Medical Liens and Your Settlement
Things don’t always go as we like. And despite our best efforts on some occasions the settlement from your auto accident doesn’t really rise to the level sufficient to cover your treatment costs in total. Thankfully there are statutes that give you some hope!
NC General Statutes 44-50 and 44-51 give you some assistance in this sort of situation. What the law essentially says is AFTER attorney fees, if the total medical bills that are protected by liens is greater than HALF of what’s left over, then you can take that total (after fees…remember that!) and split that amount in half. One half would go to you, the victim. The other half is split pro rata between the lien-holders. So let’s talk about pro rata and what “lien” means.
“Pro-rata” is lawyer talk for “percentage share.” Let’s look at an example:
100,000 Settlement. $30000 fee. $70000 left over. Let’s say the hospital is owed $30000, and another provider is owed $25000 (both with perfected liens). If you take that $70000 and divide it in half, then you have $35000/$35000. That’s less than the total of the liens, which is $55000. So take $35000 and divide it by $55000. You get roughly .63. That means you then multiply each bill by that percentage number, so in effect each gets about 63% of their bill paid. So the hospital gets $19009.09 and the other provider gets $15090.91, which totals to $35000. Providers get their share of $35000, and you get $35000.
So, that leads us to the “lien” question. A lien is a right to be paid from a defined set of funds. In this situation, the providers have to only do two things to perfect their lien: Provide the records and bills free of charge and state in writing to you or your attorney that they are asserting a lien. If there’s a lien, you HAVE to pay the providers SOMETHING from your settlement; you can’t just ignore them. But this is what the pro rata thing above is for. If there is no lien on a bill that you owe, but there isn’t enough money to pay the lien-holder in full, then you CANNOT pay the non-lien-protected bill to the detriment of the lien holder. That opens up a whole other can of worms for another post…
The purpose of this law is to ensure that you, as the victim, get something out of the settlement. I’m glad it’s still here, but it’s pretty wacky, huh?
This stuff is complicated! Don’t try to do it on your own. Get an attorney for professional help with this stuff. Call me at 919-929-2992.
| § 44-50 |
| Statutes and Session Law |
| Chapter 44. Liens. |
| Article 9. Liens upon Recoveries for Personal Injuries to Secure Sums Due for Medical Attention, etc. |
| 44-50 Receiving person charged with duty of retaining funds for purpose stated; evidence; attorney’s fees; charges. |
44-50. Receiving person charged with duty of retaining funds for purpose stated; evidence; attorney’s fees; charges.
A lien as provided under G.S. 44-49 shall also attach upon all funds paid to any person in compensation for or settlement of the injuries, whether in litigation or otherwise. If an attorney represents the injured person, the lien is perfected as provided under G.S. 44-49. Before their disbursement, any person that receives those funds shall retain out of any recovery or any compensation so received a sufficient amount to pay the just and bona fide claims for any drugs, medical supplies, ambulance services, services rendered by any physician, dentist, nurse, or hospital, or hospital attention or services, after having received notice of those claims. Evidence as to the amount of the charges shall be competent in the trial of the action. Nothing in this section or in G.S. 44-49 shall be construed so as to interfere with any amount due for attorney’s services. The lien provided for shall in no case, exclusive of attorneys’ fees, exceed fifty percent (50%) of the amount of damages recovered. Except as provided in G.S. 44-51, a client’s instructions for the disbursement of settlement or judgment proceeds are not binding on the disbursing attorney to the extent that the instructions conflict with the requirements of this Article. (1935, c. 121, s. 2; 1959, c. 800, s. 2; 1969, c. 450, s. 2; 1995 (Reg. Sess., 1996), c. 674, s. 3; 2001-377, s. 2.)
| § 44-50.1 |
| Statutes and Session Law |
| Chapter 44. Liens. |
| Article 9. Liens upon Recoveries for Personal Injuries to Secure Sums Due for Medical Attention, etc. |
| 44-50.1 Accounting of disbursements; attorney’s fees to enforce lien rights. |
44-50.1. Accounting of disbursements; attorney’s fees to enforce lien rights.
(a) Notwithstanding any confidentiality agreement entered into between the injured person and the payor of proceeds as settlement of compensation for injuries, upon the lienholder’s written request and the lienholder’s written agreement to be bound by any confidentiality agreements regarding the contents of the accounting, any person distributing funds to a lienholder under this Article in an amount less than the amount claimed by that lienholder shall provide to that lienholder a certification with sufficient information to demonstrate that the distribution was pro rata and consistent with this Article. If the person distributing settlement or judgment proceeds is an attorney, the accounting required by this section is not a breach of the attorney-client privilege.
(b) The certification under subsection (a) of this section shall include a statement of all of the following:
(1) The total amount of the settlement.
(2) The total distribution to lienholders, the amount of each lien claimed, and the percentage of each lien paid.
(3) The total attorney’s fees.
(c) Nothing in this Article shall be construed to require any person to act contrary to the requirements of the Health Insurance Portability and Accountability Act of 1996, P.L. 104-91, and regulations adopted pursuant to that Act. (2003-309, s. 1.)
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