Personal Injury Recovery May Be Subject To Medical Liens
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North Carolina law provides that doctors, hospitals and other health care providers may obtain a lien against the proceeds from the injured party’s recovery from a personal injury action.
If a doctor, hospital or other health care provider sends proper written notice to the injured party’s lawyer, and if medical records have been provided at no charge to the injured party, a lien for the amount of medical services provided is thereby attached to the proceeds from a personal injury claim recovered by an injured party.
The effect of this lien is that the attorney is legally required to satisfy the lien by paying the lien to the health care provider. The attorney has no choice about whether to pay if a proper lien exists: by law, the attorney must deduct the amount of the lien from the proceeds of the recovery obtained by the claimant and pay it to the health care provider.
Fortunately, in most cases, there is first party health insurance as well as medical payment coverage in the applicable liability insurance policy to fully pay all medical bills. There is a limit, however, to the amount that must be paid to medical providers. North Carolina law provides that the lien may not be for an amount in excess of one-half of the net proceeds to the client before payment of the lien and after payment of attorney’s fees and the cost of the litigation. Therefore, the claimant is assured of receiving at least half of the net proceeds from the recovery even in the face of huge medical liens.
Even though the lien may not be sufficient to fully pay the medical providers, the injured party remains contractually obligated to pay the health care providers the full amount of their bill. This means that the health care providers can make a claim directly against the injured party for the difference between the lien and the balance of their medical bills.
In many instances, insurance adjusters insist on making payments directly to the health care providers and deducting the full amount of the medical bills from what would otherwise be due to the injured party. This is true not only with respect to negligence claims, but also to claims under the medical payments provisions of the applicable liability insurance policy. In most cases, the medical providers have not attached a lien against the proceeds held by the insurance company, and payment should rightfully be made to the claimant rather than to the health care provider.