Medical Liens on Personal Injury Settlements
http://www.ncleg.net/gascripts/statutes/StatutesTOC.pl?bPrintable=true&Chapter=0044
One issue we encounter in almost all personal injury settlements is figuring out what we have to pay back to health care providers when we are disbursing the settlement funds.
The answer depends on what your definition of “have to” is (credit to Slick Willy for that).
Technically, a patient owes what he owes, so regardless of what we pay or don’t, the bill is his to deal with.
But having said that, there are some protections built in to the law for accident victims, particularly when the settlement is not quite sufficient to take care of everything (and by the way, that insufficiency occurs often because of a dispute regarding the liability and/or damages on the claim). Particularly, the General Statutes starting with 44-49 and going through 44-51. This is the main part of the lien statutes that we have to deal with in the personal injury context.
There is a HUGE misconception as to what “lien” means. Many providers think that patients create a lien by agreement. That is not exactly true. A lien is a statutorily created mechanism to create a right of recovery on behalf of a third party to an identifiable set of funds. In order for the lien to be valid, or be “perfected” as they say, the provider has to do TWO THINGS to perfect their lien: They have to provide the records/bills FREE OF CHARGE and they have to give NOTICE of the lien.
Free is easy. If they charge, that ain’t free, so they don’t have a lien. Notice is a little more tricky, but a very low bar to pass; all they have to do is write “lien” on the bill and that’s sufficient.
So if there is no perfected lien, we don’t have to pay the bill from the disbursement. That doesn’t mean the client doesn’t still owe the bill, it just means that there’s no right of recovery on behalf of that provider on the settlement funds.
If there is a lien, then we have to pay SOMETHING from the settlement. That means either all of the bill, or less. Well how much is less?
The statutes allow for a pro rata disbursement when there isn’t enough to go around. What does that mean? Well, after attorney’s fees are taken out, the victim gets 1/2 of what’s left over in pocket. The other half is divided, proportional to the percentage of the total lien debt, amongst each provider. That last bit is what “pro rata” means.
As with a lot of what we do, this can be very complicated and overwhelming, so it’s just one more reason that you don’t want to handle your injury claim on your own. Take my advice, and take my advice – see what I did there? Get a professional to help. Call me. 919-929-2992.