What is a Hospital Lien?
A hospital lien is legal interest that is granted to a hospital in a patient’s claim for compensation arising from an accident or injury to the patient. In Texas, a hospital’s right to a lien is governed by Chapter 55 of the Texas Property Code.
How Does a Hospital Lien Work?
When a person is injured in an accident, that person may have a legal claim against the person that caused the injury. If the injured person seeks treatment at a hospital for those injuries, the patient incurs charges for the hospital’s services. Under the hospital lien statute, the hospital may choose to secure a hospital lien for payment of its services.
Once the hospital secures a lien under the hospital lien statute, that lien attaches to the legal claim that the patient has for the injuries sustained. For instance, if a person is injured in a car accident and taken to a hospital emergency room, then the hospital may secure a lien against the claim that the patient has against the other driver or their insurance company. This is called a hospital lien.
How Does a Hospital Secure a Lien?
The requirements for a hospital to secure a hospital lien are set forth in Tex. Prop. Code, Section 55.005. The hospital must:
- Provide written notice of the lien to the injured person; and
- File written notice of the lien with the county clerk of the county in which the services were rendered.
The lien must be filed before money is paid to the injured person. Tex. Prop. Code, Section 55.005 (a).
In order for a lien to be valid, there are two notice requirements that must be met:
- Notice filed with the county clerk; and
- Notice mailed to the patient.
Notice filed with the county clerk.
The most important requirement for a hospital lien to be valid is the filing requirement. This is the requirement where most hospital liens either succeed or fail.
Notice of a hospital lien must be filed with the county clerk in the county where the services were rendered. If the lien is filed in another county, it is not valid.
The notice of lien must contain the following information in order for it to be valid:
- The injured person’s name and address;
- The date of the accident;
- The name and location of the hospital; and,
- The name, if known, of the person liable for the injuries
If this information is not contained in the notice filed with the county clerk, then the lien may be invalid.
Once the clerk receives the written notice of lien from the hospital, the clerk shall file and index the lien in its property records. A person can conduct a search to determine if a hospital lien has been filed. You may personally visit the county clerk’s office and search for a lien under the patient’s name. However, most counties in Texas allow you to search online. For instance, the Dallas County Clerk has an online portal where you can enter the patient’s name and search for all sorts of public documents, including hospital liens.
Notice mailed to the patient.
Once the clerk receives the notice of lien, the clerk will then notify the hospital that the lien is filed and indexed in the county records. Within five (5) business days after the hospital receives notice from the clerk that the lien has been filed, the hospital must send written notice to the patient.
The notice to the patient must be sent by regular mail to the patient’s last know address. The written notice to the patient must state:
- That the lien attaches to the patient’s claims against the person causing the injuries; and,
- The lien does not attach to the real property of the injured person.
Even if the patient doesn’t receive the mailed notice of the lien, the lien is still valid. The hospital is only required to show that they mailed the notice and not the patient actually received the notice. Tex. Prop. Code, Section 55.005(g).
Claims to which a hospital lien attaches.
As stated before, a hospital lien attaches to the legal claims that the injured person has against the person causing the injuries. Those claims include:
- The claims against the responsible person;
- A judgment obtained in favor of the injured individual against the responsible person; and,
- The proceeds of any settlement with the responsible person.
Any money paid by an insurance company that covers the responsible person is subject to a hospital lien. That is because those proceeds are actually paid on behalf of the responsible person under a policy of liability insurance. Tex. Prop. Code, Section 55.003(a)(3) and (b)(2). This is called a third-party claim.
First-party claims are not subject to a hospital lien. Therefore, a hospital lien does not attach to the proceeds from the injured person’s own insurance policy, such as:
- Personal Injury Protection (PIP) benefits
- Med-Pay benefits
- Uninsured or Underinsured Motorist (UM/UIM) claims
- Workers Compensation benefits
- Health insurance payments
See Tex. Prop. Code, Section 55.003 (b)(2).
Other Requirements of a Valid Hospital Lien.
There are other requirements under the statute that must be met before a hospital lien may be valid and enforceable.
Admission within 72 hours of the accident.
In order for a hospital lien to be valid, the patient must be admitted to the hospital within 72 hours of the accident causing the injuries. Therefore, if a person visits the hospital for treatment after this time period, the hospital lien is not valid.
Proving the exact time of an accident may be difficult especially if there is no police report. Therefore, the patient may have to resort to phone records and 911 call reports in order to prove the date and time of an accident.
Only “reasonable and regular” charges are allowed.
Just because a hospital may have a lien for its services does not mean a hospital can charge anything it wants. Therefore, s hospital lien is not valid for any charges the exceed the “reasonable and regular rate” for the services. Tex. Prop. Code, Section 55.004(d)(1).
