How Does a Hospital Lien Affect Accident Victims?
Following a car accident, you may be worried about paying your medical bills. Even if you have insurance, a hospital may attach a lien against any future judgment you may collect in a personal injury lawsuit against the parties responsible for the accident. It is therefore important to understand how these liens work, and more importantly, how Tennessee law restricts them.
Hospital liens are purely a creation of state law. Tennessee’s legislature first authorized such liens in 1970. The intent behind such liens was to prevent accident victims from not paying for medical care even after they won substantial personal injury judgments. Hospitals claimed losses incurred from non-paying accident victims led to higher prices and reduced care for all patients.
Under Tennessee law, a hospital may therefore attach “a lien for all reasonable and necessary charges for hospital care,” against “any and all causes of action” brought by the person receiving the care. So, to offer a simplified example, if a drunk driver hits you and you require $10,000 in care from a local hospital, the hospital may attach a lien of $10,000 against the proceeds of any lawsuit you file against the drunk driver or any other defendant (such as the person who owned the car).
Of course, most people injured in car accidents have some form of health insurance. How does this affect a hospital lien? The Tennessee Supreme Court addressed that in a series of cases decided last year.
Hospitals Try to Overcharge Insured Patients
Specifically, the Supreme Court looked at three cases where the hospital failed to release its lien even after receiving payment from the accident victims’ insurance company. In one of the cases, a woman suffered injuries in a car accident and received care at a Memphis hospital. The hospital subsequently filed a lien of just over $14,000. The victim had insurance, and her insurance company had a preexisting contract with the hospital. Under that contract, the hospital billed the insurance company approximately $3,200, which was paid in full. The hospital nonetheless refused to release the lien, claiming it would be entitled to the “full, unadjusted” $14,000 should the victim later recover a personal injury judgment.
The Supreme Court disagreed. In a unanimous opinion, the justices held the hospital’s “non-discounted charges reflected in the amount of the liens it filed against [the victim] should not be considered reasonable charges” under state law. In other words, the hospital could not bill the insurance company $3,200 while simultaneously demanding the victim pay $14,000 for the exact same medical services. As the Court noted, the hospital voluntarily entered into a contract with the insurance company to accept the reduced contract rate as “reasonable charges” for its services. Of course, this makes sense. We pay thousands of dollars a year for health insurance coverage, either directly through premiums, or through reduced wages in exchange for health benefits from our employers. Through those premiums, we are purchasing the reduction of those hospital charges. Unfortunately, we have noticed that several of our area hospitals still haven’t gotten this message.
Dealing with hospital liens is just one legal issue that can arise following a car accident. That is why you should always seek advice from an experienced Tennessee personal injury lawyer following any type of accident. Contact the office of Fox & Farley, Attorneys at Law, in Clinton or Knoxville today if you would like to speak with someone right away.