- The Gerring Law Firm
Advice for lienholders when negotiating final lien payment
I have worked with many chiropractors over the years in helping to resolve my client’s personal injury claims. They commonly confide in me their frustration about law firms that try to get a major reduction of their bill without providing any explanation. Asking a medical provider to accept a 50% of their bill without any giving any more details is a bad business practice.
Most medical providers understand that not every case will result in payment in full. Based on my experience, I have found most medical providers, including major hospitals, will accept a 15-25% reduction of their bill with little to no pushback. As any lawyer or medical provider who has settled a lot of personal injury cases can tell you, it is difficult to always get paid in full. This usually requires the settlement to be worth three times the special damages, something lawyers shoot for on every case, but sometimes just doesn’t happen. Most professionals in the personal injury industry are willing to take a small reduction and move on to the next.
Many chiropractors complain to me about lawyers who take a long time to settle easy cases and then grossly underpay lienholders. Some lawyers even take it upon themselves to determine what the regional “market rate” is for medical services. This is a task for which a personal injury lawyer is ill suited. Personal injury lawyers are not experts in medical coding or knowing what the market rates are for medical services. Insurance companies spend hundreds of thousands of dollars on algorithms to piece this data together. An attorney simply does not have enough time or data to possibly know this. While they may have a wealth of experience that directs their judgment, a lawyer shouldn’t reduce a bill if it is reasonable.
If the proposed reduction is too much to swallow, I suggest the medical provider use the follow strategies to make sure their lien payment is maximized. If the lawyer sends you a check for an overly reduced amount, do not cash it. You may be waiving your right to be paid the remainder of the settlement by cashing a partial payment. You should be especially vigilant for checks marked “full and final lien settlement” that are sent along with a letter stating that this check will cover the full disputed amount. Under Missouri law (RSMO 400.3-311) this could potentially amount to an accord and satisfaction. By cashing this check, you could potentially be accepting a new contract, one where you accepted the partial payment as full payment. The act of depositing the check might legally waive your right to any further payment.
I would advise being as patient as possible.
I suggest to all medical providers that they ask the lawyer for an itemized distribution of the settlement along with a list of all medical liens on the case and the original billed amounts. Once this information is provided, run the numbers yourself to make sure that the lawyer got the math right. Missouri law states that medical lienholders are to be paid ½ the amount remaining after attorney’s fees and expenses. See RSMO 430.225. The only way to know if you are getting a fair deal is to know this information.
The amount a medical lienholder is entitled to is calculated like this:
Amount of Medical Lienholder’s Bill x ½ Amount Remaining After
Overall Total of Liens On Case Attorney’s Fees and Expenses
Some attorneys will not respond to a request for settlement distribution or will be evasive. I have heard some say that those details are “confidential.” I am not aware of any law that would prevent a lawyer from releasing the settlement information to a medical provider if the names of the other facilities with liens are redacted. In fact, a lawyer who will not provide this to you may be hiding something. The worst-case scenario is that they fudged the numbers to get the case to settle.
A good way to respond to the “its confidential” stonewall is to send the attorney a HIPAA form signed by your patient with a request for release of the settlement details. After you send this, call the patient directly and tell them you are seeking this information to ensure you are properly paid for your work. Most of the time they do not mind providing it for you but do not be super aggressive or act like you have a Constitutional right to this information. This should be done with tact as it may come across as greedy or be met with resistance if you are too aggressive.
If all else fails, the best way to make sure you are properly compensated is to file a lawsuit to enforce your lien. RSMO 430.250 provides that lienholders have one year from the date of becoming aware of the settlement to file a lawsuit to enforce their lien. To paraphrase, this statute says that after receiving notice of lien, any person making payment to claimant or their attorneys for injury sustained, without paying hospital full amount of lien or 50% of the settlement remaining after attorney’s fees, shall have a period of one year after settlement made known to hospital to file suit to enforce their lien.
An honest lawyer will have no problem going to court over this. A dishonest one probably won’t want their settlement distribution analyzed and potentially picked apart by a court.
I have yet to have a medical provider put me to proof over a settlement distribution. I know that it will eventually happen. When it does, I will have no problem turning all the disputed settlement funds to the court and letting the judge decide.
The worst thing, from an attorney’s point of view, that can happen when a medical provider feels cheated is for the medical provider to immediately demand that the attorney reduce their fees. When this happens, it is a signal to the attorney that the medical provider is about to put up a fight over the proposed amount paid. If you value getting referrals from that lawyer or think you may work with them again, I would steer clear of this strategy even though you think it may be fair.
I frequently reduce my fees if the case warrants it, but my attorney’s fees are never subject to a negotiation with a medical provider. My attorney’s fees are based on a contract between me and the client. If the client wants me to take a reduction at the end of the case, I do not mind having that conversation with them, but it is not something I will barter with a medical provider over. What’s more, the medical provider will not win in court with this argument, so it is best to not to tread down that path.
Medical providers that work on a lien basis assume the risk that the case will not pay out in full at the onset of treatment. Realize that you as the medical provider took this risk on when treatment of the patient began. The attorney also took on certain risks at the onset of the case. Although I will not negotiate with a medical provider over my attorney’s fees, I will reduce them on my own accord if I feel that it is necessary to put my client in the best position. Every dollar of my attorney’s fees reduction should go to my client, not a medical provider.