What is reasonable takes in to account many factors including the amount the hospital has historically accepted for similar services through health insurance, Medicare and Medicaid, or cash-pay patients.
First 100 days of treatment.
A hospital lien only attaches to the first 100 days of treatment after the patient’s admission to the hospital. So, if someone is injured in a car accident as is intensive care for an extended period, the lien only attaches to the first 100 days. This is true even f the patient is in the hospital for a longer period.
The Effect of Health Insurance.
A hospital lien is not valid to collect amounts that are payable under health insurance. Additionally, a hospital lien is not valid to collect amounts the the patient would not be responsible for under a health insurance plan.
Under Chapter 146 of the Texas Civil Practice and Remedies Code, if the patient has health insurance, the hospital must bill the health insurance plan. Failure to do so will invalidate any charges that the patient would not be responsible for under the plan. This would include not only the amounts payable by the plan, but also the charges required to be written off or adjusted under the plan’s terms.
Likewise the hospital lien statute provides that the lien is not valid against any amounts barred in violation of Chapter 146. See Tex. Prop. Code, Section 55.004(d)(5).
Is a Hospital Lien Negotiable?
The simple answer is “Yes.” A patient does have some leverage in negotiating a hospital lien.
Hold out on settling the Patient’s claims.
Ultimately, if the hospital wants to stand its ground and not negotiate their lien, the injured person may choose not to settle or pursue their injury case. That may be especially true if the patient is left with relatively very little money after paying the hospital. If the patient chooses not to settle, then no one gets paid, not even the hospital.
Therefore, the hospital may have to negotiate its lien with the patient in order to give the patient an incentive to settle the claim. Then, once the claim is paid, the hospital will collect its negotiated amount and release the lien.
Hospital lien limited to 50% of the settlement proceeds.
In circumstances where person may be seriously injured in an accident, there may only be limited funds available to settle the patient’s claims. For instance, an auto liability policy may only have policy limits of $30,000, while the hospital may have charges way higher than the settlement amount.
Under Tex. Prop. Code, Section 55.004(b)(2), collection of a hospital lien is limited to the lesser of: 1) the amount of its lien, or 2) 50% of the proceeds of the settlement. Therefore, the hospital lien statute provides a limitation in the amount a hospital can collect against the patient’s settlement proceeds.
That does not mean that you are not necessarily responsible for the balance. It just means that the hospital may not enforce its lien against the settlement proceeds beyond those limitations. Nevertheless, the patient may still insist that the hospital accept the payment as settlement in full of the hospital’s account or else the patient can still refuse to settle the injury claim.
Pursuing a claim under the “fraudulent lien” statute.
As stated before, a hospital lien does not cover charges which “exceed a reasonable and regular rate for its services.” Tex. Prop. Code, Section 55.004(d)(1). Therefore, the patient may argue that the hospital’s charges are excessive.
Sometimes hospitals do not take into account what is considered a “reasonable and regular rate” for its services. It just charges the maximum rate and tries to hold the patient hostage until those charges are paid. However, rarely if ever, does the hospital actually collect the maximum rate for its services.
Under recent caselaw from the Texas Supreme Court, the “reasonable and regular rate” that a hospital may charge for its services must take into account the amounts the hospital has historically collected for its services. See In re N. Cypress Med. Ctr. Operating Co., 559 S.W.3d 128 (Tex. 2018).
If a hospital insists on collecting charges which are excessive, the patient may file a claim under the Texas Fraudulent Lien statute. Tex. Civ. Prac. and Rem. Code, Chapter 12. Under this statue, the hospital could be held liable for damages, statutory penalties, and attorneys fees if it is shown the hospital is knowingly charging excessive fees for its services.
If a fraudulent lien case is filed, a hospital could also be required to collect and disclose its historical billing data showing the amounts it usually collects for the same services. This information includes the amount the hospital actually collected from health insurance, Medicare and Medicaid, and cash-pay patients. This can be a very expensive and time-consuming effort for the hospital. Additionally, hospitals do not necessarily want to disclose information that may be sensitive to its business practices. Therefore, a fraudulent lien claim can prove to be an effective tool against a hospital especially is cases of larger settlements.
Final ThoughtsNavigating a hospital lien is not easy. In fact, some hospitals have become notorious for exploiting the hospital lien statute. And some hospitals may try to take advantage of injured victims depriving them of their compensation. I’ve noticed that this is especially true in car accident and other personal injury cases.
Fighting for injured Texans in the Dallas / Fort Worth area has been the focus of my practice since 1995. It’s not a gimmick or a sideline. It’s my specialty.
If you have been injured, get the representation from an attorney who know the ropes of D/FW area. Robert C. Slim has been helping injured Texans get the compensation and justice they deserve. The consultation is absolutely free. And there are never any fees or expenses owed until you collect on your case.