. 4th 1, 14.
Civil Code section 3045.4 establishes the “certain percentage” of the judgment or settlement amounts to which the lien applies: “Any person, firm, or corporation, including, but not limited to, an insurance carrier, making any payment to the injured person.., for the injuries he or she sustained, after the receipt of the notice [of the hospital lien], without paying to the [hospital] the amount of its lien claimed in the notice, or so much thereof as can be satisfied out of 50 percent of the moneys due under any final judgment, compromise, or settlement agreement after paying any prior liens shall be liable to the … [hospital] for the amount of its lien claimed in the notice which the hospital was entitled to receive as payment for the medical care and services rendered to the injured person.”
How does this affect your personal injury recovery?
When medical liens (or rights of subrogation) are asserted, it may substantially reduce the net value of your potential personal injury claim. In some cases, liens, including medical liens, may take legal action that is economically impractical.
Whether you decide to hire an attorney or proceed with your personal injury claim, it is important to evaluate the charges the hospital asserts. Depending on the extent of your injuries and medical bills, you may need an expert in medical billing. They determine whether the charges were related and necessary to treat the injuries. Second, you may be able to challenge the reasonableness of the bills and utilize any arguments made by the at-fault party that the charges were excessive. Additionally, you may be able to challenge the hospital to provide customary payments made by health insurance carriers for the same or similar services.
It is important to note that under the Hospital Lien Act, the lien does not apply to first-party claims like underinsured motorist benefits. (Weston Reid, LLC v. American Insurance Grp., Inc. (2009) 174 Cal.App.4th 940.) Underinsured motorist benefits is insurance coverage you purchase that protects you if you are involved in an incident where the at-fault person carries liability limits that are too low to cover the medical expenses of any injured person.
While the basic concept of a medical lien may be simple enough to some, several circumstances can complicate matters. Is the lien for the amount the medical care provider would charge an individual or the amount it would charge an insurance company? Exactly to which proceeds does the lien attach? What if all or part of the bill is payable from another source, such as workers’ compensation or Medicare? Are there other state or federal statutes that will allow your medical providers or health insurance carriers a right to recovery?
Ultimately, a defendant or an at-fault party will not settle a third-party claim without putting the hospital on the check or writing a separate check to satisfy the lien. Therefore, it is crucial to obtain legal representation to understand the complexities of medical liens. Your attorney can engage the hospital early on to maximize your recovery by limiting the amount of the lien as much as possible and allowing for a quick and efficient settlement of your claim.