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About Medical Liens

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Southwest Medical Services is an electronic medical lien service company that, among other things, is a document preparer and filing service company. We are not a law firm and do not provide legal services or advice.

What is a Medical Lien?

A medical lien is a simple and effective way to ensure that doctors, hospitals, therapists and any other healthcare provider who provides medical care and treatment, gets paid for their services. "Personal Injury" or “Medical Liens" are legal encumbrances upon property to secure the payment of a debt or obligation. In Arizona a healthcare provider's right to file a lien to ensure payment is usually created by statue, but can also be voluntarily given as a promise to pay for ongoing or future medical care and treatment.

What types of injuries are subject to becoming a medical lien?

Any injury caused by a 3rd party that requires medical care and treatment is subject to a medical lien, if you do not get paid in full for your services. This includes accidental injuries, such as auto, pedestrian, motorcycle accident, slip and falls and work related injuries, as well as intentional injuries like assaults and rape.

When can a Medical Lien be filed to secure payment on a medical bill?

A Statutory Medical Lien under Arizona Law may only be filed when the patient's injuries were caused, wholly or in part, by the actions of a 3rd party. Obvious examples are car accidents, assaults, slips and falls outside the home, dog bites and work place injuries (with some restrictions).

The key determination is whether a 3rd party may be responsible for the injuries that caused the need for the treatment and care given. The Arizona Legislature has established 2 methods for healthcare providers to recover their entire bill, even if part of the bill has been paid by health insurance. You can file a lien, which we recommend, or you can directly sue the responsible 3rd party, although, for obvious reasons, that is rarely economical. If a patient's/plaintiff's lawyer fails to honor a valid lien, not only does that lawyer or law firm have direct liability, they also violate the ethical rules and the State Bar will take disciplinary action.

What happens if I don't file a lien?

You lose any right you may have to get paid out of the settlement or verdict funds for the care you, your staff or your organization may have provided to the injured patient/plaintiff. You still retain the right to sue the person who caused the injury (but not the insurance company) and you can still perform regular collection efforts against the patient, all of which takes time, money, staff and possibly extensive attorney involvement.

Are liens really effective and, if so, why?

Absolutely!  Medical and Personal injury liens are effective because they represent a clear and unambiguous commitment by Federal, State and Local governments ensuring that 2 imperative public policy issues are met. The first is that doctors, hospitals, ambulance companies and all the other healthcare providers who treat uninsured and underinsured patients are paid their usual and customary charges when a 3rd party is responsible for the injuries which resulted in the need for treatment. 

Governments, at all levels, know that Hospitals, Emergency and Trauma Units, the Physicians, P.A.s, R.N.s and technicians are the front line of defenses and the last resort of many patients.  They are required to treat any patient who needs emergency care without regard to the patient’s ability to pay. 

This is a tremendous financial burden on the entire system. Making the people, firm or corporation that caused the need for these medical services pay the providers first is both popular and common-sense. This public policy is recognized by lawmakers, administrators, the courts and the Bar Associations. Therefore, liens are a serious and effective way to enforce your rights, provided you strictly follow the rules set forth in the statutes.

Secondly, the public policy of reducing the burden of providing healthcare benefits on local, state and the federal government is well recognized. The same lien rights and rights of reimbursement for the costs of medical treatment that state governments have given to healthcare providers are the same rights the government has reserved for itself. Thus, when Medicare, Medicaid, the U.S. military or a state equivalent (such as AHCCCS, Arizona's version of Medicare) pays for a patient's care and treatment, they have reserved the right to be paid by the 3rd party, either directly or from the proceeds of any suit or claim made by the patient/plaintiff.

Since 2005, the federal government has been aggressively reviewing its files to ensure that its right of reimbursement in 3rd party injury cases is being honored. Although actual prosecutions of individuals have thus far been rare ,the United States government has started deducting what it believes it is owed under its lien rights from the 3 rd parties insurance companies tax refunds!  As a result of several prominent and multi-million dollar tax-rebate offsets, the insurance industry has gotten the message that lien rights must not only be honored, but aggressively investigated as part of the settlement process. Thus, even if there are no attorneys involved, insurance companies check the County Recorder's website and, if the lien is not resolved, the adjustors will refuse to release the settlement funds.

What is a “Statutory” lien ?

