Introduction to Medical Liens in Personal Injury Cases...• Missouri has a long recognized and well established rule prohibiting the assignment of a cause of action in personal injury

June 13, 2019

Introduction to Medical Liens in Personal Injury Cases

Presented By: Gage Fletcher – Fletcher Law Office, LLC

Presentation Outline

• History of Hospital Lien Statute

• General rule against assignment of claims

• Exception

• Expansion

• Mo. Rev. Stat. Examined

• Additional Entities covered by 430.230

• Hospital Lien Validity

• Hospital Lien Statute In Action

• Pro Rata Share Formula

• Formula Examples 1-3

• Special Considerations

• Morgan v. Saint Luke's Hosp. of Kansas City, 403 S.W.3d 115 (Mo. App.

2013)

• Huey v. Meek, 419 S.W.3d 875 (Mo. App. S.D. 2013)

• Beckett v. Dep't of Soc. Servs., Div. of Med. Servs., 948 S.W.2d 250,

251 (Mo.App. E.D.1997)

• Practical Suggestions

Hospital Lien Statute Pro Rata Formula:

1. Determine Net Settlement Proceeds

• Gross Settlement Amount (“GSA”) = _____________

• Attorneys Fees + Case Expenses = _______________

• GSA – Attorneys Fees and Case Expenses = Net Settlement Proceeds (“NSA”)

2. Determine Medical Lien Total:

• Chiropractor Lien + Hospital Lien + Physical Therapy Lien = Medical Lien Total

• If the Medical Lien Total exceeds fifty percent of the Net Settlement Proceeds (“NSA”),

than the individual Medical Lien must be reduced by their pro rata share.

3. Determine Medical Lien Pro Rata Share:

• Chiropractor lien ÷ Medical Lien Total = Medical Lien Pro Rata Share

• Hospital Lien ÷ Medical Lien Total = Medical Lien Pro Rata Share

• Physical Therapy Lien ÷ Medical Lien Total = Medical Lien Pro Rata Share

4. Reduce Medical Lien per Pro Rata Share

• Net Settlement Proceeds ÷ 2 = Pro Rata Medical Lien Total

• Medical Lien Pro Rata Share x Pro Rata Medical Lien Total = Reduced Medical Lien

Amount

INTRODUCTION TO MEDICAL LIENS IN PERSONAL INJURY CASES

PRESENTED BY:

GAGE FLETCHER

FLETCHER LAW OFFICE, LLC

OUTLINE

• History of Hospital Lien Statute

• General rule against assignment of claims

• Exception

• Expansion

• Mo. Rev. Stat. Examined

• Additional Entities covered by 430.230

• Hospital Lien Validity

• Hospital Lien Statute In Action

• Pro Rata Share Formula

• Formula Examples 1-3

• Special Considerations

• Morgan v. Saint Luke's Hosp. of Kansas City, 403 S.W.3d 115 (Mo. App. 2013)


• Beckett v. Dep't of Soc. Servs., Div. of Med. Servs., 948 S.W.2d 250, 251 (Mo.App. E.D.1997)

• Practical Suggestions

HISTORY

• General rule

• Missouri has a long recognized and well established rule prohibiting the assignment of a cause of action in personal injury claims.

Travelers Indem. Co. v. Chumbley, 394 S.W.2d 418, 425 (Mo.App. Spfld.D.1965).

• Ex

• Exception

• In 1941, Missouri enacted the State’s first hospital lien statute and thereby carved out the first limited exception to this general

prohibition by providing for certain medical treatment providers a lien on personal injury claims for the costs of treatment with

certain limitations. Huey v. Meek, 419 S.W.3d 875 (Mo. App. S.D. 2013)

• Purpose of Statute/Exception: “designed with a dual purpose: to ensure that injured patients are quickly treated without first

considering if the patients are able to pay and to protect health care providers financially so that they could continue to provide care.”

Kelly v. Marvin's Midtown Chiropractic, LLC, 351 S.W.3d 833, 835 (Mo.App. W.D.2011).

• Expansion

• In 2003, Missouri legislature amended the Hospital Lien Statute definitions to include other entities such as chiropractors, physical

therapists and other clinics providing medical treatment.

MISSOURI HOSPITAL LIEN STATUTE

• Mo. Rev. Stat. 430.230

• “Every public hospital or clinic, and every privately maintained hospital, clinic or other

institution for the care of the sick, which is supported in whole or in part by charity, located within the

state of Missouri, or any such hospital duly incorporated under the laws of Missouri providing for the

incorporation of eleemosynary institutions, shall have a lien upon any and all claims,

counterclaims, demands, suits, or rights of action of any person admitted to any hospital,

clinic or other institution and receiving treatment, care or maintenance therein for any cause

including any personal injury sustained by such person as the result of the negligence or

wrongful act of another, which such injured person may have, assert or maintain against

the person or persons causing such injury for damages …”

NON-HOSPITAL ENTITIES COVERED UNDER STATUTE

• Mo Rev. Stat. 430.255: “Clinics, health practitioners and other institutions, as defined in this section, shall have the same rights

granted to hospitals in sections 430.230 to 430.250.”

