Should I Use a “Medical Lien” in a California Personal Injury or Accident 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 the patient to receive medical services “on credit” to be repaid once the case is resolved.

Providers typically grant a medical lien in California when a patient has been in an accident:

• Does not have a private health insurance plan, Medicare, Medi-Cal benefits, a Med Pay auto policy or other “no-fault” insurance, or
• Cannot afford to pay the deductible and/or co-pays under his or her insurance policy, or
• Is otherwise unable to pay for needed medical care while waiting for the responsible party to pay up.

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.

Fortunately, we work with a variety of caring healthcare professionals who will often agree to treat our clients on a medical lien after an accident in California.

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:

• 1. How do I find a doctor willing to accept a lien in California?
• 2. How does a medical lien work in California?
• 3. Are agreements with doctors negotiable?
• 4. Is it a good idea to hire a doctor on a lien basis in California?
• 5. Won’t high medical bills get me a better settlement?
• 6. What happens if I lose my case?
• 7. What is the statute of limitation for a medical lien in California?
• 8. Why should I hire a lawyer to negotiate my lien agreement?

You may also wish to review our articles on strict liability, negligence, gross negligence, recklessness and medical bills in California personal injury cases.

1. How do I find a doctor willing to accept a lien in California?

Not all healthcare providers are willing to give medical treatment to patients pursuant to a lien. A provider who accepts a lien is extending the patient credit for medical costs.

Like all parties that provide goods and services on credit, the provider needs to know he or she will be paid back.

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 the injury was the result of someone else’s

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

2. How does a medical lien work in California?

After a doctor or other medical provider agrees to treat an injured party on a lien basis for medical expenses, the provider will have the injured person 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.¹

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 the patient receives settlement money.

3. Are agreements with doctors negotiable?

Yes. Lien agreements with doctors and other healthcare providers are negotiable in California.²

But many doctors will not negotiate their lien rights documents because they don’t understand them and don’t want to pay to have their lawyer review requested changes.

However, the lien agreement is a legally binding contract. If the agreement is particularly one-sided and the provider will not change it, it may be worth the time and effort to find another provider.

4. Is it a good idea to hire a doctor on a lien basis in California?

As a general rule under state law, a California personal injury plaintiff should use a medical lien only

• when there is no other way to get treatment or
• when the plaintiff is uninsured or can’t afford his or her deductibles and co-pays.

One significant advantage to medical insurance is that in-network providers cannot charge the insured more than the providers have agreed under their contract with the insurance company.

If the patient has a favorable plan, these pre-negotiated payments will often be lower than the amounts the patient would owe under a lien.

5. Won’t high medical bills get me a better settlement?

It is a common misconception that an insurer will “punish” a plaintiff who pays less than the full amount for medical care after an accident.

But doctors bill initially at their full rates. And it is these bills that get sent to the other side. Settlement offers and awards are based on the value of the doctor’s services, not the amount the patient pays.

Since the patient is ultimately liable to pay for services received, it only makes sense to have that be at the lowest rate possible.

6. What happens if I lose my case?

If a patient who has agreed to a lien loses the case or does not recover enough to pay his/her medical bills, the patient is liable for the remainder.

The provider will then have all remedies available under California law and/or the terms of the lien agreement to collect on the debt.

However, an experienced California injury lawyer can often negotiate a reduction of the lien amount on the patient’s behalf — even if the lawyer did not negotiate the lien agreement.

Most medical professionals would prefer to work out a payment plan than to have to take their patients to court or arbitration.

We are often able to negotiate a reduction so that the doctor is happy but the patient still has something left over as compensation for pain and suffering.

7. What is the statute of limitation for a medical lien in California?

California’s statute of limitations for medical liens is generally four years after the debtor breaks his/her promise to pay.³

However, many lien agreements specify that the debtor is holding any settlement money in trust for the medical provider if the debtor does not pay: In these cases, there is no statute of limitations, and the debtor can be sued at any time.

8. Why should I hire a lawyer to negotiate my lien agreement?

A medical lien is a legally binding contract. Among the rights it typically grants the provider are:

• The right to be paid before anyone else once the patient is awarded a judgment or settlement;
• The right to recover any excess amounts directly from the patient; and
• The right to have all disputes resolved by arbitration rather than a jury.

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 the plaintiff loses the case or the settlement is not enough to cover the medical bills.

Injured in California? Call us for help…

If you were injured or in an accident in California and you think someone else might be responsible, we invite you to contact us for a free consultation. We can also explain the process of how medical liens get paid from a personal injury settlement.

Call us to discuss your case with an experienced California injury lawyer. Our law firm serves clients throughout the state, from Los Angeles and San Diego to Sacramento and San Francisco.

Also see the Department of Healthcare Services (DHCS) at ca.gov and Medi-Cal beneficiary information.

If you were injured in Nevada, learn How to Get a Medical Lien in a Nevada Injury or Accident Case.

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