What Is a Hospital Lien?

Personal injury is a sector of law that allows injured victims to sue responsible parties for compensation. If you get hurt because of someone else’s negligence and have suffered legal damages due to the harm, you may have grounds to file a personal injury claim.

For example, if a driver runs a red light and hits your car in the intersection, you could sue them for compensation to help cover your medical bills or lost income due to missed work.

The extent of the harm suffered determines the amount of a settlement in a personal injury case, the insurance policies involved, the cost of legal damages, and personal injury lawyer fees. However, hospital liens can also impact how much money you receive in a personal injury settlement.

A hospital lien is a claim on compensation involved in a personal injury case.

When a hospital or medical provider treats a victim and medical bills remain unpaid, they can secure a portion of the settlement package to cover those costs. Hospital liens allow doctors and emergency medical services to recover unpaid medical expenses from injured claimants in personal injury cases.

How Does a Hospital Lien Work?

This mechanism is involved in many personal injury lawsuits. Generally, if a person has health insurance, the insurance company will pay all the relevant medical bills.

However, if the person does not have insurance or their coverage cannot cover all the bills for their treatment, then a hospital lien may be the solution for emergency hospital care services to recoup unpaid bills. Here is how a lien works.

The Purpose of a Hospital Lien

Medical services require payment. Unpaid hospital bills burden hospital services and other providers because they cannot keep up with the demands of all their patients. A hospital lien can protect the clinic’s bottom line if an injured person’s health insurance company cannot cover all the expenses incurred for their treatment.

A hospital lien can only be filed if the person involved in a personal injury claim receives emergency medical services. The compensation for that treatment will only be awarded to the medical practice if the case is successful and health insurance is insufficient to cover the payments.

The Legal Framework Behind Hospital Liens

Legally, healthcare facilities have the right to place hospital liens on patients for emergency medical services provided. These laws specify eligible providers, covered injury types, notice requirements, filing time limits, and maximum recoverable amounts.

A hospital lien on an individual’s settlement gives them the right to recover compensation for emergency care before the person receives money from their settlement. However, a hospital lien is disregarded if the plaintiff has enough accepted insurance benefits to cover all payments.

Who Can File a Hospital Lien?

If you have suffered injuries due to someone else’s negligence, you must understand what parties can place hospital liens on your settlement to ensure you are not taken advantage of.

Medical Providers and Healthcare Institutions

Any entity that provides medical care related to your injury can file a lien on your insurance settlement. If your injury was severe and you went to an emergency medical services provider, such as a hospital, this entity could place a hospital lien on your settlement.

You may receive ongoing treatment, such as physical therapy or medication, during your medical recovery. The practices at which you are treated can also file a hospital lien. Lastly, other healthcare providers, such as physicians, can pursue hospital liens if you cannot pay all the bills associated with your medical care.

Only certain entities have a claim on your settlement, so consult a lawyer if you need clarification on the legality of a lien in your personal injury lawsuit.

Exceptions to Who Can File a Lien

Not all healthcare services can file hospital liens in every case. Nationwide, a hospital lien cannot be filed if there is an insurance company that can be billed. As long as the patient’s health insurance company covers the bills, there is no need for a hospital lien.

Some states place a statute of limitations on the provider’s services. If the clinic does not file the lien within a specific timeframe, it cannot claim compensation from a settlement. This timeline could be as short as ten days or as long as three months.

Some states also enforce limits on the amount of a hospital lien, where the medical care clinic could only be eligible for a lien on the costs of the early days of treatment. For example, under Texas hospital lien law, a hospital lien can only cover the first 100 days of hospitalization.

In some cases, there is a percentage limit for the costs of medical services that a hospital or other healthcare provider can reclaim. Many states limit the cost of a lien to the same settlement percentage as reasonable attorney’s fees. In those states, if your lawyer has a 30% contingency fee for the settlement, the lien amount should not exceed 30% of the total settlement.

How a Hospital Lien Affects Your Settlement

Whether you received immediate medical care for your injuries or ongoing treatment, a lien filed on your settlement will affect the outcome of your personal injury claim. It is crucial to understand how hospital lien laws may change the compensation you receive if your claim is successful.

