July 28th, 2016
Using Liens in PI Cases
When it comes to getting paid on PI cases, few documents and protocols are as important as those relating to a well drafted financial policy, along with a set of unalterable financial protocols (at least not easy to change). With these in place, you are positioned to solve various types of payment challenges that you may encounter.
One financial policy is the use of a lien. Many chiropractors often are not skilled at drafting or effectively using legally binding liens. It’s recommended that you contact your state association’s legal counsel and obtain a copy/sample of a personal injury lien that can be successfully used in your state. This is the best way to do it.
For a lien to be powerful, you must create and follow the aforementioned financial policy and its accompanying protocols. Your financial policy should be difficult to change on-the-fly. It should only be changed by an executive committee (which should include your spouse, accountants, legal counsel, business partner, financer, etc. - In other words a large committee). With this in place you can readily solve a host of payment problems in the area of PI care/ insurance reimbursement and also general health insurance reimbursement. Knowledge can save you thousands of dollars of lost revenue, loss of time, stress, and the mental anguish that often follows the ill-prepared/inexperienced PI care provider.
Personal Injury/Medical Liens should be used by every Chiropractic office that provides injury recovery care to car crash injury/personal injury (non-work related) patients. These liens are a simple and effective way to help ensure that you get paid from the proceeds of the patient’s insurance settlement for injury recovery services that you provided to them.
When you have a patient sign a lien, it’s important to have that lien filed with the attorney on record. It’s equally important to document that the attorney has received your lien as well. Not all attorneys will sign a lien and send it back to you. If you do not confirm the receipt of your lien with your patient’s attorney, you can find yourself at the mercy of the patient. Attorneys have their first responsibility to their clients. If the client chooses to instruct the attorney not to pay your bills, even if that attorney happens to be a close friend or family member to you, that attorney must follow the client’s instructions and not pay your bills!
If an attorney has accepted your lien, they have a legal obligation to pay your bills from the settlement proceeds, even if your patient instructs them otherwise! So get that lien signed by your patient and their attorney as soon as possible! There are many methods to prove receipt of lien by the attorney, but a returned signed copy is best.
While liens appear to be a great legal instrument to force payment, they are not foolproof. In many states when patients file for bankruptcy, they will subject your lien to steep discounting or even dissolution, with only a hospital and attorney lien being able to survive the bankruptcy. Do what you can to get Chiropractors included in your states hospital-lien-survivability category.
Even with these well designed procedures in place, you can still have a lot of questions about the use of liens and interactions with attorneys/patients. For the following common problems/questions I have drawn on ChiroCode publications, the internet and a lot of personal experience. Here are a few that occur in PI care, accompanied by some recommended solutions. I hope to save you the pain and suffering that I have been through, because I didn’t have this knowledge ahead of time:
Liens vs. Assignment vs. Uniform Commercial Code (UCC) Liens
The term “Assignment” means that an asset (or property) has been transferred to a third party which results in complete control of the asset. A lien is a legal obligation placed upon an asset (or property) which results in a legal claim for payment to a creditor for services/products received from the creditor. In the case of personal-injury work, judges tend to not like assignments of personal-injury claims. They do not look favorably upon the holder of the assignment and consider it along the lines of a predatory relationship because the assignor is under some sort of financial distress. In some cases this type of arrangement has been overturned by a judge and has been known to be ignored by the insurer with the settlement proceeds still issued to the original payee.
A Lawyers Responsibilities
For a comprehensive review of the many legal responsibilities that an attorney has both to their client and to you, please visit the Legal Information Institute at Cornel University Law School, American Bar Association (ABA) Model Rules of Professional Conduct 2004: see details here
Remedies for Attorney Misbehavior
Sometimes even with the best documentation and financial policy guidelines, you will have to deal with a misbehaving attorney. When that happens, you do have some remedies you can try to get them to treat you better and play more professionally. Here are some of those behaviors and a few tips to try:
Declining to pay you/discounting your bills
Failing to correspond on the status of a case.
You can complain to your State Bar Association (SBA) and also bring the offending attorneys actions to the attention of its ethics department. You can also file legal action against the attorney (small claims court), forcing him to stand before a judge to account for his unwillingness to comply with the law and the resolution of your unpaid claims.
Attorney Declines to Sign Your Lien
This is more common than you think. For reasons that are really hard to justify, some attorneys feel that they do their client a disservice by acknowledging your lien. I’d get worried when an attorney won’t sign your lien. Remember, the attorney works for his client (your patient) and pledges his allegiance to them. A properly acknowledged lien prevents the client from instructing the attorney to deny paying your bills. Without a properly executed lien, the attorney must comply with the client’s denial instruction.
Here is a good solution, shared with me by a trusted, very successful PI attorney. This solution will require that your fax machine print a “picture journal” of the first page of the body of the fax you are sending. If your fax works this way, you can send a fax to the representative attorney, with no cover page, with the lien being the first page, and when the Journal prints, it provides you with a copy of the first page along with the receiving fax number and the date. Without this definitive measure proof, it becomes the “he said she said” argument that you cannot win. This suggested “proof of delivery” is quite powerful and protects you against possible claims of non-receipt that frequently occur with regular non-journal documented faxes, mailed, emailed, shipped, and hand-delivered notices. When an attorney has an acknowledged receipt of lien, whether through signature or definitive proof of delivery, the attorney must comply with the law and pay your rightful claims from the settlement or opt to pay your claims out of their own pocket. Refusal to pay a valid, document claim subjects an attorney to possible punitive action by the attorney’s state Bar Association.
Attorney Consistently Asks for Large Reductions on Your Lien
“Billboard” attorneys are notorious for this kind of business model as well as high volume, rapid settlement firms = usually not too good for the client. Yet it still happens every day. You need to decide if you want to associate with this kind of firm. If not, then don’t accept patients who have hired this type of attorney or inform them that you will care for them if they change attorneys, which is perfectly legal for them to do. There are often certain penalties for changing attorney’s mid-stream, but the new attorney can often get these old attorney liens reduced/cancelled. For more help on that please contact my office.
You do NOT have to accept any reduction to your lien claim, though it may be a good business decision and here’s why. Your client is usually surprised by the size of their bill. I’m not sure why, but they seem to always do this. They should be getting monthly EOB’s, but they still express surprise. There is a business strategy that is worth considering. If you allow a small % reduction in your outstanding lien to help them get more money back on their settlement, you look like a hero! For this to work best, the attorney must be willing to be the one to point out your generosity. If you’d like to know more about how to structure your fees and PI business structure, please contact me.
When Attorneys Drop Clients
Sometimes attorneys will drop a client and usually for good reason. Non-compliance, lack of communication, hiding the truth, scamming the system and sometimes because it’s just a bad case. Most good attorneys will notify you in writing that they no longer represent your patient. This can affect your financial claim (i.e. lien). Liens are usually not transferable! If your patient changes attorneys, you will need to have the new attorney sign another lien (to learn how to avoid lien reassignments, please contact my office).
When I receive one of those letters, I instruct the patient that if they will select another attorney from my approved attorney list, I will not begin collection proceedings against them. If they do not immediately select a new attorney, then they must make immediate payment arrangements to avoid being sent to collections. Your financial policy in force once again!
Liens are an effective tool, but only if you get them signed by the patient on the initial encounter and then document that the patients selected attorney has received it.