You had an accident. If you are reading this, it most likely means it was not your fault. You may or may not have suffered injuries, but in order to make sure everything is ok, you go to the Emergency Room. Upon arrival, they ask what caused your injuries, and of course, you mention it was a car accident.
The scenario above is typical in the personal injury field. As a patient seeking treatment, you comply with every request from the hospital. After all, you are seeking emergency treatment. You probably haven’t been in the ER before, or at least not for an accident, but hospitals have been doing this for years, and they have developed a system to ensure they get as much financial compensation as possible out of any possible settlements.
When you come into the ER, you need to take time to review the documents you are signing and the information you are providing. Hospitals will ask you to provide any insurance information both from you and the party at fault. At this point, we recommend you inform the hospital that this is a self-payor account, and that they can bill you directly for the charges. This does not mean you will not pay for the charges out-of-pocket of course. After a personal injury attorney is hired to represent you, the attorney will handle your account with the hospital and pay them out of the proceeds of your settlement. The reason why you don’t want to provide insurance information is because the hospital will most likely place a lien and put the insurance on notice. Having a lien on a case means a hospital has the upper-hand in negotiations since they know that when a lien is placed, no funds can be disbursed to anyone. In other words, they can single-handedly hold up the entire settlement until they are paid.
As for your own insurance, a hospital will attempt to recover any policy benefits you purchased, for example Personal Injury Protection (PIP) or MedPay. Typically, a hospital cannot place a lien on these benefits since they are first-party benefits, meaning your own. The hospital liens can only be placed on third-party funds. But hospitals found a way to recover money from your own insurance through a document called “Assignment of Benefits”. By signing an assignment of benefits, you are giving the hospital or any medical provider the right to pursue any funds that are out there, including those from your own insurance company.
For example, you go to the ER after an accident. The hospital asks for car insurance information and you provide it. You also sign an assignment of benefits. The hospital bills you an exaggerated amount for their services, for example, $15,000.00, when in reality, it is worth around $7,000.00. Before an attorney can see the bill and reduce it based on what is reasonable, the hospital uses your assignment of benefits and sends it to your own insurance. If you had $10,000.00 in PIP, they can take all of it, even if the bill was unreasonable. At that point, the hospital will use the insurance information from the party at fault and send them a “lien notice”, stating they are owed $15,000.00, even though they are only owed $5,000.00. When the insurance company receives it, they will stop issuing any funds to any party until they have a document from the Hospital that states they are willing to accept a reduced amount in exchange for a release of lien.
Because the hospital had insurance information and an assignment of benefits, they were able to recover $10,000.00 plus any money from the at-fault-party’s insurance, when in reality their bill was worth $7,000.00 and should have been reduced. You, on the other hand, have to struggle and resolve the lien before your settlement is awarded.
For these reasons we recommend reading carefully the documents provided by the Hospital and not providing insurance information. After the attorney is hired, they will deal directly with the hospital and negotiate a fair payment to them.
Thanks to our friends and contributors from Brandy Austin Law Firm, PLLC for their insight into dealing with hospital liens.