Nobody likes sticker shock — the moment you discover the true cost of that new car you’re about to buy, complete with extras, dealer charges, and taxes. Unfortunately, people who have been injured in a car accident sometimes experience a form of sticker shock when they discover that something called a medical lien must be paid to health care providers before they can receive their settlement.
In order to avoid unpleasant surprises, it’s important to understand what your rights and obligations are when it comes to a medical lien on your settlement. Here are a few frequently asked questions and answers that can make the road ahead a little less bumpy.
Q: WHAT IS A MEDICAL LIEN?
A: A medical lien is a claim against your personal injury settlement, asserted by an entity that has provided you with medical care or services in response to the accident. It’s essentially a demand for reimbursement out of the proceeds of your settlement.
Q: WHO CAN FILE A MEDICAL LIEN?
A: Typically, a medical lien might be filed by a doctor, a hospital, or some other health care provider involved in treating your injuries from the accident. This arrangement is common if the patient doesn’t have health insurance, so that you can receive treatment without having to pay up front; the medical bills are then paid out of the settlement obtained from the at-fault driver’s insurance company.
A lien might also be filed by your own health insurance company to recover the costs it incurred for your care. This is known as subrogation, and the extent to which your insurance provider can put a lien on your settlement is largely dependent on the terms of the policy and state law.
Q: WHAT'S COVERED UNDER THE COLORADO LAW?
A: In Colorado, the subrogation law imposes significant restrictions on the practice of subrogation and precludes such liens entirely in certain instances. In other words, it means that the settlement must "make the plaintiff whole" before the health insurance company is entitled to a refund in subrogation.
Q: DOES COLORADO LAW ALLOW HOSPITAL LIENS?
A: Hospital liens are permitted in Colorado, but the hospital has to follow specific procedures for the lien to be valid.
Among other requirements, the hospital has to make good-faith efforts to recover costs from any applicable health insurance coverage. Hospital staff or medical service providers may seek to have you sign a lien letter, consenting to a claim against your settlement to repay any outstanding costs.
Whenever possible, you should review any documents related to medical liens with your personal injury attorney before signing.
Q: DO LIENS ALWAYS GET PAID?
A: Not always.
If you fail to receive any money in settlement of your case, a lien on your claim is basically worthless.
As discussed below, an experienced personal injury attorney may also be able to negotiate release of the lien for less than the total amount sought. Still, a lien is a legal instrument, similar to a mechanic’s lien filed on your house that prevents you from selling the property until you have paid for services rendered. Like any debt obligation, it should not be ignored or taken lightly.
Q: HOW CAN A PERSONAL INJURY ATTORNEY HELP?
A: As you may have gathered from the answers above, the statutes governing medical liens on accident settlements are complicated. An experienced personal injury attorney can make sure that the lien is valid and that the amounts billed are correct. He or she can work with the treatment providers and insurance companies to try to reduce the amount of the lien. It’s also the attorney’s duty to make sure the lien is satisfied and released before you receive your settlement, so that there won’t be any more surprises down the road.
THE CAR ACCIDENT LAWYERS AT FDAZAR: For more than thirty years the attorneys at Franklin D. Azar & Associates have helped thousands of injured people obtain complete and timely compensation for their losses. Our proven track record and expertise have allowed us to grow into the largest personal-injury law firm in Colorado, with offices in Denver, Colorado Springs, Pueblo, and Trinidad. If you’ve been injured in a car, truck, or motorcycle accident, you may be entitled to compensation. Please call the car accident attorneys at FDAzar day or night at 800-716-9032 or contact us here for a free consultation and no-obligation evaluation of your case.