Things to Know About Medical Bills, Expenses and Liens in Personal Injury Cases

Personal injury cases can be extremely challenging to navigate, especially when it comes to managing medical bills and healthcare expenses. When you have been injured, the medical bills accumulate quickly.  Doctors and hospitals often will assert liens on your personal injury case in order to maximize their reimbursable recovery.  If you’ve been injured due to someone else’s negligence in Illinois, the Illinois Health Care Services Lien Act (IHCSLA) was enacted to protect the injured party and the health care industry. This law can significantly impact your personal injury settlement.  So understanding its intricacies is crucial when seeking compensation for your injuries.

What Is a Medical Lien?

Before getting into the specifics of the IHCSLA, it’s essential to understand what a medical lien is and when it is implemented. A medical lien is a legal claim a healthcare provider or facility places on a patient’s personal injury settlement or verdict.

This medical lien allows healthcare providers to seek reimbursement for the medical services they provided to the injured person. With a medical lien in place, the healthcare provider has a stake in the settlement or verdict, such that the provider has a right to be paid directly from the proceeds of that settlement or judgment.

Requirements for a Valid Medical Lien

In Illinois, medical liens are governed by the Illinois Health Care Services Lien Act. Several requirements must be met for a medical lien to be valid and enforceable.

  • Written Notice— The healthcare provider need only send written notice to the injured party and the person believed to be legally liable for the injuries.  The lien must be sent by registered or certified mail or given directly to the patient.
  • Required Information in the Notice — The written notice must contain the address of the patient, date of injury and the name of the party legally liable for the injuries.  This notice can contain the amount of the lien and the services provided for what is being claimed.  However, the statute does not require the amount of the lien to be contained in the notice or document itself.

Limitations of Medical Liens

While medical liens are a legitimate way for healthcare providers to seek payment for their services, there are limitations to how much they can claim from a personal injury settlement or verdict. 

Ideally, there is more than enough insurance available to fully compensate the injured party for all of their injuries and medical bills.  But that is not always the case.  Sometimes, there is not enough liability insurance to even cover the total amount of the medical bills.  This is where the IHCSLA protects injury victims.  The IHCSLA imposes these limitations on the amount the health care industry can recover in order to protect the rights of personal injury victims:

  • Maximum Percentage — Per the statute, the total amount recoverable from all medical lien holders cannot exceed 40% of the injured person’s settlement or verdict. However, the statute differentiates between health care professionals (i.e. doctors) and health care providers (i.e. hospitals, surgery centers, nursing homes, rehabilitation centers).  When the liens exceed 40% of the settlement, then the most the doctors and providers can receive is 20% each.
  • Uninsured or Underinsured Motorist Claims — The medical lien applies to more than just the settlement with the “at fault” party’s insurance company.  If the personal injury claim involves uninsured or underinsured motorist coverage, the healthcare provider’s lien also applies to uninsured and underinsured motorist settlement as well.
  • Reduction for Attorney Fees and Costs — The healthcare provider’s lien must be reduced by a proportionate share of attorney fees and costs incurred in obtaining the settlement or verdict. As a result, by hiring a lawyer, the amount the medical providers must be reimbursed is reduced further.  

Impact on Personal Injury Settlements

Understanding how the Illinois Health Care Services Lien Act affects your personal injury settlement is essential for both injured individuals and their attorneys.

  • Negotiations — When negotiating a settlement with the at-fault party’s insurance company, the existence of medical liens is an important factor that must be considered. The healthcare providers with valid liens expect to be paid from the settlement proceeds.
  • Settlement Amount — The presence of medical liens can reduce the amount of money that ultimately reaches the pocket of the injured person. The settlement amount must satisfy any valid medical liens, attorney fees, and costs before the injured person receives compensation.
  • Other Subrogation Claims – In addition to medical liens, other entities may have a right of reimbursement out of the settlement of your injury case.  For example, some of your medical bills may have been paid by health insurance or your own automobile insurance company.  These entities may have a right of reimbursement as a result. Your attorney can and should negotiate these claims to the fullest extent in order to maximize your recovery.
  • Attorney’s Role — Your personal injury attorney plays a crucial role in managing medical liens. They will work to ensure that the lien amounts are accurate, that the lienholders have followed the proper legal procedures, and that the injured person’s interests are protected.
  • Distribution of Funds — Once your attorney receives the settlement funds, they are deposited in a “Trust Fund Account” maintained by your lawyer.  Once the gross settlement check is deposited, checks are written for attorney’s fees, expenses, medical liens, other subrogation interests, and the client’s net amount.  As a result, as required by the IHCSLA, payment is made directly to the medical lien holders.  Whatever remains after these deductions goes to the injured person.
  • Uninsured or Underinsured Claims — If your personal injury claim involves uninsured or underinsured motorist coverage, the limitations on medical liens (20%) become particularly relevant. This can affect the total amount available for your medical expenses and other damages.

Consult With an Experienced Personal Injury Lawyer

The Illinois Health Care Services Lien Act is a complex statute.  However, the law plays a crucial role in personal injury cases in Illinois. It defines the rules and limitations surrounding medical liens, which significantly impact the outcomes of personal injury settlements.  

Experienced personal injury attorneys can not only help you obtain larger settlements, but they can also help navigate medical liens and subrogation interests in order to maximize your recovery. If you have been injured in Illinois, you should seek a knowledgeable personal injury attorney who can guide you through the process.

The lawyers at Pullano & Siporin have over 50 years of personal injury experience in Chicago, Illinois. We are here to help you navigate the intricacies of medical liens and maximize your recovery.

Contact us today to schedule a free consultation.

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