• 430.255(1)(2): “Clinic” • Defined as: “a group practice of health practitioners or a sole practice of a health practitioner who has incorporated his or her practice;”

• 430.255(1)(3):”Health practitioner” • Defined as:

• a chiropractor licensed pursuant to chapter 331;

• a podiatrist licensed pursuant to chapter 330,

• a dentist licensed pursuant to chapter 332,

• a physical therapist licensed under chapter 334,

• a physician or surgeon licensed pursuant to chapter 334,

• or an optometrist licensed pursuant to chapter 336, while acting within the scope of their practice;

• 430.255(1)(5) “Other institution”, • Defined as: “a legal entity existing pursuant to the laws of this state which delivers treatment, care or maintenance to patients who

are sick or injured;”

HOSPITAL LIEN VALIDITY

• A treatment provider covered under section 430 that is seeking to assert a medical lien on a personal injury case must adhere

to the statutory directives for the lien to be valid. Mo. Rev. Stat. 430.240 provides the following

1. Notice

1. Written

2. Contains the name and address of the injured person

3. Date of the accident

4. Name and location of the hospital

5. If known, the name of the person or persons, firm, or company alleged to be liable to the injured party

6. Prior to the payment of any compensation to such injured person or their attorney/legal rep as compensation for such injuries.

2. Certified Mail

1. Treatment provider seeking to assert lien must send a copy of the lien notice by certified mail with return receipt to:

1. Insurance carrier if known, which has insured such person, firm, or company against such liability.

HOSPITAL LIEN STATUTE IN ACTION

• Mo Rev. Stat. 430.255 provides the lien reduction formula that is used for the practival

application of the statute.

• Mo. Rev. Stat. 430.255(3). If the liens of such health practitioners, hospitals, clinics or other

institutions exceed fifty percent of the amount due the patient, every health care

practitioner, hospital, clinic or other institution giving notice of its lien, as aforesaid, shall

share in up to fifty percent of the net proceeds due the patient, in the proportion that each

claim bears to the total amount of all other liens of health care practitioners, hospitals, clinics

or other institutions.

• “Net proceeds”, as used in this section, means the amount remaining after the payment of

contractual attorney fees, if any, and other expenses of recovery.

HOSPITAL LIEN STATUTE FORMULA


• Gross Settlement Amount (“GSA”) = _____________

• Attorneys Fees + Case Expenses = _______________

• GSA – Attorneys Fees and Case Expenses = Net Settlement Proceeds (“NSA”)


1. Chiropractor Lien + Hospital Lien + Physical Therapy Lien = Medical Lien Total

2. If the Medical Lien Total exceeds fifty percent of the Net Settlement Proceeds (“NSA”), than the individual Medical Lien must be reduced by their

pro rata share.


1. Chiropractor lien ÷ Medical Lien Total = Medical Lien Pro Rata Share

2. Hospital Lien ÷ Medical Lien Total = Medical Lien Pro Rata Share

3. Physical Therapy Lien ÷ Medical Lien Total = Medical Lien Pro Rata Share


1. Net Settlement Proceeds ÷ 2 = Pro Rata Medical Lien Total

2. Medical Lien Pro Rata Share x Pro Rata Medical Lien Total = Reduced Medical Lien Amount

HOSPITAL LIEN STATUTE FORMULA EXAMPLE 1


• Gross Settlement Amount (“GSA”) = $25,500

• Attorneys Fees + Case Expenses = 40% Contingency Fee $10,200 + $300 Case Expenses = $10,500

• GSA ($25,500) – Attorneys Fees and Case Expenses ($10,500) = $15,000 Net Settlement Proceeds


1. $2,500 Chiropractor Lien + $10,000 Hospital Lien + $2,000 Physical Therapy Lien = $14,500

2. If the Medical Lien Total exceeds fifty percent of the Net Settlement Proceeds (“NSA”), than the individual Medical Lien must be reduced by their pro rata share.


1. Chiropractor lien ($2,500) ÷ Medical Lien Total ($14,500) = Medical Lien Pro Rata Share (17.24%)

2. Hospital Lien ($10,000) ÷ Medical Lien Total ($14,500) = Medical Lien Pro Rata Share (68.96%)

3. Physical Therapy Lien ($2,000) ÷ Medical Lien Total ($14,500) = Medical Lien Pro Rata Share (13.80%)


1. Net Settlement Proceeds ($15,000) ÷ 2 = Pro Rata Medical Lien Total ($7,500)

2. Chiropractor Pro Rata Share (17.24%) of Pro Rata Medical Lien Total ($7,500) = $1,293

3. Hospital Pro Rata Share (68.96%) of Pro Rata Medical Lien Total ($7,500) = $5,172

4. Physical Therapy lien Pro Rata Share (13.80%) of Pro Rata Medical Lien Total ($7,500) = $1,035

5. Client Share: $7,500





• GSA ($13,000) – Attorneys Fees and Case Expenses ($300) = $7,500 Net Settlement Proceeds


1. $2,000 Chiropractor Lien + $5,000 Hospital Lien = $7,000

2. If the Medical Lien Total exceeds fifty percent of the Net Settlement Proceeds (“NSA”), than the individual Medical Lien must be reduced by their

pro rata share.


