This topic is perhaps one of the most confusing for lawyers and clients. I do a very poor job of explaining it to clients (and probably here as well) and there is inevitably confusion. Let’s begin with the basics:
- What is a “lien”? Simply put, a lien is a legal right to payment or reimbursement. There are all types of liens—most people have them on their cars, their homes, etc… In those cases, it is the bank or financing company with a legal interest to be paid concerning that piece of property because they have fronted the money on your behalf (the loan). For most, you can look at your car title (if you own it outright) and you may see a notice of lienholder that shows as satisfied. The lien can be “released” or “satisfied” when the lienholder is paid what they are owed—the money they fronted for you (the loan).
- How do liens work in injury cases? In injury cases, many medical providers are authorized to assert a lien against the proceeds of the recovery for the services they have provided. For example, if someone is hurt in a crash and goes the emergency room, the ER may assert a lien (or valid legal interest) regarding the proceeds from the recovery—the ER will be entitled to some money from the proceeds.
- Who qualifies as a “medical provider”? Under RSMo 430.225, a medical provider is a “healthcare practitioner”. A “healthcare practitioner” is described as a (1) licensed podiatrist, (2) licensed dentist, (3) licensed physical therapist, (4) licensed chiropractor, (5) licensed optometrist and (6) licensed physician or surgeon. Also included are hospitals and clinics so things like x-rays are covered.
- How do they establish their lien? The steps are set out in RSMo 430.240. Here is what a healthcare provider must do to establish their lien:
- Provide written notice they are utilizing the statute; and
- Contain the (1) name of the injured, (2) date of the incident and (3) names of those alleged to responsible for the injuries; and
- Sent via certified mail to those responsible (like the insurance company or person, aka tortfeasor) or the injured party’s lawyer.
- What is the purpose of RSMo 430.230 and its corresponding sections? Section 430.230 is designed with the dual purpose of ensuring that injured patients are promptly treated without consideration of their ability to pay and financially protecting health care providers to enable them to continue to provide care. Kelly v. Marvin’s Midtown Chiropractic, LLC, 351 S.W.3d 833, 835 (Mo.App. W.D.2011). Basically, it guarantees care to the injured whether they can pay for it or not AND allows the healthcare providers to get paid something for their treatment.
Why do healthcare providers assert liens?
First and foremost, it is to get paid for services rendered when someone doesn’t have health insurance. There are also some other reasons–I admit that I had a misunderstanding on this area until an owner of an Urgent Care corrected me. Here is why some healthcare providers assert liens when there is health insurance coverage (this can be done by agreement of the injured or the attorney):
The health insurance carrier of the injured person can and may deny a request for reimbursement by the healthcare provider. For example, say you get hurt and go to the Urgent Care. Urgent Care gets your health insurance info, etc…. They provide services to you and send the bill to your health insurance carrier. Well, your health insurance carrier doesn’t just pay that bill. They perform an investigation on cases they think they can get out of paying. So they send you a questionnaire—with things like “Was this the result of a crash or accident?” They do not want to pay your bills and are looking for any way out of it. If they find out it was a crash and someone else may be responsible, your health insurance company will just refuse to pay the Urgent Care bill. So what is Urgent Care supposed to do?
Or the even better scenario is that all of the above happens but your health insurance carrier does not find out you were in a crash until AFTER they paid your bill to Urgent Care. How does the health insurance carrier get their money back? Simple, they withhold that amount from their next reimbursement check to the Urgent Care. Most of the health insurance companies send regular monthly checks to the healthcare providers. So if they feel they shouldn’t have to pay a claim, they simply withhold it from their next reimbursement check and stick Urgent Care with the deficit. Why doesn’t Urgent Care sue them for withholding the money? Simple—Urgent Care, in order to get patients, agrees to a ridiculously oppressive contract with the huge health insurance carrier wherein Urgent Care gives up its constitutional right to sue the health insurer in order to get gain access to the health insurer’s clients. Urgent Care cannot compete with the health insurance carrier’s demands so ultimately Urgent Care must submit to them. Does any of this make sense? I sure hope so but it is a complicated set of transactions with a whole bunch of loopholes and tricks implemented by the health insurance carrier at the expense of the doctors.
What if the amount of the lien is more than my settlement?
A great question—I’m glad I wrote it. This is the most common question I get from clients after explaining what a lien is. The simple answer is that the statute, RSMo 430.225, gives the answer. The answer is that the ALL the lienholders (whether it is one or one million) will split the net proceeds of the settlement, after attorney’s fees and expenses, 50-50 with the injured party and that will extinguish or satisfy the lien. Here is a small example: You are in a crash. You incur medical bills of $50,000. The defendant only has $50,000 in coverage. Your lawyer settles the case for $50,000 and fronts expenses of $175.00. The medical providers (hospital, doctors, therapists) all assert a valid legal lien for their bills totaling $50,000. Here is how this breaks down:
Fee (1/3): -$16,666.67
Medical Liens -$16,579.16 (was $50,000)
Net to client after all bills paid: $16,579.17
The medical bills are then completely satisfied for the discounted price of $16,579.16 because the healthcare providers perfected their lien. Now, this assumes that you have no health insurance. If you do have health insurance, the scenario will change due to Morgan v. St. Luke’s unless you or your lawyer makes an agreement with the healthcare provider. It may, in fact, be very beneficial to you to agree to a lien arrangement in order to avoid the defense utilizing Deck v. Teasley—topic for another blog.
Morgan v. St. Luke’s Hospital of Kansas City, 403 SW 3d 115
This case was decided by the Missouri Court of Appeals in the Western District in 2013. What the Court found was the following:
If you have health insurance and you go to a healthcare provider after a crash who accepts that health insurance, that healthcare provider CANNOT establish a valid lien under the laws of Missouri. The reasoning was such that a lien cannot exist where there is no debt. There is no debt in these scenarios because the healthcare provider has already entered into a contract with your health insurance to accept payment on your behalf for any treatment provided. So, there is no debt. And you are a beneficiary of that contract—you pay your health insurer to benefit from their agreement with the hospital, healthcare provider, etc…
Make sense? Confused yet?
The last line of RSMo 430.225
This is where almost every client gets confused—using our example above, how can it be that the $50,000 medical bills are totally resolved? A smart, intuitive question. Here is the answer:
“5. Any health care provider electing to receive benefits hereunder releases the claimant from further liability on the cost of the services and treatment provided to that point in time.”
This last line informs the lienholder should they choose to utilize the practices authorized under RSMo 430.225, they have agreed to accept whatever may come from operation of the statute. That number could be zero. The lienholder, by perfecting a lien, is willing to take the risk they may get all their bill paid, none of it paid or only a portion paid. The healthcare provider or lienholder cannot go after the injured party for the difference between their bill and what money was paid under the Missouri Lien Statute. The bill is considered satisfied if the healthcare provider selects this option to obtain payment. It is a risk inherent in the business.
Given the myriad of issues, some we didn’t even touch upon—including use in trial strategy, this blog is to be considered only a primer on using the Missouri Healthcare Lien Statute. The analysis could go for pages and pages when you consider different scenarios and unique fact patterns.
Either way, the Missouri Lien Statute allows for the injured to get the care they need, the doctors to get the money they deserve and the bills to be completely resolved. R