A statutory lien is a lien filed pursuant to Arizona Revised Statute (A.R.S.) §33-931 et. seq. and it puts the world on notice that you have rendered care and treatment to a patient whose injuries were caused by a 3rd party, and that you have a right to receive payment for your services if a claim is made against the responsible 3rd party. A statutory lien is a public policy adopted by the legislature to ensure that healthcare providers get paid by the 3rd party when they take care of their victims.

What is a “Voluntary” or “Contractual” lien?

A voluntary or contractual lien is based on a contract.  It is created when the parties (in this case the doctor, hospital, surgical center, therapist, etc. and the patient) enter into a contract in which medical care and treatment will be provided in exchange for an enforceable right to receive payment for medical services directly from the settlement or award, before the patient or other creditors get paid. Voluntary liens have been recognized by Arizona Courts as enforceable against the proceeds from a patient’s personal injury lawsuit or claim.  A lawyer or 3rd party who ignores the lien is liable to you for full payment and a lawyer who ignores valid liens is subject to discipline by the State Bar of Arizona.

Voluntary medical liens are an exemption to the general rule that proceeds from personal injury claims that usually are not assignable. It is a public recognition that hospitals, doctors and other healthcare providers who provide care and treatment to uninsured and underinsured patients injured by someone else, are often not paid for their services, even when the patient prevails in a claim or suit against the 3rd party that caused the injury.

What is the difference between a statutory lien and a voluntary lien? 

A voluntary lien is a valid lien and can exist because the parties (in this case the doctor, hospital, surgical center, therapist, etc. and the patient) enter into a contract in which medical care and treatment will be provided in exchange for an enforceable right to payment that also has a priority. Voluntary liens have been recognized by Arizona Courts as enforceable against the proceeds from a patient's personal injury lawsuit or claim. Voluntary liens are an exemption to the general rule that proceeds from personal injury claims can not be assigned. This exemption in Arizona law exists because Arizona courts recognize health care providers often bear the financial burden of treating uninsured and underinsured patients.

A statutory lien is a lien that exists because the legislature created a legal right for a healthcare provider (hospital, surgeon, doctor, therapist, radiologist, laboratory, technician, physicians assistant, chiropractor, urgent care facility, surgical or outpatient treatment center) who has provided care and treatment to a patient injured by someone else, to get paid for their care, even if the patient was uninsured or had medical insurance which only paid a portion of the actual medical bills.

In Arizona, the applicable statute is Arizona Revised Statute ("A.R.S.") § 33-931 et. seq.  Statutory medical liens were created by the legislature and established an exemption to the common law doctrine that prevents personal injury plaintiffs from assigning or transferring any financial interests in their claims to third parties.  But in the case of doctors, hospitals and others who provide medical care to such plaintiffs, in Arizona it is now official public policy that those providers will get paid first from the proceeds of any settlement or claim IF they have timely filed a valid medical lien. 

If the lien is not filed, is filed late or does not have the right information on it, you lose your right to receive payment from the claim proceeds!

If you are a Level 1 customer, then you have authorized us to act as your agent for the purposes of responding to any and all inquiries for information from patients, law firms and insurance companies.  Simply direct any responses, calls or inquiries to us, either through our website or contact information, and our experienced professionals will handle all further communications.  We will, as your agent, transmit any offers or counteroffers and, once a lien is resolved, handle the collection, documentation and lien release procedures. 

Further, SWMS is not only fully insured, but employs its own in-house counsel which, pursuant to our agreement to defend and hold harmless, will act to defend the validity of the lien(s) filed. If necessary, SWMS will employ experienced outside counsel to resolve, defend or prosecute the liens we have filed as your agent.

Does filing a lien mean I will always get paid my full charges? 

Often, but not always. A statutory lien is a lien that exists because the legislature created a legal right for a healthcare provider (Hospital, Surgeon, Doctor, Therapist, Radiologist, Laboratory, Technician, Physician's Assistant, Chiropractor, Urgent Care, Surgical or Outpatient Treatment Center) who has provided care and treatment to a patient injured by someone else to get paid for that care, even if the patient was uninsured or had medical insurance which only paid a portion of the actual medical bills. In Arizona, the if is Arizona Revised Statute ("ARS") 33-931 et.seq. 

