Medical Liens Explained

Many medical providers may put a lien on the file of a personal injury case in Massachusetts, Rhode Island and many other states, in order to secure their right to re-payment. A medical provider can put a lien on a case by simply sending a binding agreement signed by the patient/client stating there is a lien on the case.

Certain health insurance companies have liens for repayment on the medical bills they paid, as well. State and federal health insurance, such as Medicaid and Medicare, have automatic liens required by law. That means the state health insurance does not have to notify the client nor the law firm that there is a lien on the file. The state health insurance absolutely has to be paid back a portion of the amount of the medical bills that were paid by the health insurance. Private health insurance companies can only have liens on the file to be paid back when the send a letter to the law firm and client notifying that there is a lien on the case.

What if there is a disagreement about the amount owed?

Sometimes there are conflicts between what the medical provider states is the amount owed and what the client believes is the correct amount owed. This becomes a problem for an attorney because the attorney’s office is obligated to pay the provider who has a lien, but the attorney also has an obligation to the client to do what the client decides regarding his or her settlement money.

According to Rule 1.15 of the Rhode Island Rules of Professional Conduct:

(a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained in the state where the lawyer’s office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of seven years after termination of the representation.

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(d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

(e) When in the course of representation a lawyer is in possession of property in which two or more persons (one of who may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute.

Recent Rhode Island Medical Case

The Rhode Island Supreme Court Ethics Advisory Panel recently addressed this issue. The inquiring attorney settled the case for his client for the policy limits of $25,000. The client had medical bills in the amount of approximately $22,000. The attorney requested a reduction from a medical provider who had a lien on the file. The provider presented bills in excess of $10,000. The attorney was able to get the provider to agree to reduce the bill to $9,000. The client did not want to pay the provider in question the $9,000. The Ethics Advisory Panel stated its opinion that,

Pursuant to Rule 1.15, the inquiring attorney has an obligation to notify Provider that the inquiring attorney is in possession of the client’s settlement funds. If the client consents, the inquiring attorney may pay Provider an agreed upon amount. Absent the client’s consent to payment, the inquiring Attorney has an obligation to hold the outstanding amounts due Provider until resolution. If no resolution results, the inquiring attorney may pay the disputed amounts into the court registry and may commence a lawsuit to seek judicial determination.

It is clear from the decision that an attorney is not allowed to either just pay the provider the amount requested or give the money directly to the client and not pay the bill. The money must be delivered to the court to be held until a judge determines who and how much the parties what should be obtaining regarding the disputed amount.

Talk to Rob Levine & Associates about Your Case Today

At Rob Levine & Associates, we are acutely aware of any liens on a client’s file and we make sure the client is aware of the lien, as well. We have a great rapport with providers in order to obtain reductions for clients so that he or she may get more money in their pocket at the end. If there is ever a dispute, though, the attorneys will make sure to resolve the issue sufficiently and effectively on a client’s behalf. Call us to set up a consultation about your case: 800-LAW-1222.