HB 2929’s Changes to Texas Hospital Liens
Many crash victims receive emergency medical treatment at hospitals immediately after a collision. Because hospitals treat patients regardless of their ability to pay, Chapter 55 of the Property Code gives Texas hospitals the right to secure a lien to an insurance settlement when the patient receives medical services due to a third party’s negligence (e.g., following a car crash). Often times, though, hospitals abuse that right by ignoring the patient’s health insurance and filing a lien instead.
What is a Lien?
A lien is a legal right that guarantees an underlying obligation. The most common liens are those placed on houses or cars when the purchaser uses a lender to secure financing. Although these types of liens are granted by agreement, a lien can also be granted by law.
Without a lien, a hospital can recover payment of emergency medical services only through the patient. If the patient cannot pay, the hospital could send the bill to collections or file a lawsuit. Since most people are “judgment proof,” though, it would be cost-prohibitive for a hospital to sue each time a patient does not pay.
To help hospitals recover payment, the Texas legislature created statutory hospital liens. Chapter 55 of the Property Code gives hospitals the power to place liens on the settlement funds of crash victims who receive hospital services within 72 hours of an accident. To secure the lien, the hospital must file written notice of the lien with the county clerk of the county where the medical services were provided and notify the victim of the lien before the settlement funds are paid. Once the hospital follows those steps, it has the right to be paid before anyone else—including the actual victim.
How Do Hospitals Exploit Liens?
Generally, health insurance companies have contracts with medical providers (like hospitals) that allow the insurers to pay discounted rates on behalf of their insureds. These discounted rates are lower than the rate medical providers charge the general, uninsured public. This means that medical providers often receive less payment when a patient has health insurance than if the patient was uninsured.
To avoid reduced reimbursements, many hospitals will not bill a patient’s health insurance after a collision. Instead, these hospitals will file a lien to try and recover more than the reimbursement rate from the liability carrier at settlement.
In Texas, though, drivers are only required to have $30,000.00 of liability coverage. Thus, many crash victims find that their maximum possible settlement does not cover all the outstanding medical expenses—due in part to an overly inflated hospital bill. Since the at-fault driver’s liability carrier usually refuses to pay a settlement before addressing outstanding liens, the crash victim could end up paying more for the same medical services than his or her health insurer would have paid.
How Does HB 2929 Change Chapter 55?
In addition to limiting named driver policies, the Texas legislature recently passed HB 2929 to limit the power of hospital liens. Until recently, the only limit Chapter 55 placed on hospital liens was that these liens do not cover more than a “reasonable and regular rate” for the services provided. Unfortunately, it is not always clear when a rate is “reasonable” or “regular.” Since a lien ensures the hospital is paid first and it would be expensive to routinely litigate what qualifies as a “reasonable and regular rate,” hospitals have had very little incentive to reduce their charges voluntarily.
HB 2929, which took effect on June 10, aims to rein in a hospital’s leverage by limiting the amount of a lien to the lesser of: (1) a patient’s hospital charges for the first 100 days of hospitalization; or (2) 50% of the total judgment, settlement, etc. to which the lien attaches. Additionally, HB 2929 prevents a hospital from including charges for which a patient would not be liable due to his or her health insurance in its lien. This means a crash victim should get credit for—and a hospital lien should not attach to—any charges that the victim’s health insurer would have paid on the victim’s behalf. This language should prevent hospitals from ignoring a victim’s health insurance and filing a lien to recover a higher amount instead.
Hire an Injury Lawyer If You Receive Notice of a Hospital Lien
If you or a loved one has received notice of a hospital lien following a motor vehicle collision, you have enough things to worry about. Do not let dealing with and negotiating a hospital lien be one of them. We deal with the hospital lien so you can focus on getting your life back to normal. You have one chance to do this; make the right choice by choosing the right attorney. Call us at (956) 291-7870 or email us at contact@rdjlawyer.com for a free consultation and case evaluation.