WHAT IS A LIEN?
A lien is a claim of a right to payment. It is common that liens are asserted in personal injury cases. The “personal injury lien” represents a claim of a right to payment from the proceeds received from any resulting settlement or judgment. Liens in personal injury cases are usually asserted by a medical provider or an insurance carrier. There are two types of liens that may be asserted: (1) Contractual Liens, and (2) Statutory Liens.
Provisions for reimbursement are also considered liens, which will also require repayment only if there is a recovery. In contrast, subrogation allows for a right to directly sue the third party tortfeasor (i.e. the party that caused the accident). There must be statutory authority for an insurance company or healthcare provider to have subrogation rights. Statutes that allow for subrogation include: California Civil Code section 3045.1 for Hospital Liens, California Labor Code section 3856 for workers’ compensation benefit reimbursements, California Government Code section 23004.1 for County Hospitals, and California Government Code section 13963 for victims of violent crimes.
WHAT ARE CONTRACTUAL LIENS IN A PERSONAL INJURY CASE?
Contractual medical liens are claims for repayment based on an agreement between the injured party and the medical provider. These claims usually include: health insurance reimbursement, medical treatment provided on lien basis, and Med-Pay provisions for reimbursement.
WHY IS HEALTH INSURANCE REIMBURSED IN A PERSONAL INJURY CASE?
Health insurance companies have a claim for reimbursement when the injuries that are treated are caused by a third party based on the contractual language in the injured victim’s health insurance policy. Many Health Maintenance Organizations (HMOs) like Kaiser Permanente, health insurance companies, including Preferred Provider Organizations (PPOs) like Blue Cross and Blue Shield, and other health care plans will utilize boilerplate language in the patient contracts for a lien against any recovery by the insured for personal injuries from a third party tortfeasor (i.e. the party that caused the accident). The lien provides for repayment of the medical expenses made on behalf of the injured party. Because there is no statutory authority allowing for the insurance company or health care plan to obtain an assignment of the tort cause of action from the injured party or allowing for subrogation rights to directly pursue a cause of action, the lien is purely contractual.
CAN A HEALTH INSURANCE LIEN ASSERTED IN A PERSONAL INJURY CASE BE REDUCED?
Yes, a health insurance lien can be reduced pursuant to statute.