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What is a Medical Lien? - Definition & Requirements

Instructor: Morgan Gannarelli
In this lesson we will discuss what how you many be affected in the event of a medical lien and what exactly a medical lien is. We will also go over the requirements for a medical lien to be placed.

What is a Medical Lien?

Have you ever been in an automobile accident and had to seek medical treatment? Depending on the state you live in and what coverage you have, you may have had a medical lien involved. This is a fairly common occurrence.

Let's say Jim is in an car accident and breaks his arm. He is taken to the emergency department at a local hospital and treated there. He notices that they did not ask him questions about insurance until after the procedures were performed. That's because no one is denied treatment for an emergency here.

After Jim leaves the hospital he has a medical lien for his procedures to repair the injuries from the accident. This means the doctor is awaiting payment for those procedures. Jim hires a lawyer to assist him with his case. The accident was not Jim's fault and now he is awaiting payment from the insurance of the person who struck his vehicle.

Once Jim receives his settlement, he is now required to pay the hospital and doctor for his procedures. Usually the amount of the lawsuit or settlement is negotiated from the cost of the medical bills and damages to the vehicle associated with the accident.

In simple terms, a medical lien is a guarantee to a lien holder (see list of lien holders below) to recover medical costs associated with a personal injury, usually from an automobile accident. In most cases with auto injuries, the doctor that treats you does not get paid until your case has been settled.

Because of this, many doctors will not see you on a medical lien, therefore usually the only place to go is an emergency room. The lien is implemented when a doctor or health care provider has not been paid for their services performed on the injured party.

Types of Lien Holders

Types of lien holders in a personal injury claim may include those from:

  • doctors, hospitals, or any other health care provider
  • Medicaid and Medicare
  • Veterans Administration
  • worker's compensation insurance
  • health insurance companies
  • auto insurance companies

Emergency Departments will see all patients even if on a medical lien
ER

Perfecting a Lien

Upon completion of procedures, referred to as 'perfection', the injured party is now required to settle the debt. This is usually paid from the proceeds of their settlement or lawsuit. Often a written notice of the debt to all parties (the patient, insurance companies, and attorneys) is sent in order to perfect the lien. Each state has different laws on who must receive the notice.

The notice must include some or all of the following information:

  • Acknowledgement of the debt and responsibility for payment by the injured party
  • Agreement for the attorney of the injured party to be instructed to pay the creditor from the proceeds
  • Agreement by the injured party that the debt will be paid from their settlement proceeds
  • The amount of debt and a description of services received

Information Required

For Jim's hospital to have a valid lien under A.R.S. 33-932, it must contain the following information:

  • Name and address of the patient, healthcare provider, and executive officer (you or a senior executive in your organization) or agent of the healthcare provider, if any
  • Dates or range of dates of services received by the patient from the healthcare provider
  • The amount claimed for healthcare

If the lien holder is not a hospital or ambulance company, they must, to the best of your ability, also provide the name and address of all persons, firms or corporations and their insurance carriers claimed by the injured patient to be responsible for the injuries requiring the medical care, treatment and transportation provided.

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