It’s important to take proactive steps to ensure your practice’s financial health, starting with a new medical lien and updated procedures.
Many chiropractors, acupuncturists, physical therapists, and other healthcare providers are expanding their medical liens to increase revenue from personal injury cases. However, there’s a lot of confusion about medical liens and responsibilities of the patient, provider, and attorney in a personal injury medical lien situation.
Most office procedures for handling lien agreements are deficient, and the forms being used around the country are all too often poorly worded, missing provisions, or have other contractual defects. These can all cause financial issues for the healthcare provider, as the foundation upon which your lien recovery house is built on more sand than solid rock.
Let’s start with the basics. What is a personal injury or medical lien?
A personal injury or medical lien is an agreement or contract that states terms where a healthcare provider agrees to wait to be paid until after a personal injury patient’s claim or lawsuit is resolved. In this case, the outcome, good or bad, can’t be predetermined so it is the act of waiting to be paid after resolution that is being specified.
A medical lien agreement and proper office lien documentation procedures are essential to protect your business. It can be the deciding factor between great profit or varying loss, often significant. Without these two in order, you may find yourself being forced to accept 10 to 30 cents on the dollar rather than all or most of your bill, because you lacked the clarity, leverage and enforcement of a great lien contractual agreement.
Avoid These Common Mistakes in Your Office Procedures for Medical Liens
The following common mistakes are avoidable and sadly all too familiar missteps we have seen healthcare providers make.
- Treating a patient without getting a lien signed by the patient AND the attorney as it’s critical to binding both of them, including any later substituted attorney or co-counsel brought into a case where that co-counsel will receive settlement monies from the insurer.
- Failing to have the printed names of the patient, the attorney, and the law firm below each signature so they can’t say “that’s not my name!” or you can’t prove an authorized person from the law firm signed it.
- Not keeping a record in your file proving both the attorney (fax confirmation) and the patient (email or certified mail) received the fully signed lien.
The above errors are all too common, but they can be avoided.
Protect Yourself from Patients’ Attorneys
Medical providers are vulnerable to people who are looking for ways to take advantage of them. This includes your patients’ attorneys who may be hiding information from you, misstating the law, or refusing to issue your payment. A properly drafted and properly signed contractual lien agreement can make all the difference here. You want that protection. Dealing with attorneys who fight and argue and seek to get out of things for a living, you need that protection..
Here are four ways you can better protect yourself.
Get the Attorney to Sign the Medical Lien
Protect yourself by getting a signed lien. When a patient’s attorney signs a medical lien, they generally take on legally enforceable fiduciary duties that obligate the attorney to protect your financial interest, keep you informed on the case status, not mislead you or make misrepresentations of law or fact, and to let you know when your payment right is being affected positively or negatively.
A signed lien gives you leverage in the event of a payment dispute. And it’s best to have a statement in the line agreement that literally states the attorney has a fiduciary to you the medical provider, as some courts or state laws may imply that duty but waffle over asserting it on a particular attorney.
You will have situations where your patient changes attorneys, and you need that new attorney to also sign your lien even if signed by the original attorney. If not, a court may not hold the new attorney bound to those same fiduciary duties. Same if the attorney first retained brings in “co-counsel” to take the case to trial if that co-counsel is the law firm to receive settlement monies paid by the at-fault insurance company.
You need the law firm that is to receive case monies in their trust account to be bound. Your leverage for force those signatures is your ability to declare a breach of the lien and require immediate and full payment if they don’t. The best liens have this situation addressed in the actual lien agreement.
Add a Provision to Recover Attorney’s Fees
One thing that is very important to incorporate when creating a medical lien is a provision allowing you to recover your attorney’s fees if there are any violations of the terms of the lien. Most states require an attorney fee entitlement only if you have it contained in a signed written contract. You want that leverage in there, as well as protecting you in the event you have to enforce that agreement to get paid by hiring your own attorney that you may likely have to pay on an hourly basis which makes no practical business sense on smaller liens.
