When Hospitals Place Liens Instead of Billing Insurance

Imagine you were injured in an accident. Perhaps it was a car accident caused by someone else’s negligent behavior. Whatever the reason, your injuries were severe enough to warrant a trip to the emergency room for medical care. You received treatment and, finally, you were well enough to go home. You believed the worst was behind you, and in many ways you were correct.

Until the bills started to arrive.

Now confusion has set in, because you are insured, and you provided your insurance information while you were in the emergency room or once you were coherent enough to do so. However, the hospital is not billing your insurance. Instead, they have placed a lien against you in order to recoup payment for your medical care. Even worse, rather than abide by the lower, negotiated prices they have agreed to with your insurance company, the hospital is billing you for the highest amount possible – as if you did not have any insurance.

This scenario may sound unlikely or perhaps even bizarre, but according to a recent article in The New York Times, it can happen to anyone, and it does. After receiving medical care in hospitals in South Carolina – or in other states around the country – accident victims find themselves on the receiving end of hospital liens despite having health insurance.

For accident victims who are awarded a settlement based on their injury claim, the news is just as bad. Hospitals want, and are determined to take, as much of that settlement as possible. Often, they will hand patients a form to sign while still in the emergency room. The wording on the form may be misleading, asking patients if they want their insurance to be billed even though the patient is not at fault for the accident. Some patients sign the form, not realizing what it actually means. This includes patients who, at the time the form is presented to them, may not be considered competent enough to make the decision due to head trauma or other injuries from the accident.

Why do some hospitals use liens instead of billing patients’ insurance?

Hospital liens have been a common practice since the early 20th century when few Americans had health insurance. The idea at the time was to encourage hospitals to provide emergency care to any patient who needed it, regardless of his or her ability to pay. However, in order to protect hospitals and healthcare providers from significant financial loss due to patients not paying their bills even when they could afford to do so, hospitals were permitted to place liens on patients’ real and personal property.

Of course, it is now much more common for a patient to have insurance than not. So, what is driving this billing practice? In a word: greed. Pure greed. Hospital administrators know that they can make more money off of patients if they place a lien rather than bill through the patient’s insurance. The possibility of the patient being awarded monetary compensation through a personal injury lawsuit also presents an opportunity for hospitals to collect higher payments. Rather than bill the insurance company at the agreed-upon rate, the hospital instead puts a lien on the patient and collects a percentage of any compensation the injury victim is awarded.

Are hospital liens legal in South Carolina?

Hospital liens, sometimes referred to as healthcare provider liens or medical liens, are legal – even if the ethics surrounding some of the practices may seem a bit questionable at times. Some states regulate the practice more than others. For instance, allowing only nonprofit hospitals to place liens, or, when a personal injury award is involved, limiting the total amount or percentage of the recovery award hospitals are permitted to claim.

In certain states, the law requires hospitals to bill the patients’ insurance before placing a lien. If the patient was injured in an auto accident, the hospital may be required to bill both the patient’s auto insurer and his or her health insurer. This is considered to be a more consumer-friendly practice.

South Carolina does not regulate these matters.

What if a hospital is refusing to bill your insurance or has a lien against you?

If you or a loved one were injured in a car accident or other accident and sought treatment at a hospital that is now refusing to bill your insurance for your care, you need to speak with a personal injury lawyer. Hospitals who engage in these predatory billing practices know exactly what they are doing. No amount of phone calls or letters from a patient will correct the matter, and, while you are busy trying to convince the hospital that they made a mistake and should be billing your insurance provider, the unpaid bills will pile up and your credit score will take a nosedive.

The South Carolina personal injury attorneys at McGowan, Hood, Felder & Phillips, LLC have experience fighting on behalf of injury victims. We make sure that the hospital bills your correct insurance. We also deal directly with your insurance company or companies if they are reluctant to pay or if they decide to place liens against any judgment you may be awarded. In short, we fight for you, and our record of winning cases against hospitals speaks for itself.

We understand that an accident such as a car crash can be traumatic and that the stress of a lawsuit can take a toll on clients. However, we also know that watching the majority of your settlement be handed over to hospitals and insurance companies in what some may consider an act of legal theft is typically much worse for injury victims. We can help. Call us at 803-327-7800 or by completing our contact form to schedule a free consultation with one of our South Carolina personal injury lawyers.