How do medical liens work?
Updated: Feb 9, 2021
Wimpy Wellington’s famous catch line “I’ll gladly pay you Tuesday for a hamburger today” perfectly illustrates how lawyers and medical providers are paid in car accident settlements. Injury victims can expect to get medical and legal services now and pay for them later. The contingency fee contract used by attorneys allows them to recover money after the case is settled without the client putting the costs up front. Similarly, many of the medical providers used by injury victims do not require payment up front or in installments as treatment is provided. They are typically paid when the case settles.
The tool that medical providers use to enforce their right to payment after a settlement is called a “lien.” A lien grants whomever has asserted it the right to payment after the case has settled. Before a lien is valid, it must comply with Missouri law as set out in RSMO 430.240. Medical providers must provide written notice of their lien to the insurance company responsible for causing the injuries or their injured persons attorney. Their lien must include the name and address of the injured person, the date of the accident, and the name and location of the medical provider. The amount the medical provider is owed does not need to be on the notice of lien, as often this notice is sent at the beginning of treatment prior to the amount owed being finalized. The notice of lien must be sent certified mail with return receipt requested to both the insurance company and attorney for the injured.
Once the notice of lien is given, the at fault party’s insurance company and injury victim’s attorney must accommodate payment of that bill in any final settlement. Failure to do so can result in the at fault party’s insurance company, injury victim’s attorney, and injured party all being on the hook to the provider.
The main statutory authority for medical lien in car accident cases can be found in RSMO 430.225. This provides that lienholders can recover 50% of the settlement remaining after attorney’s fees and expenses under this statute. If there are multiple lienholders, each must share pro rata in the amount available to all providers. This statute also specifically grants chiropractors the same rights as other “health practitioners” under the law. Among these rights are conferring the lien’s legitimacy against medical benefits paid to public assistance recipients and, most importantly, provides liability for failure to pay by referencing RSMO 430.250.