Should I use a “medical lien” in my California injury case?

In a personal injury case, a medical lien is where a health care provider gives treatment at a discounted price or without charging upfront at all, but then has a right to get paid for the medical bills directly from the settlement or judgment. This allows you to receive medical services “on credit” to be repaid once the case is resolved.

The following flowchart illustrates the steps for getting a medical lien after an accident.

To help you better understand when you should use a medical lien in a California injury or accident case, our California personal injury lawyers discuss below:

• Finding a Doctor on a Lien Basis
• How Medical Liens Work
• Are liens negotiable?
• When to Get a Lien
• What if I lose my case?
• Statute of Limitations
• Role of Attorneys
• In Sum
• Additional Reading

Finding a Doctor on a Lien Basis

Most providers who work on a lien basis will only do so if they think the case is winnable. Since the provider is an expert in medicine, not law, it helps to have a referral from a lawyer the provider trusts.

The lawyer can reassure the provider that your injury was the result of someone else’s:

• strict liability,
• negligence,
• gross negligence,
• recklessness or
• intentionally wrongful act.¹

How Medical Liens Work

After a doctor or other medical provider agrees to treat you on a lien basis for medical expenses, the provider will have you sign a lien agreement.

The lien agreement is a legally binding contract. Once the contract has been signed, the doctor will “perfect” the lien by sending a notice to:

• the responsible insurer and
• other interested parties.

Perfecting the lien allows the other party or its insurer to pay the doctor directly from a court award or out-of-court settlement before you receive settlement money.²

Statutory Medical Liens

Under California law, hospitals are allowed to place “statutory medical liens” against the at-fault parties so that you can receive emergency care services.

For hospitals to place statutory medical liens, they have to give written notice of the charges to the at-fault party. Then once you get compensated for your medical expenses, the hospital has one year to recover their costs.

Medi-Cal

When Medi-Cal (California’s Medicaid program) places statutory liens, it will receive a part of your ultimate judgment or settlement. The California Department of Health Care Services (DHCS) can even

• sue the at-fault parties on your behalf,
• intervene in your lawsuit against the defendant, and
• assert its lien on your monetary recovery.³

Learn more about the DHCS Personal Injury Program.

Are liens negotiable?

Yes, lien agreements with doctors and other healthcare providers are negotiable in California.² For example, you can negotiate on:

• the method of payment,
• how to calculate payment depending on your settlement or judgment,
• what happens if you do not get a settlement or judgment, and
• how to resolve disagreements.

If the agreement is particularly one-sided and the provider will not change it, it may be worth your time and effort to find another provider.⁴

When to Get a Lien

As a general rule under state law, you should use a medical lien only:

• when there is no other way to get treatment or
• when you are uninsured or cannot afford your deductibles and co-pays.

One advantage to medical insurance is that in-network providers cannot charge you more than the providers have agreed under their contract with the insurer. If you have a favorable plan, these pre-negotiated payments will often be lower than the amounts you would owe under a lien.

What if I lose my case?

You are liable for the remainder if you agree to a lien and then lose the case or do not recover enough to pay your medical bills.⁵ However, an experienced California injury lawyer can often negotiate a reduction of the lien amount on your behalf.

Most medical professionals would prefer to work out a payment plan than to have to take you to court or arbitration. We are often able to negotiate a reduction so that the doctor is happy but you still has something left over for yourself.

Statute of Limitations

The statute of limitations for enforcing a medical lien in California is four years.⁶ However, many lien agreements specify that you are holding any settlement money in trust for the medical provider if you do not pay: In these cases, there is no statute of limitations, and you can be sued at any time.

In cases of statutory liens, hospitals have only one year to seek payment.⁷ Meanwhile, Medi-Cal has three years to sue the at-fault third party.⁸

Role of Attorneys

Standard lien agreements are drafted so as to favor the doctor or provider – sometimes significantly. Having a lawyer negotiate – or even better, draft – the lien agreement can result in much more favorable terms.

For instance, a lawyer may be able to negotiate a discount in the event:

• you lose the case or
• the settlement is not enough to cover the medical bills.

Note that you typically have only two years after your accident to file a personal injury suit, so be sure to contact an attorney as soon as you can.⁹

In Sum

Here are five things to know about medical liens in California personal injury cases:

1. Providers typically grant a medical lien when you have been in an accident and you do not have healthcare insurance or are otherwise unable to afford medical care.
2. Since personal injury cases are not always successful, not every doctor, chiropractor, and therapist is willing to work on a medical “lien basis” in California.
3. Lien agreements are negotiable binding contracts, and you should have an attorney review the lien before you sign.
4. Medical liens should be avoided unless you have no other way of getting healthcare.
5. If you lose your case or do not recover enough money to pay back the doctor, the doctor can exercise the lien against you.

Additional Reading

For more in-depth information, refer to these scholarly articles:

• A Common Conflict: Common Fund Doctrine and Medical Provider Liens in Tort Settlements – Boston College Law Review.
• Legality and Ethics of Lien Uses in Medicine – Missouri Medicine.
• Preying on Pain: A Legal and Bioethical Analysis of How Hospitals Profit from Placing Hospital Liens on Medicaid Patients’ Accident Recoveries – Wake Forest University.
• Healthcare Liens and the Common Fund Doctrine: The Need for Legislative Action to Prevent Fee Shifting at the Expense of Healthcare Providers – Iowa Law Review.
• “Disingenuous and Somewhat Deplorable” A Look at Hospitals’ Use of Healthcare-Provider Liens to Reap a Windfall – Florida State University Law Review.

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