What is a Hospital Lien?

What is a Hospital Lien? In this podcast episode, Josh and Aaron explain everything you need to know about hospital liens and medical billing following a personal injury. Listen here or read the transcript below. FVF’s Summary Judgment podcast is available wherever you listen to podcasts including Apple Podcasts, Spotify, iHeart Radio, and more.

Intro: Thank you for tuning into Summary Judgment where Austin personal injury attorneys, Josh Fogelman and Aaron Von Flatern of FVF law discuss the ins, outs and in-betweens of personal injury cases

Aaron Von Flatern: Welcome back to summary judgment. I’m Aaron Von Flatern and I’m here again with my law partner, Josh Fogelman, we are the co-founders of FVF law, a law firm in Austin that’s dedicated to changing the way people perceive personal injury law, especially in Central Texas. And Josh and I founded the law firm in 2014, have grown it to roughly 30 people now, and it’s going strong in part because everyone here believes in the mission of helping people understand that they have options, that they don’t need to call some sleazy lawyer, but they also don’t need to go it alone with an insurance company, just to be able to figure out what their best options are. So we’re a law firm dedicated to people calling us and just finding out what they need to know, and if we can help them as a client, great, if not we’ll send them on their way. Today, we have a cool topic, we are talking about something that most people haven’t heard of, but if you have heard of it, it’s pretty scary. It’s called a hospital lien, and it happens after you’ve been in like an emergency situation, in a car accident, an industrial accident.

You go to the hospital, they ask you, Was this the result of an accident? And the next thing you know, you’re getting this thing in the mail with the state seal on it, it says it’s been filed with the County, and it’s called a hospital lien. So let’s just jump off there with that sort of fearful intro, Josh, what is a hospital lien?

Josh Fogelman: Yeah, and Aaron, you hit the nail on the head when you suggested that the hospitals are asking salient questions about how an injury occurred because basically the Texas law protects hospitals who provide services to people who were harmed by the carelessness of somebody else by giving them a lien over the injured person’s right to recover money from the person that harmed them. And a good way to think about practically what a hospital lien is, because it can be really confusing if you’re not familiar with how liens work, think about it, if you were to borrow money from the bank to buy a house. The bank has a lien on your house, where if you don’t pay the bank back for the house, they can go and foreclose on your property and take it.

A hospital lien in is similar to that in that the law does not allow you to settle or resolve your personal injury case if the hospital or an emergency medical services provider or emergency doctors in some instances, have properly secured a lien against your case in the way that the law allows them to do.

Aaron Von Flatern: Right, so all that’s great, but it sounds like my credit’s going to be affected, maybe it is like a house lien, is it going to appear when the bank pulls my credit, is it something that would encumber my house, lien is not a good word for most people, right?

Josh Fogelman: Yeah, it’s definitely scary. The law mandates the hospital who wishes to secure a lien actually provide notice of the lien to the person who was hurt to their patient who they treated, and it can be scary to get that letter and open it up and say, “Oh my God, what is this? I didn’t sign up for anything, I didn’t borrow any money.” But the law also mandates sort of the extent of the lien and the reality of it is, it’s not borrowing money from the bank, and so unlike a loan or credit card debt or something like that, the impacts of the lien aren’t that far reaching. The law is pretty clear about how far the lien will go, and it really only extends to a person’s claim for personal injury damages against the party that harmed them. And one of the things Aaron that we have to often analyze when we’re evaluating a lien, we get a call and people say, “You know, I’ve got this big ol’ hospital bill, and a person hit me and they don’t have any insurance.” Or, “I found out that they have very limited insurance, my bill is so huge.” We can talk to them about, Well, let’s talk about your own insurance coverages, right?

Because a lot of people out there on the roads have what we call uninsured or under-insured motorist coverage that can protect them on their own auto insurance policy that protects them from being harmed by someone who doesn’t have a whole lot of their own auto insurance or who might not have any auto insurance at all. And one of the ways that Texas law can be beneficial to people who have done a good job of protecting themselves with uninsured or under-insured motorist coverage is by limiting the extent and the effectiveness of a hospital lien and not extending that lien to the insurance that a person who’s been harmed has procured for themselves. So that hospital lien, not only is it not going to impact your real property, not only is it not going to impact your credit, but it’s also not going to dip into any insurance that you have purchased for yourself to protect you from being harmed in that kind of a situation.

Aaron Von Flatern: Yeah, there’s so much to unpackage there. One of the things that you mentioned was you could get this really big bill, and we all know that sometimes the health insurance company is going to come down and cut that bill way down or adjust it way down, so can we start with what are someone’s rights in just reducing the amount of that lien, right off the bat if they have health insurance.

