How Does the Alabama Hospital Lien Statute Work?
Posted on Thu Jan 07, 2021
Getting injured due to the negligence of another driver is bad enough. The hospital took your Medicare, Medicaid, TriCare, or private health insurance information when you were admitted. Now, you have received a bill for what you thought your insurance covered. This bill is also known as a hospital lien. What do you do now?
In this guide, we’ll explain how liens work and answer common questions include:
- What is a hospital lien?
- How long is a hospital lien valid in Alabama?
- What is the Alabama hospital lien statute?
HOW DOES A HOSPITAL LIEN WORK IN ALABAMA?
When a patient arrives in the emergency room after a motor vehicle accident, the hospital may not know whether the accident victim has insurance, but they must treat them. To ensure the bills are paid, the Alabama law allows hospitals to file a lien granting them funds from any personal injury settlement or jury award.
Generally, a hospital lien involves situations in which someone is brought to the emergency room by ambulance or medevac. Only hospitals, not physicians or other healthcare providers, may file this lien. There is an exception if the accident victim completes a document allowing these other healthcare providers the right to settlement or judgment proceeds to pay outstanding bills.
Keep in mind that hospital charges for the uninsured are far higher than for those with insurance. The insurance premiums paid by the insured help them qualify for discounts negotiated between the hospital and the insurance company. Before a recent change in the law, when a hospital filed a lien, the amount was not for what Medicare or private insurance would pay, but for the full charges. That meant the hospital could collect an amount far greater from a settlement or judgment than the amount for which an insurer was billed.
However, a hospital lien cannot go after the patient’s home or personal property. It also does not affect workers’ compensation benefits. While that is a relief for many people, it still means that the hospital can receive the bulk of any settlement or judgment amounts.
UNDERSTANDING THE ALABAMA HOSPITAL LIEN STATUTE
The Alabama hospital lien statute allows hospitals to place an automatic lien on a patient's judgment or settlement if the hospital treated the patient for those injuries within one week of the injury.
Such a lien requires perfection. To perfect a lien, the hospital’s administration must file a verified statement with the probate court of the county in which the hospital is located stating the patient’s name and address, the dates of the patient’s admission and discharge, the hospital’s name and address, and the amount the hospital claims is due for care. The lien attaches to all "reasonable charges" for the patient's "hospital care, treatment, and maintenance" if they entered the hospital within one week of suffering the injuries.
Within one day of the lien filing, the hospital is required to send a copy of the filing to every person, firm, or corporation named via certified mail it claims are liable for damages. It is also sent to the patient or their guardian or personal representative. A filing of the lien notice constitutes notice to all parties, parties, known or unknown, at the time of the filing of the lien, as per Alabama Property Code §§ 35-11-370 – 375.
A perfected hospital lien has top priority over any other claims to these funds, with the exception of an attorney’s lien. Here is how it works:
When a person enters a settlement or the court awards them a judgment, the first entities receiving the funds are the attorneys or hospitals with perfected liens. After those liens are paid, the plaintiff then receives the remaining funds.
UNDERSTANDING LIEN REQUIREMENTS
Under an amended law that went into effect in 2019, if the patient is covered by Medicare or Medicaid or the hospital is unaware that the patient has health insurance, the lien is perfectible within 20 days of the patient’s discharge.
However, if the hospital discovers that the patient is covered by insurance after the lien is perfected, it is required to bill the patient’s insurance company. The lien stays in place until the insurer pays the bill. Once the bill is paid, the hospital must release the lien within ten days.
LIENS AND INSURANCE
Besides the one-week limit on injuries, a hospital may only file a lien under the amended law if the patient does not have health insurance coverage or the insurer denied the claim. If the insurance company does not pay the bill within six months of its submission, the hospital may file a lien. No longer can the hospital file a lien in lieu of billing the insurer, and no longer can it charge the full price rather than the rate offered to the insurance company.
HOW LONG IS A HOSPITAL LIEN VALID IN ALABAMA?
The Alabama hospital lien is valid until the insurer pays the bill. As noted, once the bill is paid, the lien requires release within ten days. Alabama’s statute of limitations for filing personal injury lawsuits is two years from the date of the accident.
SEEK LEGAL ADVICE FROM A PERSONAL INJURY ATTORNEY IN ALABAMA
If you or a loved one were injured in an accident caused by another party's negligence or recklessness and you received a hospital lien, you need the advice of an experienced Alabama personal injury attorney. Call us today or contact us online to arrange a free initial and confidential consultation. We can determine how a hospital lien may impact your claim and resolve the issue or negotiate with the hospital.