Lien doctors follow an arrangement similar to contingency fee arrangements used by plaintiff lawyers in the sense that lien doctors agree to be paid for the medical services they provide to injured accident victims after the victim’s lawsuit has wrapped up, according to a January 8 article in The Wall Street Journal titled, “Who Wins in a Personal-Injury Lawsuit? It Can Be the Doctor.” If you have never heard of lien doctors, you are not alone.
Lien doctors have been around for years but the practice is growing due to legal and legislative changes in California as well as other states, including Florida, Colorado, Texas and Georgia. Although a lien doctor takes on the risk of not being paid for the services they provide to accident victims, in such a scenario, lien doctors may also receive higher fees as compared to being paid through victims’ health insurance.
On the other hand, if an accident victim receives medical services through a lien doctor, but does not recover or recovers very little from their lawsuit, the victim may be stuck paying potentially higher priced medical bills than if they had used their health insurance.
In some circumstances, accident victims with health insurance will forego using insurance because their insurance does not cover the treatment or services they need. Moreover, if an accident victim utilizes a lien doctor instead of their health insurance, the lien doctor can provide a broader range of treatment and services since there are no limitations on what the victim’s insurance will and will not pay for. For uninsured victims, lien doctors may be their only option.
One defense lawyer in California believes that lien doctors are being used to increase plaintiffs’ lawyers’ payouts. Other defense lawyers as well as the liability insurance industry believe that this practice of utilizing lien doctors will drive up litigation costs. Despite their concerns, medical experts contend that lien arrangements for medical services and treatment are legal and do not violate ethical rules.
In 2011, California’s highest court decided to draw a distinction between the lower rates insurance typically pays to medical providers and the higher amounts that medical providers charge for their services. The court ruled that plaintiffs may recover the lesser of either amount paid or incurred for medical services or the “reasonable market value” of the care. For insurance, the court ruled that the “amount incurred” is what the insurance company actually pays, despite the fact that the medical provider may have billed a higher price.
While defense lawyers initially viewed the above California ruling as a win, the decision made the use of lien doctors more attractive to plaintiffs’ lawyers. For instance, in a lawsuit, if an accident victim received medical treatment or services from a lien doctor, the lien doctor’s bill for the treatment or services provided to the victim would be introduced to the jury, not the insurance-discounted medical bill. One California doctor asserts that these lien doctor bills can be as much as seven to 25 times higher than what an insurance-discounted medical bill may be. On the other hand, a California personal injury lawyer claims that the premium cost of lien doctors’ bills is justified since doctors must wait to be paid and because of the risk lien doctors incur from the possibility of not being paid.
The Journal article features one California resident and accident victim who utilized the services of lien doctors after being injured when a big rig crashed into his motor home while he was inside. The plaintiff’s lawsuit was a success, with the jury awarding him $3.6 million in damages, including $644,000 in past and future medical expenses. The defendants tried to challenge the verdict, arguing that the plaintiff’s medical bills were excessive; however, the California court ruled in the plaintiff’s favor. Since then, the use of lien doctors has continued to grow in California.
In a later appellate decision regarding the above case, the court found that although the plaintiff had health insurance, because he decided to utilize lien doctors instead, the jury would see only the lien doctors’ bills. This later ruling has made lien doctors even more enticing to plaintiffs’ lawyers.
The basis of typically every personal injury lawsuit is medical expenses; because of this, it is unclear as to whether accident victims utilizing lien doctors appreciate the risk they are undertaking when they use lien doctors’ services. However, both lawyers and doctors say that in situations where a lawsuit fails, the liens are often negotiated down.
Insurance Panel Counsel Considerations
The provision of services by a lien doctor in a personal injury case is something that defense panel counsel members will want to try and monitor. Over time it may become clear which doctors tend to offer this type of contingency fee arrangement, for example.
The services provided by lien doctors have some similarity to litigation funding, in that other parties are offering to essentially finance a significant portion of plaintiff expenses in the anticipation of a higher payout once the case is resolved. We first wrote about litigation funding in an August 2016 post titled, “Litigation Funding: Tipping the Scales of Justice?”
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.