1. Chiropractor lien ($2,000) ÷ Medical Lien Total ($7,000) = Medical Lien Pro Rata Share (28.57%)

2. Hospital Lien ($5,000) ÷ Medical Lien Total ($7,000) = Medical Lien Pro Rata Share (71.43%)


1. Net Settlement Proceeds ($7,500) ÷ 2 = Pro Rata Medical Lien Total ($3,500)

2. Chiropractor Pro Rata Share (28.57%) of Pro Rata Medical Lien Total ($3,500) = $1,071.43

3. Hospital Pro Rata Share (71.43%) of Pro Rata Medical Lien Total ($3,500) = $2,678.57

4. Client Share: $3,500





• GSA ($60,000) – Attorneys Fees and Case Expenses ($300) = $35,700 Net Settlement Proceeds


1. $2,700 Chiropractor Lien + $4,000 Hospital Lien = $7,000

2. If the Medical Lien Total exceeds fifty percent of the Net Settlement Proceeds (“NSA”), than the individual Medical

Lien must be reduced by their pro rata share.

3. No reduction: Medical Lien Total does not exceed fifty percent of Net Settlement Proceeds

SPECIAL CONSIDERATIONS

• Morgan v. Saint Luke's Hosp. of Kansas City, 403 S.W.3d 115 (Mo. App. 2013)


• Beckett v. Dep't of Soc. Servs., Div. of Med. Servs., 948 S.W.2d 250, 251 (Mo.App. E.D.1997)

• Insurance carrier paying benefits to hospital directly without claimant’s authorization.

430.255(4)

MORGAN V. SAINT LUKE'S

• Facts: Plaintiff was injured in an MVA in 2009. She was treated at St. Luke’s and incurred $11,452.75 in

medical expenses. Upon completing treatment, St. Luke’s initially billed Plaintiff ’s health insurance carrier.

St. Luke’s and Plaintiff ’s health insurance company held an agreement that entitled Plaintiff to a

contractual reduction in the medical bills incurred while being treated at St. Luke’s.

• After Plaintiff ’s health insurance submitted payment to St. Luke’s, the hospital returned payment to Ms. Morgan’s

health insurance provider and asserted a lien on Plaintiff ’s third party claim against the tortfeasor.

• Issue: Can a treatment provider assert a lien on a third party tortfeasor claim when there is a contract

between the healthcare insurance provider and the treatment provider that allows for a discount in the

insured’s medical bills and the healthcare provider has already submitted payment to the provider?

• Holding: For Plaintiff. There is an absence of a debt when the insurer submits payment.

HUEY V. MEEK

• Facts: In December of 2010, Plaintiff was rear ended. After the wreck, Plaintiff osught treatment with

Defendant, a licensed chiropractor. The Chiropractor’s proposed lien paperwork included a provision

attempting to remove the agreement from any dominion of the hospital lien statute. The agreement read

in part:

• “This is a consensual lien as authorized by Missouri case law. This is not a statutory lien under Sec. 430.250

R.S.Mo. [sic], and is therefore not restricted by the limitations therein.”

• Clearly this proposed agreement was drafted with an intention to avoid the mandatory directives of the hospital

lien statute i.e reductions.

• Missouri has a long recognized and well established rule prohibiting the assignment of a cause of action

in personal injury claims. Travelers Indem. Co. v. Chumbley, 394 S.W.2d 418, 425 (Mo.App. Spfld.D.1965).

• Holding: The lien was inconsistent with the statute and therefore invalid.

BECKETT V. DEP'T OF SOC. SERVS., DIV. OF MED. SERVS.

• Facts: In September of 1994, patient was injured in a one car accident in Missouri caused by the driver of

victim’s vehicle. Victim was treated at a hospital in Illinois. Upon resolution of an interpleader, victim was

awarded $75,000 in interpleader funds subject to liens asserted by Division of Medical Services and the

hospital where victim was treated. Dispute arose as to how the funds were to be apportioned between

the treatment providers.

• Issue: Can a hospital that is not located in Missouri nor duly incorporated in Missouri assert a valid lien

pursuant to the Missouri Hospital Lien Statute?

• Holding: No. For purposes of asserting a hospital lien on a personal injury claim in Missouri, the

treatment provider must be either:

• i. Located in Missouri; or

• ii. Duly incorporated under the laws of Missouri.

PRACTICAL SUGGESTIONS

• Inspect Lien Agreements

• Negotiate

• Medical lien holders primary intention in asserting lien is to secure compensation for their

services. This is done to reduce risk and increase security.

• Most medical lien holders are very receptive to the request for lien reductions to make a case

resolution feasible.

CONTACT

Gage Fletcher

Fletcher Law Office, LLC

Email: [email protected]

Phone: 816-631-2868

Documents

Introduction to Medical Liens in Personal Injury Cases...• Missouri has a long recognized and well established rule prohibiting the assignment of a cause of action in personal injury