Hospital Liens

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December 24, 2015
Edward Smith

Hospital Liens


How the Insurance Company in Your Personal Injury Case May Try to Profit From Your Injury – and What You Can Do About It

I’m Ed Smith, a Sacramento Personal Injury LawyerIf you have been injured in a personal injury accident because of the careless actions of another person, you may have needed to obtain medical treatment from a hospital emergency room. If you presented yourself to a California emergency room claiming you were injured by another person and did not have the money to pay for services, the hospital may apply for and perfect a hospital lien. Like other liens, a hospital lien gives the hospital that treated you a right to recover payment for its services to you from funds or property. This can include compensation awards you would receive as part of a personal injury lawsuit or other property or funds you may have. The amount of the lien is the value of the medical services you received less any payments made by you or a third party.

How Insurance Companies Try to Harm Personal Injury Victims

To illustrate how some insurance companies attempt to harm personal injury victims, consider the following example: Roy is injured in a car accident clearly caused by Tom and is airlifted to a local hospital. Roy does not have insurance but the hospital proceeds to treat Roy and files a lien against the compensation award Roy is expecting to receive from Tom (assume it is in the amount of $200,000). The amount of the lien is $50,000. Thus, once Roy is awarded the $200,000 judgment, $50,000 of that would immediately go to the hospital to satisfy the lien.

Tom’s insurance company is looking to retain as much money as possible in this situation. The company contracts with the hospital and purchases the lien from the hospital for $25,000.  Now the insurance company possesses a $50,000 lien for which it only paid $25,000. When Roy is awarded his $200,000 judgment, the insurance company asserts its rights pursuant to the lien and is given $50,000 even though the company only paid $25,000 for the lien. Roy’s compensation award is thereby unnecessarily reduced.

Can I Stop an Insurance Company From Purchasing My Hospital Lien?

 A creative Sacramento Personal Injury attorney can attempt to raise any one of several potential arguments to a court to try and prevent the insurance company from purchasing the hospital lien. Briefly stated, some of the arguments include:

  • The insurance company’s actions improperly and unlawfully interfered with contracts that may exist between the victim and the hospital as well as between the victim and his or her attorney;
  • If purchased, the insurance company’s lien should be secondary to any other lien on the victim’s recovery, including a lien placed by the victim’s attorney for the services rendered by the attorney;
  • There is no reason for the insurance company to purchase the hospital lien other than to attempt to realize a profit. Principles of fairness and equity dictate that the court not permit the purchase of the lien or, alternatively, not permit the insurance company to assert the lien against the victim at face value.

Protecting Your Recovery Through Experienced Legal Representation

I’m Ed Smith, a Sacramento Personal Injury Lawyer since 1982. Call me anytime at 916-921-6400 in Sacramento or 800-404-5400 Elsewhere.

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