Out of State Medical Liens

I’ve written before on  Medical Liens in North Carolina. These liens allow a hospital or doctor or other health care provider to place a lien on any settlement that an injured person may get from a third-party. If a company has a valid lien in North Carolina, the attorney can’t give that money to their client, even if the client orders them to. At best the attorney can keep it in his trust account until the client and the medical provider come to an agreement or have a judge make the determination. North Carolina medical liens are set forth by statute and give some protection to the attorney fees and won’t be valid for any amount exceeding 50% of the settlement. Because the standard contingency agreement is 1/3 of the recover, the breakdown frequently becomes 1/3 to the client, 1/3 to the attorney, and 1/3 to the medical provider. The medical provider also has to provide their records free of charge or they waive their lien rights.

Recently I have a wrinkle on that procedure. I had a client who had been in a car wreck in North Carolina and lived in North Carolina, but a large portion of her care was over the border in South Carolina. South Carolina does not have a similar lien statute to North Carolina. The medical provider in South Carolina had my client sign an “assignment of any rights.” Essentially she had to sign an agreement that if she got any recovery  from the person that hit her, her lawyer (me) would have to pay that medical provider directly. Since South Carolina had no lien statute, that could mean I would be forced to pay the entire amount of the debt, even if it was more than the settlement amount.

My client was severely injured, but unfortunately, the driver who hit her did not have enough insurance to pay all her medical bills, much less any pain and suffering, and lost wages. (Please consider increasing your underinsured motorist coverage)!  So my dilemma was do I pay the entire amount of the assignment of rights as I should do under South Carolina law, or do I take the position that there was no valid North Carolina lien (they billed me for the records)? While I could find no real guidance in the laws of North Carolina or South Carolina, my opinion was the law of North Carolina should apply because that is where I have the proceeds of the settlement and where I am disbursing the funds. I contacted the medical provider and explained my position.

Because of my argument, they agreed to negotiate down the debt to what the North Carolina lien law required (the 1/3 each). While I could have simply refused to pay at all, this would have still left a significant amount my client owed. The lien laws of both states simply dictate what I have to disburse, it does not let the client off the hook for the debt. Since I got the actual debt reduced to a third of the settlement, my client was saving thousands of dollars that otherwise would have followed her around for years. It was also a good deal for the medical provider because they got cash in hand instead of chasing my client in collections.

-Bradley A. Coxe is a practicing attorney in Wilmington, NC who practices in Personal Injury, Car Accidents, Medical Malpractice, Contract and Real Estate disputes, and all forms of Civil Litigation.  Please contact him at (910) 772-1678.