Medical Liens: What Are They?

Like most states, Arizona allows healthcare providers to impose liens on injury claims if victims could not pay for their treatment.

When a healthcare provider treated injuries of an accident victim, but has not been compensated in full for the treatment rendered to the patient, a medical lien is used to recover payment for the treatment upon settlement.

Normally, they are only used in cases when a patient lacks a comprehensive health insurance plan and is unable to pay for treatment.

Federal law compels hospitals to provide emergency room care to all who seek it without finding out whether they can pay. This law makes treatment of all emergency room patients a prerequisite to receiving Medicare and Medicaid funding, an essential source of revenue in hospitals.

Qualifying for the Lien

Arizona’s medical liens are somewhat unique in that they apply to a broad range of healthcare providers.

Hospitals, clinics, ambulance services, private practices, state and local governmental entities, if licensed, may all pursue a medical lien.

Essentially, any entity that operates a medical facility, provides healthcare or operates ambulances may be entitled to a lien under this provision.

It is important to note that the law does not allow medical providers to go after their patients if they cannot pay. They can only recover what is owed by the treated patient upon the final settlement of the accident claim.

Scope of the Lien

This specific class of liens applies only to accident claims brought by the person who was injured and treated. As such, wrongful death suits are excluded.

In cases where the other driver is underinsured and uninsured, and/or the victim has health insurance, a medical lien cannot be used. Hence, a patient’s recovery in a suit against his own insurer would not be subject to a lien.

Amount of the Lien

The only guarantee regarding the amount of the medical lien is that it may not exceed the total payout of the patient’s settlement claim.

This applies regardless of the method of recovery, be it a judgment, verdict, or settlement. The lien amount is further limited to the amount of the healthcare provider’s “customary charges.” This means the healthcare provider is not entitled to its full billing charges if it often accepts reduced payments from health care insurance companies. In other words, the medical lien amount would be roughly equivalent to the portion (usually 20-40%) a patient with health insurance coverage.

The amount of the lien may also limited by the common fund doctrine. This means a healthcare provider’s owed balance is reduced by a prorated share of the cost of securing the recovery from the patient.

As of today, Arizona courts are undecided as to how comparative fault affects medical liens.

Comparative fault is the legal concept of apportioning the responsibility for an accident and subsequent injuries by percentage to involved parties, including the injured patient. However, public policy of encouraging settlement of dispute as well as notions of equity most likely weighs in favor of proportionally reducing such liens.

Perfection Requirement

To be enforced, a lien must be verified and contain specific information:

  • The date upon which the services were rendered
  • The amount claimed owed by the injured party
  • An indication that the treatment is ongoing if necessary

Perfection requirements may also vary based on the type of healthcare provider asserting the lien and what county the lien is being recorded in.

Healthcare providers are required to record a lien within thirty days of any service or treatment related to the injuries for which the patient seeks redress.

Such liens are to be recorded in the office of the recorder in the county where the healthcare provider is located. Hospitals, however, have slightly more leeway, instead having thirty days from the date when the patient was released from their care.

Enforcing Healthcare Liens

The most important aspect of enforcing a medical lien is that it’s only enforceable against the party that is liable for the damages. In other words, any legal action cannot be brought against you, the patient, for the amount on the lien. Your credit score would not be impacted either.

The statute of limitations on enforcing a lien is two years from the date of entry of judgment or settlement of the dependent case.

As stated previously, the amount may not exceed the total compensation paid to the victim.

Arizona differs from other states in that it gives priority to hospital creditors over other medical liens. Hospitals with liens will thus take in full payments before ‘inferior’ liens receive any payment.

A Note on Balance Billing

Balance billing is an attempt by healthcare providers to seek additional payment through a lien where a partial payment has already been received via another source.

Federal law forbids balance billing where the payment comes from Medicare or Medicaid, which are de-facto payments in full. This federal law preempts state law whenever state law permits medical service providers to balance the bill of customary charges.

Contact Us For More Information About Medical Liens

In most cases, because you have health insurance as required by current laws, medical liens usually do not enter the picture.

But if you do not have insurance, have too little insurance, or your health insurer refuses to cover your treatment even when medically necessary, you can pursue a medical lien so that your medical provider can get paid once your claim gets settled.

Contact us at Thompson Law Firm for more information about medical liens and how they work.


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