Home Table of Contents Our Practice Staff Directory

Directions L&S Reports Useful Links L&S History

Local Government Site Valley Southern Title

By Melisa G. Michelsen

As all healthcare providers know, patients do not always have the present financial ability to cover the cost of their medical bills. In cases involving injury to a patient through the negligence of another, healthcare professionals can employ medical liens to secure payment for their services. Medical liens can be created in two different ways: 1) by contract and 2) by operation of law. This article will briefly touch on contractual liens while focusing on the express statutory language which create liens through the operation of law.

Contractual Liens

Contractual liens are governed by basic contract principles. An analysis of contractual liens and the patient's obligations under that lien, cannot be fully explored in this article. However, this brief overview illustrates how healthcare providers can maximize their use of contractual liens.

Contractual liens are typically created in one of two ways. First, a contractual lien can arise through lien and reimbursement language in an insurance policy or a medical plan policy to which the patient is a party. Second, contractual liens are often created by forms provided by the medical provider prior to rendering services. These forms signed by the patient can serve several purposes. The forms:

1) reaffirm the patient's obligation to be personally responsible for the medical bills;

2) create a lien by the medical provider against any judgment, award, or settlement received by the patient in the case;

3) create an understanding that the medical provider will forego payment until the patient's case is resolved; and

4) impose a duty on the part of the patient's attorney to honor the lien and withhold adequate amounts from any proceeds received in the case.

When a patient agrees to reimburse the healthcare provider out of any proceeds he may recover in a pending personal injury claim, the patient assigns his right to the proceeds, or at least a portion of the proceeds, to the healthcare provider. While it is universally recognized that a right of action for personal injuries resulting from the negligence of another is not assignable, most jurisdictions allow the injured party to assign the proceeds of such a cause of action to another party. Virginia appears to recognize such a distinction. A Virginia court upheld an assignment of proceeds, stating that there is a legally significant distinction between an assignment of a cause of action for personal injuries and an assignment of the proceeds thereof. Interestingly, the court further noted that the hospital had no right to proceed against patient if he decided not to pursue his legal claims.

Statutory Liens

Medical liens created by the operation of law can be found in Title 8.01 of the Virginia Code. These liens are created by express statutory language, which has been strictly construed by Virginia courts. Thus, understanding and knowing the requirements and limits of the statutes is imperative to fully protect your rights.

A. Private Health Care Providers

Medical liens for hospital, medical, nursing, physical therapy, and pharmaceutical services have been created in § 8.01-66.2. Section 8.01-66.2 states that whenever any person sustains personal injuries caused by the negligence of another and receives medical attention or treatment, the healthcare provider or facility rendering such treatment will each have a lien against the person whose negligence is alleged to have caused such injuries for the amount of a just and reasonable charge for the services. However, it is important to note that there are statutory limits on the amount of each lien. In the case of a hospital, the lien shall not exceed $2,000. The lien for each physician, nurse, therapist, and pharmacy shall not exceed $500. The Code specifically provides that chiropractors are included in the term "physician." Va. Code § 8.01-66.12. In addition to the statutory cap, this statutory lien is inferior to any claim by the patient's attorney or personal representative for professional services for representing such injured person in his claim or suit to recover for his injuries. Va. Code § 8.01-66.3.

In order for the lien to become effective, it is necessary for the medical provider to give notice of the lien. Section 8.01-66.5 requires the healthcare provider to send a written notice or bill setting forth the name of the medical provider and the name of the patient. This notice can be served upon or given to one of three persons: 1) the person, firm, or corporation whose negligence is alleged to have caused the patient's injuries; 2) the attorney for the injured patient; or 3) the injured patient. Once notice is provided, it shall have the effect of making the person, firm, corporation, or attorney liable for the reasonable medical charges, up to the statutory limit, upon payment or receipt of money for such injuries. Va. Code § 8.01-66.6. If suit has already been filed by the patient against the negligent party, the healthcare provider, in lieu of providing notice under § 8.01-66.5, may file in the same court a petition to enforce the lien. Va. Code § 8.01-66.7.

B. Commonwealth of Virginia

Similarly, the Virginia Code also provides for liens in favor of the Commonwealth, and its programs, institutions, or departments. Whenever any person sustains personal injuries and receives treatment from a public hospital or medical care facility or receives treatment which is paid for through a public program, e.g., the Virginia Medical Assistance Program, the Commonwealth shall have a lien on the claim of such person against the person, firm, or corporation who is alleged to have caused the injuries. Va. Code § 8.01-66.9.

Some important differences exist between the lien in favor of the Commonwealth and private healthcare providers. First, the written notice required by § 8.01-66.5 is waived if the attorney for the injured patient knows that the medical services were either provided or paid for by the Commonwealth. Second, and most importantly, there is no statutory cap or limit on the amount of the lien, except as otherwise provided that the amount for the services be just and reasonable. Third, although not statutorily limited, the lien of the Commonwealth may be significantly reduced. Under the provisions of the Code, either the Attorney General or the court in which a suit is filed or must be filed both have the power to reduce these liens upon motion or petition of the injured party.

If the lien is reduced by the Attorney General, he has the power to reduce the lien and discharge the remaining amount owed. On the other hand, the judge does not have the same power. The Supreme Court of Virginia held that the court has the power to reduce the lien, but it does not have the power to discharge the remaining amount of the lien University of Virginia v. Harris, 239 Va. 119 (1990). This ruling created an interesting outcome. The hospital's lien was reduced significantly to accommodate the patient's settlement offer and the hospital was unable to garnish the remaining proceeds of that settlement. However, the hospital could attempt to recoup the remaining costs owed by the patient through other assets of the patient.

Conclusion

The protections afforded health care providers by statutory and contractual liens for medical services rendered to patients may not be as concrete as they appear. Patients may not have the financial resources to live up to their contractual obligations. Statutory liens are limited in amount and notice procedures must be followed in order for these liens to take effect. However, steps can be taken to preserve and protect medical liens:

1) Take advantage of both contractual and statutory liens;

2) Obtain an assignment of the proceeds of any settlement, judgment, or recovery from the injuries for which treatment was given;

3) Provide copies or notice of the assignment to the patient's attorney;

4) Obtain a judgment against the patient in the amount of the unpaid medical bills;

5) Provide written notice or bills to the patient, the patient's attorney, and the injured party or his attorney, if known;

6) Work with the patient's attorney to receive maximum coverage under a settlement.