Why did my doctor’s office file a lien against me?

If you don't have health insurance, your two main options for getting the medical treatment you need after a car accident are paying out of pocket or finding a medical provider that treats on a "lien basis." 
Clayton T. Hasbrook

Written by Clayton T. Hasbrook. Last modified on February 19, 2024

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How Treating on a “lien basis” Works

Upon agreeing to treat a patient, a doctor’s office typically files a lien with the county clerk immediately. For those in Oklahoma County, a lien on a case can be searched for here: https://www.okcc.online/. While most medical offices initially file a lien for the anticipated bill, they often submit an updated lien after the treatment concludes.

How a Letter of Protection WorksHow a Letter of Protection Works

The specifics of a letter of protection can vary, but the fundamental terms include:

  1. The medical provider agrees to offer treatment while the case is pending.
  2. The provider will not demand immediate payment for the bills and will refrain from sending the account to collections or affecting the patient’s credit while the letter of protection is in effect.
  3. The patient instructs their lawyer to pay the medical provider directly from the settlement of the personal injury claim.
  4. After receiving the settlement funds, the lawyer agrees to compensate the medical provider directly from his trust account.

It’s worth noting that not all medical providers offer treatment under a letter of protection. Providers catering to car accident victims, such as Accident Care & Treatment and The Broadway Clinic, typically treat on a lien-basis. While some surgeons and MRI facilities may offer this option, it’s less common among general family doctors or primary care physicians. If a patient’s current treating doctors do not provide treatment on a “lien-basis” or accept a letter of protection, their lawyer might direct them to a provider who does. The two aforementioned clinics often receive referrals from numerous emergency rooms.

Understanding how a lien/letter of protection works requires basic knowledge of how settlement funds are managed. Upon settling a case, the lawyer receives a check from the insurance company, typically requiring both the lawyer’s and the patient’s signatures for deposit. This check also includes lienholders, such as an emergency room hospital filing a lien. The check is deposited into the lawyer’s “trust account,” a specific type of bank account regulated by the state bar. After clearing the check and obtaining the patient’s approval on the disbursement of settlement funds, the payments are made from the trust account to:

  1. The attorney (for fees and costs)
  2. The health insurance company (if applicable)
  3. Any medical providers who offered treatment under a letter of protection/lien
  4. The patient (the remaining amount)

A letter of protection ensures the doctor does not have to attempt to collect his bill directly from a patient who cannot afford the upfront payment. Without such an arrangement, a plaintiff might spend all their settlement money, leaving the doctor in a difficult position to collect. With a lien or letter of protection, if the lawyer fails to pay the doctor directly from the settlement, the doctor can sue the lawyer for breach of contract if the bill remains unpaid. Medicare/Medicaid and lien holders also have the right to pursue the liability insurance company that had notice of the lien but failed to include it on the check.

What is the Purpose of an Independent Medical Exam regarding a Filed Lien by a Doctor’s Office?

When a doctor’s office files a lien, a defense medical exam may be conducted to verify the legitimacy of the claimed injuries. These exams aim to impartially assess the patient’s condition and determine the necessity and extent of the medical treatment required. The goal is to safeguard the interests of all parties involved and ensure outcomes are fair and justified in legal proceedings.

What a Letter of Protection Does Not Do

A letter of protection does not absolve the patient of their obligation to pay the medical provider if the lawsuit is lost. The patient is responsible for the medical bills regardless of the lawsuit’s outcome. This means that even if a settlement is reached for a lower amount, the patient may still owe a portion of the medical bills after the lawyer pays the provider from the settlement. The letter of protection is not an agreement for the lawyer to cover the patient’s medical bills from their own funds if the case is lost or the lawyer does not recover enough to cover the bills. The only scenario in which a lawyer might be liable for a patient’s medical bills is if they fail to honor the letter of protection and instead allocate the settlement funds to the patient. However, even in this case, the patient remains liable for the bills, potentially making the lawyer responsible as well.

Negotiating Down Medical Bills Owed Under a Lien or Letter of Protectionsuccessful physical therapy

Medical bills often remain unpaid after a personal injury case is settled. The attorney negotiates these bills to reduce the amount owed post-settlement.