Impact on Compensation

Medical expenses are a primary category of legal damages in injury cases, so a hospital lien is standard in most settlements. Once properly filed, hospital liens give healthcare providers a legal claim to a portion of any personal injury settlement or judgment, sometimes taking priority over other creditors.

Before you receive a single dollar from the court award, the agreed amount in the hospital lien must be addressed if your health insurance company does not cover all the expenses owed. This agreement means your compensation will be diminished from the total settlement to cover the hospital bills or other treatment costs.

You can pursue other legal damages to increase your settlement. Lost income, future medical costs, emotional distress, physical pain and suffering, and loss of enjoyment of life can all increase compensation to limit the impact of a hospital lien on your settlement.

A personal injury lawyer can work with you to assess damages and pursue a higher settlement so you walk away with more money, even after the lien payments are completed.

Negotiating Medical Liens

If your health insurance does not cover all the bills for the admitting hospital and the practice that handled ongoing care, these clinics are entitled to that amount.

However, these entities may attempt to claim more compensation than they are owed. Sometimes, lien amounts can be negotiated so the hospital accepts a smaller payout, and the victim can receive a more significant percentage of the settlement.

With a personal injury lawyer handling these negotiations, you will stand a better chance of earning favorable terms. Experienced attorneys know how to negotiate these hospital charges to ensure accident victims earn more compensation from settlements.

If you are the injured party in a lawsuit and there is a hospital filing a lien on your settlement, contact an attorney who can reduce the lien amount so you will walk away with more money in your pocket.

How to Handle a Hospital Lien

High medical debts can be frustrating. An accident victim who receives hospital services may end up owing substantial medical payments. These amounts are either paid by their own insurance companies or the defendants in their cases.

However, the hospital lien simply adds a step to the process, taking the money earned from the settlement and allocating it to cover the medical expenses that the injured individual incurred. If an emergency medical services lien is filed with your lawsuit, here is what you should do.

Notifying All Parties

There are two types of hospital liens: hidden and explicit. Injured victims often do not receive a hospital lien notice, so they are unaware that part of their settlement will go toward paying medical bills. This reason is why explicit liens are preferable.

All relevant parties should be aware of the lien and have a signed agreement regarding the hospital bill to be paid when the personal injury settlement is awarded. The agreed contract also specifically details what bills the hospital lien covers.

If a hospital lien is involved in your case, ensure all insurance providers, medical clinics, and lawyers know about it. Undisclosed liens could undermine your case or limit your lawyer’s negotiating power.

Settling the Lien After a Case

A lien is usually settled after the personal injury case is resolved. This procedure is primarily the case because the injured victim could not afford the medical payments at the time of their treatment. They can only afford those bills by winning a sufficient settlement from the defendant and their insurance company.

Your case may be settled before the lien is paid in two ways. First, it could be settled through negotiations, which is the case for most injury lawsuits. However, a stubborn defendant could push for a trial proceeding, extending the process and requiring a court judgment.

In either case, the hospital lien will be paid first out of the settlement agreement, so the plaintiff will only receive whatever money is left after attorney fees and the lien payment.

Secure Expert Legal Representation

If you’ve been injured in an accident due to someone else’s negligence, received emergency or ongoing medical treatment, and filed a claim against the at-fault party for damages, your settlement may be subject to hospital liens.

This lien gives the medical provider a claim on compensation from your settlement should your injury case succeed. As a result, any unpaid medical expenses for your treatment that were not covered by insurance could be owed to the providers before receiving any money yourself. This process is infinitely complex, so navigating a hospital lien situation should not be done alone.

Rosenfeld Injury Lawyers has represented many clients who were facing steep costs from hospital liens. You may want to determine whether the lien amount is negotiable or even legal. An attorney from our team can assess your case, help you pursue a larger settlement, and negotiate for a lower medical services lien on the settlement.

Contact our Chicago personal injury attorneys today at 888-424-5757 or via our online form for your free consultation.

All content undergoes thorough legal review by experienced attorneys, including Jonathan Rosenfeld. With 25 years of experience in personal injury law and over 100 years of combined legal expertise within our team, we ensure that every article is legally accurate, compliant, and reflects current legal standards.