There is another strategic placement decision, with a good strategic reason. Place the fee provision above the patient’s signature line not below it to ensure enforceability against the patient. You want the patient to be bound by the attorney fee provision so that if the lawyer violates it, then the attorney may have caused his own client higher personal financial exposure and in a way that their own client might have a malpractice claim against their own attorney. You want that leverage strategically so the attorney is thinking about that when trying to take advantage of you and the often generous nature of healers. This can create an incentive for lawyers to resolve the lien dispute more in your favor.
Add a Provision to Accrue Interest
Interest is an important provision in medical liens. If you don’t have it, your money will decrease with time.
We suggest you state in the agreement that interest accrues on your billed balance at a 10 percent or the maximum legal rate permitted by law, which varies by state. We also recommend that you have that accrual start from when you finished treatment, otherwise the attorney will argue it doesn’t start until after the lien is breached which could be years down the road. Interest is really your only protection against time. And, you can always waive the right to that entitlement when in lien reduction negotiations, given up interest but still getting your full bill paid. The appearance of a win-win but you may never want to charge interest if pressed so it’s really a home run for you if giving up interest gets that bill paid in full. The grand slam in PI recovery is getting both the billed amount AND the full interest accrual.
Follow Appropriate Procedures
Once the patient and their attorney agree to the lien, you as the medical provider sign it only after they have signed it. Too many times we see liens changed or missing signatures, but an office staffer routinely puts an incomplete document in the patient file and the error isn’t uncovered until after the case has been resolved.
Remember, a properly worded lien sets the rights and expectations of all the parties involved when drafted properly, and you want that clarity to point to down the road if things ever go south, and especially if you have to enforce your contractual rights.
And if an attorney seeks to change your lien, puts a stamp, or slips in an extra page that limits your recovery in a way not supported by your state law, don’t be silent. You will spot those things with you seeing it last, and you can then email or fax them your rejection of those changes.
Remember the fast-food code in Fast Times at Ridgemont High? “No shirt. No shoes. No dice!” We suggest you approach this area the same way, as your best leverage point is the very beginning, and if you don’t force it there you are setting yourself to be used and abused when the time to be paid which could be years down the road.
Your standard procedure should be to:
1) Sign the agreement last.
2) Make sure any substituted attorney or “co-counsel” brought in down the road to try the case also signs that lien.
3) If any changes to the lien, determine if those are acceptable or speak up and put your rejection in writing.
4) Fax the (signed) agreement to the patient’s attorney.
5) Mail a copy to the patient (certified mail).
6) Retain all paperwork and transmission proofs in your files.
Without a solid, properly signed and unmodified medical lien agreement in place, you’re at a grave disadvantage when it’s time for the patient’s attorney or the patient to pay your bill. And when done right, PI is and will be the most profitable segment of your practice.
Get The Best Medical Lien Agreement in the Country from PIMadeEasy.com!
To protect the financial health of your medical practice, we urge you to take action right now. Register at PIMadeEasy.com and download our medical lien agreement which is by far the most comprehensive in the country, and either use that form or modify your existing lien to incorporate important provisions you are missing, all in consultation with a healthcare attorney licensed in your state. Then follow the procedures listed in our portal, some of which are laid out in this article.
Sign up for a free membership today to change the future of your medical practice. You’ll get free access to our Lien Agreements and many more helpful resources like our Patient Case Tracker, Law Firm Results Tracker, and other tips, tools and resources, to help you Do Business Better in PI.
You’ll thank yourself the next time a patient’s attorney tries to cut your bill!
And a personal thank you from all of us at PIMadeeasy.com for being a healer who cares for your patients, provides the records and support for the PI damages claims, and then agrees to what to be paid on top of it. You are true business Heroes. We are here for you. Email Michael Coates, our President & Founder directly, at [email protected], with any comment, feedback or suggestions for articles, about our portal, and how we can help you accelerate your success in PI.
None of the comments or information presented here should be construed as legal or financial advice. Consult with your legal counsel, CPA or other qualified personal or business advisor.