How Lawyers Try to Reduce Medical Bills

Doctors and hospitals generally prefer receiving a negotiated partial payment over waiting for a trial judgment. Lawyers employ several strategies to lower these bills:

  • Direct negotiations with providers for a reduced bill, often aiming for a 10-15% reduction.
  • They are persuading providers to accept a lower payment from the settlement funds.
  • Holding settlement funds in trust until an agreement on a reduced amount is reached.
  • When settlement funds are not enough to cover all liens fully, an “Interpleader” action can be filed to request a judge’s decision on proportional fund distribution.

What is an Interpleader Action?Interpleader when the settlement is less than the liens

An interpleader is a legal procedure initiated when settlement funds are insufficient to satisfy all medical liens and bills fully. For instance:

  • Settlement amount (policy limits): $100,000
  • Total medical bills: $150,000
  • Attorney fees: $30,000

In this example, the $150,000 medical bills cannot be fully paid after deducting the attorney’s $30,000 fee. The attorney files an interpleader action, asking the court to determine how to distribute the remaining $70,000 among the various medical providers. All lienholders and medical providers are notified of the interpleader action.

A hearing is usually held where each provider can present their case for priority in payment. The judge then issues an order for proportional distribution of the $70,000 among the providers. For example, if Provider A’s bills total $50,000 (of the overall $150,000), they might receive 33% of the $70,000, equating to $23,100.

The advantage of an interpleader is that it allows the court to decide on the allocation, shielding the attorney and client from potential liability. However, the process can be time-consuming and incur legal expenses.

Challenges in Reducing Medical Bills

Several obstacles can arise in the process:

  • Providers may refuse to negotiate reductions until after the settlement.
  • Persistent contact may be required to elicit responses from billing departments.
  • Sometimes, only one individual in the billing department has the authority to negotiate bill reductions.
  • Even if a bill is reduced, the patient might still owe the full amount after the settlement is distributed.

Lien Treatment FAQs

What is personal injury protection (PIP) coverage?good physical therapy results

Personal Injury Protection (PIP) coverage is a type of car insurance that covers medical expenses and sometimes lost wages or other damages, regardless of who is at fault in an accident. It’s designed to provide immediate financial support for medical treatment following an automobile accident.

How do I know if my medical provider will treat me on a lien basis?

To determine if your medical provider offers treatment on a lien basis, you should directly inquire with their billing department or administrative staff. Additionally, your personal injury attorney can provide guidance and may recommend medical providers known to accept lien-based treatment for accident victims.

What happens if I lose my lawsuit but have received medical treatment under a letter of protection?

If you lose your lawsuit after receiving medical treatment under a letter of protection, you are still obligated to pay the medical bills. The letter of protection does not absolve you of your financial responsibility; it merely delays payment until the conclusion of your lawsuit.

Can a letter of protection affect my credit score?

While a letter of protection prevents the medical provider from sending your account to collections or negatively impacting your credit score while it’s in effect, failing to fulfill your payment obligations after your case is settled could result in the provider taking actions that may affect your credit score.

What is the difference between a lien and a letter of protection?

A lien is a legal claim filed by a medical provider against a personal injury settlement or verdict to ensure they are paid for their services. A letter of protection is an agreement between the patient, their attorney, and the medical provider that allows the patient to receive treatment with the understanding that the medical bills will be paid from the settlement funds.

How does an interpleader action work?

An interpleader action is a legal process initiated when there are insufficient settlement funds to satisfy all medical liens and bills fully. The attorney files the action, asking the court to decide how to distribute the available funds among the lienholders and medical providers. This process involves a hearing where providers can argue their case, and the judge issues an order for proportional distribution based on the arguments presented.

Can I negotiate my medical bills myself after a personal injury settlement?Payments to the Medical Providers

Yes, you can attempt to negotiate your medical bills yourself after a personal injury settlement.

What should I do if my medical provider refuses to treat me on a lien basis?

If your medical provider refuses to treat you on a lien basis, consult with your personal injury attorney. They can often recommend other medical providers who are willing to offer treatment under a lien or a letter of protection.

Is it common for medical providers to request an independent medical exam when treating on a lien basis?

It’s more common for insurance companies or defense attorneys to request an independent medical exam (IME) to assess the validity of the claimed injuries. However, some medical providers might also request an examination to ensure the treatment provided aligns with the injuries claimed.

How long does settling a personal injury claim involving medical liens take?

The time it takes to settle a personal injury claim involving medical liens can vary widely depending on the complexity of the case, the amount of negotiation required to reduce medical bills, and the legal proceedings involved. It can range from several months to a few years.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Clayton T. Hasbrook who has years of legal experience as a personal injury lawyer. Our last modified date shows when this page was last reviewed.