Don’t be confused by recent news—a hospital lien has absolutely nothing to do with suing patients. It’s a valuable tool that facilitates hospital reimbursement from third-party settlement funds.
Many states allow healthcare providers to assert statutory liens for services provided to patients where a third party is potentially responsible for the injuries sustained. Where available, hospital liens are a critical component of the revenue recovery process for MVA and other third-party liability claims. Based on our experience, a focused MVA/TPL strategy that includes the use of hospital liens may achieve as much as 70% reimbursement.
What is a Hospital Lien?
A hospital lien grants a hospital a secured interest in a potential settlement awarded to an injured party. Although they are commonly confused with liens attaching to personal property, such as a garnishment or judgment lien, hospital liens are entirely different and attach only to funds paid to claimants as part of their personal injury settlements.
A secured interest in a personal injury settlement guarantees that the hospital will be paid first before funds are disbursed to the claimant. Without a hospital lien, providers are stuck without a statutory mechanism to secure their share of the funds a patient receives as compensation for medical expenses.
More than 40 U.S. states plus the District of Columbia have enacted lien laws that assist hospitals in collecting the third-party reimbursement they’re due. View a list of them at this link.
Hospital Lien Perfection
The process of completing all the necessary steps to file a hospital lien is known as hospital lien perfection. It’s an arduous process, and the laws are constantly being reinterpreted, so by necessity MVA recovery teams include attorneys who specialize in this work.
As with most statutes, hospital lien laws are generally difficult to understand and require strict compliance with every procedural detail articulated in the statute. For example, most hospital lien laws contain time limits for perfecting a lien, and failure to meet those deadlines could void the lien.
Further, lien laws vary from state to state (and sometimes county to county), so time limits, filing requirements, and rights granted to providers vary significantly depending on location.
A few examples illustrate the complexity of state-based lien statutes:
- In many states, providers must notify the patient, the negligent party, and the negligent party’s liability carrier of its intent to file a lien prior to actually filing the lien with the appropriate clerk’s office. This must be done in writing via certified mail.
- Some states require that liens be filed in the county where the accident took place, while other states require liens to be filed in the patient’s county of residence. Some require both.
- Some states limit hospital liens to a percentage of the total settlement in cases where the plaintiff is not “made whole” by the settlement.
Legal Protection for Providers
Lien statutes in every state are always mired in controversy as plaintiff’s attorneys often argue over how to interpret the statue, when to apply it, and how much a hospital can collect. The complexity may lead some hospital revenue managers to assume incorrectly that hospital liens are not worth the effort.
Remember that lien statutes exist to protect providers, who should not hesitate to utilize them where available. And when attorneys are actively involved in the process, they can help ensure that liens are perfected and appropriately applied to protect hospitals’ rights to reimbursement for their patient care services.
Our MVA/TPL team would be happy to answer questions. Please contact us here.
Argos Health is a KLAS top performer and the Black Book top-rated complex claims vendor for three years in a row. We handle motor vehicle claims from start to finish, with the resources and legal expertise to manage the hospital lien process and advocate fiercely for proper payment. Learn more here.