Josh Fogelman: Yeah, yeah, absolutely. And I’ll tell you this, just in practicing personal injury law for the past 12 years, I have learned that hospitals are very keen billing experts, they do a really good job of identifying opportunities where they might be able to inflate their bill or recover more money than they probably realistically should. So to kind of answer that question, let’s take a step back and just give a brief overview about how bills work. All medical providers have kind of a charge master, it’s their billing practices, and it’s the retail price tag for the charges that they… For the services that they provide. That includes hospitals, okay?

But most major healthcare providers and most hospitals have contracts with health insurance companies where in exchange for a guarantee of prompt payment from the health insurance company and also the benefit of being able to tap into that health insurance companies network of clients and insureds, the hospital will agree to dramatically reduce that retail price tag and discount that retail price tag for people who have that health insurance, what I have noticed, what we see over and over and over again though, is hospitals recognize an opportunity when they see somebody who’s come in and they’ve been hurt, and they know that it’s a car wreck, or they know that it’s some kind of an accident where the person they’re treating has a claim for damages against somebody else, and oftentimes they’ll actually convince the patient not to use their health insurance, or they’ll get the patient to sign something during intake or discharge where they’re agreeing not to use their health insurance because the hospital knows that if they use the patient’s health insurance, they’re going to end up having to take a big old discount on that bill, and they don’t want to do it because they know that they’re protected by the hospital lien.

Aaron Von Flatern: A lot of times, they’d rather get paid out of the settlement because who knows it might have been a really big rich Corporation that mowed somebody down and they’ve got deep pockets, and in the grand scheme of things paying off that hospital bill is probably small potatoes in that case, and so the hospital’s thinking, “Hey, we’d like to get dollar for dollar, our sticker price if we can, out of this corporation is maybe scared of this case, rather than go into this health insurance company where we already agreed on all these reasonable rates.” And so I think you really nailed it with describing their finely tuned algorithms inside the hospital to figure out when they want to put pressure on the patient to go get it out of the maybe what we call the tort fees or the at-fault party, and when they’re going to go to the health insurance and bottom line, the control comes back to the patient. You can use Texas law to your advantage, Texas law gives you a lot of rights here and you can send the proper letters, of course, we do that as a law firm for you to make sure that the hospital is forced to push that bill to health insurance if that’s the right decision for your case, and that’s a whole another discussion in terms of strategy on a case and timing. But that is a key factor.

Now, one of the things that I don’t want to lose side up here is that a hospital lien is a basically, a public state is on file, and it says, “We the hospital have a right to be paid out of a settlement.” It doesn’t mean anything more than that. And obviously they do have a right, that was already the case. And so the lien document is not anything to really be afraid of, but a lot of our clients get confused because they’re also getting billed by the emergency room physicians, for example, is a separate billing group. And sometimes it has the same name as the hospital almost. So it’s very confusing as to what that means, they’re also sometimes getting billed by the radiology department or maybe the pathology department, the lab work on the blood. So how does all that play into the hospital lien question? And how do we address that, Josh?

Josh Fogelman: Yeah, so one of the biggest concerns that our clients usually have, and one of the biggest issues that we have to help them with is they come to us and they’ve gotten some medical bills in the mail and they’re not quite sure what to make of them because often times their cryptic in nature as far as who they’re from, and what many people don’t understand is, when you go to the hospital and receive any degree of medical care, if you’re having any imaging work done, X-ray, CT scans, MRIs, if you have to undergo any sort of a surgery, even if you just go for a checkup and get treated by an emergency room doctor, you’re going to get multiple bills out of that transaction. You’ve got the facility itself, you’ve got the emergency room doctor who’s usually not an employee of the hospital, you’ve got anesthesiologists who are not employees of the hospital, or of the emergency room doctor, you’ve got radiology departments who are totally independent entities, so you’ll start seeing just a slew of bills and it can be really hard to make out what to do with it.

And so kind of going back to your point in your last question to me, one of the things that we help our clients work with is well, does it make sense for us to really force all of these bills through your health insurance company, because in Texas, you have the right to do that, like you said earlier. And using your health insurance in some situations can be beneficial because it can stave off creditors, it can reduce those bills and make them more manageable, it can buy you just time in general to pay off some of those debts. But on the other hand, in some circumstances, using your health insurance will also put you in a situation where now you’ve got copays and deductibles that you have to be responsible for, that you might have otherwise been able to defer until resolution of your case by working with a hospital who had a lien. So we have to work with each client individually to figure out what’s the best circumstance for their particular case, understanding what their health insurance situation, what their financial situation looks like, you have to learn about the person who hit them and hurt them and figure out what auto liability insurance looks like, our own clients, uninsured, underinsured motorist coverage looks like, there’re just a lot of factors. And it can become really complicated.

