Why Most Missouri Medical Providers Incorrectly Assert Personal Injury Liens On Car Accident Cases
In an earlier blog post, I discussed the importance of liens in car accident cases.
What is sometimes overlooked are the details in how medical providers must perfect their lien. These minor details can have a big impact on a case. I find that, upon close inspection of the text of the law, many personal injury liens are incorrectly perfected. The result is that many medical providers technically do not have a right to be paid from the settlement as they may have thought.
A provider with an unperfected lien gives the plaintiff’s personal injury lawyer a huge advantage if reductions must be negotiated at the end of a case. When a lienholder is being difficult, I can trump them by showing that their lien is not valid (not that I usually need to do this, but sometimes it is hard to get providers to accept big reductions on those cases that require it).
Let’s break down RSMO 430.240, the Missouri statute outlining how a medical provider must perfect their lien:
No such lien shall be effective…unless a written notice containing:
1.) The name and address of the injured person;
2.) The date of the accident;
3.) The name and location of the hospital;
4.) The name of the person, firms, or corporations alleged to be liable
to the injured party for the injuries received
Now that we know what needs to be on the lien, the statute goes on to describe the method for asserting it:
[Notice] shall be sent by certified mail with receipt requested to:
->the persons, firms, corporations ->If known
->Alleged to be liable to the injury party ->If known
Such hospital shall send by certified mail with return receipt requested a copy of such notice to any insurance carrier, if known, which has insured such person against such liability.”
Big Error 1: Sending Patient’s Lawyer The Lien: Many medical providers send their lien by certified mail to the patient's personal injury lawyer. This does not perfect their interest! RSMO 430.240 clearly states that it shall be sent by certified mail to the person, firm, or corporation alleged to be liable to the injured party. There is no language here that permits the lien to be sent to the plaintiff’s lawyer. If you are a provider, you must send it to the third-party insurance company!
Big Error 2: Failure to Name the At Fault Party On Lien: This error is made by most medical providers in most cases. Most liens I see fail to do this. An oft overlooked requirement of perfecting the lien is writing the at fault party’s information on the lien notice.
Practice Tip: Thankfully, I think this error is one that can be corrected by adjusting the process for when liens are sent out. Most medical providers send their liens out at the beginning of the case. It is often sent out prior to either the patient or the patient’s lawyer knowing the name of the person who caused the accident or what insurance company is handling the claim.
Medical providers should not send their liens out so early. Send them after a month or at least until the plaintiff’s lawyer has had time to obtain the police report. Why? The notice of lien must have the name of the persons or corporation alleged to be liable to the injured person! As seen above, no lien can be valid without this information. Most liens do not have it. They often leave it blank or fail to address it at all.
What about a lien that doesn’t include the at fault party’s name but has the claim number? That’s ok! In Truman Med. Ctr., Inc. V. Am. Standard Ins. Co., 508 S.W.3d 122 (Mo. App. 2017), the court ruled that sending the claim number with the lien was actually better at identifying the at fault party to the insurance company than using the at fault party’s actual name. The court allowed the medical provider to enforce its lien against the insurance company using just the claim number.
Big Error 3: Providers assume that they can sue the plaintiff’s lawyer to collect on an unpaid lien. Did a lawyer not pay you for a patient’s case? If not, you may be considering what options you have available to you. Most providers I talk to assume that the injured party’s attorney should be on the hook. The lien law puts the insurance company on the hook, not the attorney. An attorney for the injured person is “neither liable to the injured person for the injuries sustained, nor personally compensating the client when forwarding settlement payments, [therefore] Section 430.250 is inapplicable to attorneys representing an injured client.” Truman Med. Ctrs., Inc. v. McKay, 505 S.W.3d 799 (Mo. Ct. App. 2016).
Practice Tip: If you are a provider and haven’t been paid out on your lien, contact the patient to see if the case has settled. If the patient does not tell you, and the lawyer you are dealing with won’t reply, call the at fault insurance company. If you have a perfected lien, they should be able to tell you if the case has settled or not. If the case has settled, see if the plaintiff’s lawyer sent the insurance company a “hold harmless” letter. If so, the plaintiff’s lawyer may have assumed a contractual or quasi contractual obligation to pay the medical provider.
A hold harmless letter should only be sent by a plaintiff’s lawyer when they know that their client wishes to pay all liens against the case. Payment of a lien is a client’s decision. If they do not want the lawyer to pay it, the lawyer must hold the disputed lien funds in their trust account until the client and provider resolve their dispute.
For the plaintiff’s lawyer, the downside of sending the hold harmless language is that they may have assumed contractual or quasi-contractual liability to pay the lien. I have not found much caselaw on this subject, but would be interested to see how a court would rule.