Impossible to Settle: The Continuing Trend of Plaintiffs Engaging Lien-Based Medical Providers

A trend identified in California a few years ago has seemingly spread to other areas of the United States. Plaintiffs’ attorneys are referring their bodily injury clients to expensive, lien-based medical providers to drive up the  medical damages claimed in their cases. This pattern is making US bodily injury cases increasingly difficult to settle absent trial.

Here is a quick summary. Instead of billing insurance for medical treatment, lien-based medical providers enter into a legal contract with the patient (plaintiff) that allows the provider to be paid by a settlement or a judgment in a bodily injury case. Sometimes to their client’s detriment, plaintiffs’ counsel are advising their clients not to use their own health care insurance for treatment so that the lawyers can use the larger amounts billed by the lien-based medical providers as evidence of their medical damages, rather than the lesser amounts that insurance would pay. The patient (plaintiff) agrees to be personally liable for the lien amounts (even though their own insurance may have covered the cost of the medical services provided). In some instances, the lien-based cost of a medical procedure is up to 20 times the amount commonly paid by worker’s compensation (work-based, no-fault health insurance for injured workers) or Medicare (federal health insurance for anyone 65 years or older, or anyone under 65 with certain disabilities or conditions).

With such enormous claimed medical damages, plaintiffs’ counsel commonly make “policy limit” demands or, alternatively, demands so high that it leaves no choice but to try the case. Further, lien-based medical providers often refuse to cooperate in providing subpoenaed documents regarding the amount the lien-based medical providers will actually accept in payment for the medical services they provide. Protracted and expensive discovery motions to compel production ensue.

Although expensive, such fights are necessary because evidence of what the lien-based providers actually accept is critical to show the complete unreasonableness of the lien-based medical charges. The hope is that the jury (or judge if it’s a bench trial) will recognize that the over-inflated lien-based medical provider billing amounts are not the amounts commonly accepted by them for payment for the medical procedures/care provided to plaintiffs.

Medical bill auditing experts are also critical in such cases. They can assemble evidence from medical billing databases to show that the lien-based billing is far outside the standard accepted amounts billed for the same medical procedures/care provided to the plaintiff in the community in which they live. Again, the hope is that the jury/judge will understand that the lien-based billing is massively inflated and award damages (if any) on the true value of the medical services provided.

Courts appear disinclined to prohibit such tactics by plaintiffs’ counsel. Unless states introduce legislation to curtail lien-based medical billing, it seems likely that this trend will continue to grow. Thus, we can expect that more US bodily injury cases will need to be tried due to conflicting medical damage valuations and that litigation fees/costs will likely continue to increase.