Personal Injury Lien Reductions

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Dear Dr. Friedman,

I’m a chiropractor practicing in California with some questions regarding a chiropractor’s acceptance(or not) of payment for services rendered for personal injury patients, specifically regarding lien reductions proposed by personal injury attorneys.  Other chiropractors I’ve spoken, even those hosting seminars on the subject seem to be in the dark about these issues.

As far as we understand it, since attorneys use a patient’s medical bill amount to put out their settlement demand letters, we would expect that the settlements would typically be sufficient to pay our bill in full.  Most claim this is not the case for various reasons and ask us to accept less as payment in full.  In turn, we ask for the following:

1)   The settlement amount(assuming 1/3 of that settlement should be designated for payment of the medical bills)

2)   A copy of the actual settlement check(as proof of the above)

3)   The amounts of any other medical bills that also need to be paid, if any, as well as any other negotiated lien reductions.

We are typically met with resistance from attorneys in general.  A few provide the information without issue.  Others provide the information, but express a great deal of dissatisfaction with the request.  Some state they will provide the information and then simply send us a check in hopes(presumably) that we will deposit it blindly.  And other claim they legally cannot provide the information for various reasons.

So, my questions are as follows:

1)   Is it legal for them to ask for a reduction in the bill if the settlement appears to be sufficient to pay it in full?  What should we do when we know the 1/3 of the settlement is sufficient to pay a bill in full, yet they still ask for a reduction?  

2)   What is necessary to have on file before any such reductions can be negotiated or accepted?  

3)   Do you have any suggestions or know of any particular laws or regulations we may cite when we request the information from them?

Any information you may provide would be most appreciated.  Thank you for your assistance.  

[Reule]

John,

It is legal and ethical for the attorney to request a reduction.  Sometimes this is necessary to accommodate a settlement.  If it becomes commonplace with a particular attorney, you may wish to cease working with that attorney.

1/3 may not be an equitable distribution of the patient has other outstanding liens such as healthcare insurance, balance billing or other provider liens.  You would probably wish to make sure the patient is receiving a fair amount of the settlement which would lead to good will and the probability of referrals from the patient in the future.

It sounds as if you are asking for all of the right material.  I would never ask a treating physician to reduce by any percentage more than I, as an attorney, am willing to reduce.  It is reasonable for you to ensure the patient is going to end up with an equitable amount and the attorney is lowering fees as well.

I am sorry but I cannot provide you with a particular law or case since I am not licensed to practice law in California and it would be unethical and illegal for me to do so.

Very truly yours,

Paul D. Friedman, M.A., Ph.D., J.D.