Aaron Von Flatern: Yeah, we haven’t even mentioned the no-fault benefits that a lot of clients have on their own policy in the form of what’s called Personal Injury Protection Coverage, which is something that you want to strategically deploy in these cases, because you have some billers that are going to be very antagonistic and very quick to try to harm your credit and other billers that are totally willing to wait for the outcome of the case, and so you don’t want the biller who’s willing to wait to gobble up all of what we call the PIP money that you’ve paid for it, you paid premiums for, and then leave you in a bad situation where you’ve got to be making payment arrangements to avoid your credit getting hurt. The bottom line from all this in my opinion is, this is why, if anyone in my family gets in a car accident, they ask me, “Is this serious enough for me to call a lawyer?” — “Yes.”

There are so many decisions to make. There’s a decision tree that is unfolding before the minute a car crash happens. And the insurance companies are waiting for you to make some of these wrong decisions so that they can take advantage of, for example, those adjustments that your health insurance company has negotiated with the hospital, you pay premiums to that health insurance company to enjoy the benefits of those adjustments. And the at-fault insurance company also would like to enjoy the benefits of those adjustments without having to pay any of it. In other words, the negligent party is getting some benefits that you’ve paid for, and that’s not always the right choice. Okay, so it kind of depends on how big the policy is and how serious your injuries are, and you may have at some point to make some really serious decisions about which billers you’re going to take care of. Let’s say you’ve been catastrophically brain injured, and you can’t employ yourself and you can’t parent. You can’t do the exercises, all the stuff you’d like to do, and you certainly can’t pay every single medical bill you receive in that case, maybe there’s a million dollars in billing.

And there’s just not enough insurance coverage because you just don’t have that insurance policy and the other party doesn’t either. In those cases, you’re going to have to make some strategic decisions. And the bottom line is, there is no harm in calling the law firm, as long as you kind of check their credentials ahead of time, obviously if you’re local call FVF, but otherwise just get informed before you start going into the deep end on this stuff, because it gets thick really fast.

Josh Fogelman: Yeah. And Aaron, are there things that we can do as a law firm when we see a big inflated hospital bill and a client who’s being pressured by a hospital to pay this huge bill? Are there some things that you’ve been able to do successfully in the past to help actually offset some of that debt for the client?

Aaron Von Flatern: Yeah, there’s kind of a couple of things that are the main things, and one of them is we just lean on the structures that we’ve already built as a law firm, and some of the relationships we have with some of these hospitals and try to figure out where the pain point is and see if they’re willing to come to a reasonable term with us, and then if that doesn’t work, unfortunately, we may have to file a lawsuit on our clients behalf. I’ve done that before with a hospital that was double billing. They had been paid already, but they realized that they could take advantage of a loophole and they send another bill to the client for their full sticker price, and it was abusive. And we pointed that out, and they immediately backed down. There’s a lot of confusion. I think, even at the hospital level when these things get deep, because a lot of times they don’t know the layers of insurance coverage and they don’t know say what our clients resources are or the at-fault party’s resources are. And so sometimes it just takes a little bit of education to get everybody on the same page.

Josh Fogelman: Yeah, and I’ll tell you too, neither an auto insurance company who you’re trying to collect money from or the hospital itself are going to do a good job of explaining to you some of the safeguards that the statute, the hospital lien statute itself has in place for preventing abusive Hospital billing practices and making sure that the hospital doesn’t actually gobble up the entirety of a settlement. Just a brief example, the statute doesn’t allow hospitals to secure liens for unreasonable amounts, and so oftentimes we’re having a fight about what is reasonable and what’s not reasonable, and then there’s a very expressed protection in the statute that doesn’t allow the hospital to recover more than 50% of what you end up securing from the at-fault driver or the at-fault party’s insurance company.

So kind of like you said Aaron, bottom line, this is a very complicated area of law that can have a huge impact on a client’s net bottom line and the time to start making decisions that can really have a big impact on the outcome of a case is basically immediately after the incident occurs, immediately after you’ve received the hospital care. Health insurance companies have timely filing deadlines, and if you miss them, you’ve lost a huge opportunity there, and just kind of staying out ahead of the hospital lien is super important.

Aaron Von Flatern: This is a case where, it’s a classic case of knowledge plus advocacy are needed to address the myriad problems here and the myriad questions. So bottom line, get informed, call a lawyer, listen to this podcast, but don’t just trust the insurance companies to steer you right on this one, because at the end of the day, the adjuster’s got 100 files and really is more interested in getting home and eating dinner at the end of the day than what’s going to happen to you and your family. So please give us a call. And this has been Summary Judgement.