Because this type of medical lien was created by the legislature and creates an exemption to the common law doctrine that prevents plaintiffs from assigning or transferring the interests in their claims to 3rd parties, in the case of doctors, hospitals and others who provided medical care to the plaintiffs, it is now official public policy that those providers get paid first from the proceeds of any settlement or claim. The mechanism by which these rights are secured is a medical or personal injury lien.

However, if the person that caused the injury is poor or uninsured, or if the victim required extensive medical care, there might not be enough money to cover all the valid liens. (Healthcare providers who have not filed a valid lien have no right to get paid from any settlement or award.)  In that case, you will often be contacted by the patient, a lawyer or an insurance adjuster and asked to compromise your lien. As the agent for Level 1 customers, SWMS will handle all such contacts on your behalf. SWMS does not act as an agent for Level 2  customers.

What are automatic or “super” liens and who has them?

Other entities also have lien rights, many of which are not required to file with any governmental agency or office. The Federal Government has automatic lien rights which exist simply by virtue of the fact that it paid for all or part of the patient’s care through a Federal Health insurance plan (Medicare, Medicaid, FEHBA, and Military Health insurance). These are known as "super liens" because of the scope of the lien, the priority of the lien, and the number of potentially responsible entities who can be required to pay, offset or disgorge funds.  In some states, under state law, insurance companies have rights of subrogation which allow them to seek to recover funds they paid to their insured. Other states, like Arizona, prohibit this practice. However, even Arizona's indigent insurance plan (“AHCCCS”) has filing requirements which are similar to those for doctors. The key difference is where the lien must be filed.

What if my patient has health insurance and that pays all or part of my bill?

Generally, unless a private insurer pays all of your usual and customary charges, you may bill the client for the unpaid balance. This is called "Balance Billing" and is generally prohibited unless the injuries which caused the need for the medical care and treatment were caused by a 3rd party.

"Balance Bill" liens are clearly prohibited for Medicare, Medicaid, FEHBA and Military insurance benefits. However, a provider has the right to reject the partial payment and seek full reimbursement from the 3rd party.

It is unresolved as to whether state indigent programs and state employee benefit programs are subject to the same restrictions on balance billing liens that apply to Federal Benefit Programs.

Self-funded Employer Benefit Plans (known as ERISA plans) are, by definition, not insurance plans and clearly allow balance billing. In fact, the ERISA plan administrator will likely claim their right to full reimbursement is greater than yours.  In that circumstance, a valid lien will be your only protection.

What if I already have a voluntary lien signed by my patient?

A voluntary lien for provision of medical care and treatment can be filed for any care and treatment, for any injury or illness. Although, as a practical matter, it only makes sense to accept a voluntary lien for treatment when the provider, patient and the patient's attorney have all agreed in advance what body of distinct funds the lien attaches to. Voluntary liens do not have to be recorded in order to have legal effect and an attorney or patient who knows of the lien can be held directly liable for failing to honor the lien.

However, an unrecorded voluntary lien is not effective notice to any responsible 3rd parties, nor are they enforceable against any subsequent attorneys representing the patient, unless it can be established that the subsequent lawyer had actual knowledge of the consensual lien. 

Recording the lien is crucial because, legally, it gives actual notice to any individual or entity that has control over the funds, however briefly.  

Why are liens now becoming an issue and why should I care?

Public policy has long favored allowing healthcare providers to recover their customary fees and charges from the settlements of uninsured patients. However, Arizona, like many states, also has a specific law prohibiting a Provider that had agreed to accept health insurance from an insurance company, an HMO or PPO from billing the patient for more than the agreed to reimbursement rate. It was widely assumed that the two laws applied even in situations where the injuries were caused by a 3rd party. However, in 2001, Arizona Courts reinterpreted the 2 statutes and held that the statues were not exclusive.  In other words, in some cases balance billing for accident injury patients was allowed. See Andrews v. Samaritan Health System, 201 Ariz. 379, 36 P.3d 37 (App. 2001).

Although the same Arizona Supreme Court later overturned much of the Andrews decision, it left intact the rule that a lien for the balance of the provider's usual and customary charges was, in fact, valid under certain circumstances. Since these and other decisions have been handed down, there has been significant activity at all levels of government, especially in the legislature and state and federal courts, to try to amend, change, interperet and apply the multiplicity of laws, regulations and case decisions governing liens and reimbursement rights. Monitoring and applying these developments is what led to the decision to create Southwest Medical Services, Inc.