WHY PERSONAL INJURY LIENS ARE IMPORTANT
In Utah personal injury cases, whether it be a dog bite case or a car accident case, liens occur and the personal injury attorney has to manage these liens or the case can go south in a hurry. Liens can be helpful, or they can be deadly to a personal injury case. See my prior articles on this important subject here.
WHAT IS A PERSONAL INJURY LIEN?
A lien is a legal term that describes debt being secured by collateral. Secured debts are like your mortgage or a car note. If you do not pay, they foreclose on your house or repossess your car. The creditor lien holder has a right to the collateral, i.e. the car or the house if you don’t pay the debt. Sometimes furniture stores can secure the installments payments with the furniture they sold, same goes with diamond rings. These are called a purchase money security interest. Meaning they take back their stuff if you do not pay.
In Utah car accident personal injury cases, often the person can’t work, and can’t afford the proper documenting medical care to prove up his settlement. As a result medical liens arise, or funding liens so that the person can live while they recover, and get their medical bills stayed until a settlement can be reached. See an article on the types of personal injury liens here.
7 TYPES OF PERSONAL INJURY LIENS
There are several types of liens in the personal injury context. All liens need to be paid or the personal injury attorney can get sued, along with his client for not paying them. Here are the most common types of liens in Utah personal injury cases.
1. Medical Lien. This is a consensual lien created by the contracting parties, i.e. the medical provider and the injured patient. This lien does not have to occur. Instead, it is by the agreement of the parties.
Common medical liens are chiropractic or physical therapy liens whereby these medical providers agree to provide the patient continued medical care, but will not get paid until the end of the case. An example is where the chiropractic physician bills the patient’s medical pay benefits attached to the injured patient’s car insurance. After exhausting the normal $3,000 medical pay limits, the chiropractor may bill another $1,500 on a lien basis to get the patient better, because the patient needs the care but does not have private health care insurance to pay for it. Physical therapists who often treat car collision victims will work in the same way.
2. Private Health Care Insurance Liens. It is ironic that you pay so much for private health care insurance with premiums and deductibles, only to have the insurance carrier want every dollar back that it paid for medical bills due to the fault of a third party.
Technically, these liens are by consent, but really the covered person (“insureds”) have no bargaining power against these large private health care insurance companies. It is a one way street. These liens arise when you are hit in a car accident, or any negligent situation, and your private health care insurance pays for the medical care incurred because of the wrongdoing of the other at-fault car.
For example, you are rear-ended and you break your leg. You go to the ER and your private health care insurance pays $20,000. If you recover a $25,000 settlement, you will immediately pay your private health care insurer back the first $20,000. Leaving you with $5,000 to deal with costs and attorney fees still outstanding. Also the private health care insurer does not take into account all those premiums or deductibles that you paid over the years. It does not care. A one way street and your going the wrong way.
Sometimes the private health care insurer will not even reduce it’s lien by 1/3 to reflect your attorney’s work to collect a settlement. Without the attorney, the insurance carrier probable would not receive any reimbursement. As a result it should help shoulder the attorney fees and work that it benefited from. Not all the attorney fees should be born by the injured party.
3. Medicaid Liens. Medicaid liens are created by federal and state law. If you sign up for Medicaid or use Medicaid, you will pay back Medicaid any monies it spent on your medical care that was caused by an at-fault party. It works very similar to private health insurance liens, except in Utah they generally automatically reduce the lien by 1/3 to reflect the attorneys collection efforts that ultimately benefit the Medicaid program.
4. Medicare Liens. Medicare liens are also created by federal law. They work very similar to Medicaid liens, except when dealing with Medicare you had better pack a lunch and probably dinner also just to talk to a real person to find out what your lien balance is. They are very hard to deal with and it can take months to resolve a Medicare lien.
5. Funding Liens. Funding liens are where private companies provide small loans to people hurt in personal injury cases. The loan amounts could be $800 to $2,500, or more depending on the facts. Basically, these companies front the money and charge significant interest on these loans. These consensual liens generally are not a good idea, more of a last resort.
6. Hospital Liens. Utah hospital liens are created by statute at Utah Code Ann. 38-7-1. Utah hospital liens are filed complaints with a Utah District Court asserting a lien on any personal injury settlement that may occur in the future where the hospital provided care to an accident victim because of an at-fault party. Your personal injury attorney will often times try to beat these liens before they are filed or are monitoring the court’s website for hospital lien filings.
7. Surgical Funding Liens. Another form of the medical lien is specialty work like scar revision, or knee surgery. The variety of lien work is as varied as doctors who are persuaded that they will ultimately get paid on the back end. All too often, car crash victims do not have private health care insurance and they must get their needed medical care through a lien. The drawbacks of lien work is since the medical provider will not get paid until the back end, the provider will add a premium, like interest, to make up for the months or years of not getting paid, waiting for the case to settle.