Summer is an exciting time for those of us who monitor the changes coming down from Atlanta. July 1st is when newly passed legislation becomes law in Georgia. Some of those new laws are highly publicized and debated, while others fly under the radar. One of the more inconspicuous laws to change is what is called the Hospital Lien Statutes. A dry subject, but an important one for people who have been injured due to the negligence of others, most frequently car accident victims.
What is a hospital lien?
O.C.G.A. 44-14-470, et. seq. provide that if hospitals or physicians, who treat patients seeking treatment as a result of an injury caused by another party, may assert a lien for reasonable charges against the settlement funds accruing to the patient so long as they fulfill the statutory requirements set forth. Those requirements include sending notice to the tortfeasor (more commonly referred to as the at fault party), the tortfeasor’s liability insurance carrier, and the patient and subsequently filing a lien in the county where the healthcare provider is located and the patient’s home county. This all must be done in the prescribed time period.
That’s a lot of jargon, but in essence: If you are in a car wreck and you go to a hospital for treatment, the hospital (or physician) can collect payment for the treatment from your settlement. On its face this doesn’t sound unreasonable. It’s a mechanism by which a doctor or hospital can get paid if you receive treatment from them and there is money with which to pay them.
But, of course, it’s not that simple and there have been a number of appellate court decisions interpreting these statutes over the last couple of decades. One such case is Bowden v. The Medical Center, which had multiple trips through the appellate ranks in Georgia. It all started with the definition of “reasonable charges.” Everyone is aware that medical charges have skyrocketed over the last decade and there have been numerous reports on the vastly different rates for the same treatment at similar hospitals. The lien is not for any imaginable amount, but for the reasonable charges. The Georgia Supreme Court ultimately held that what various health insurance carriers (e.g. Anthem, UHC, Aetna, Cigna, Medicare, Medicaid) pay is admissible to prove reasonableness.
For example, if a CT scan has a base charge of $3,000 (this is referred to as the “chargemaster rate”), it would not be unusual to see wildly different reimbursement rates (what the hospital actually receives) from each of the various “payers” depending on the managed care contract that the health insurance carrier has with the hospital. Medicaid may pay $300 and Aetna might pay $900, while UHC could pay $1,111. Which, if any, of those amounts are reasonable and what amount can the hospital assert its lien for? Bowden litigated those issues with no real definitive answer.
With all this discussion about health insurance and their varying rates, the lien statute itself never indicates whether the hospital even has to file the charges to your health insurance. The lien statute provided an incentive for a hospital to forgo filing to a health insurer who pays 30 cents on the dollar and instead shooting for the full freight. Many healthcare providers took the position that they were not required to file to health insurance and could use the lien instead. The 2023 changes in 44-14-471(c) give guidance on the issue:
“No filing of a claim or lien under this part shall be enforceable unless the person, firm, hospital authority, or corporation operating a hospital, nursing home, physician practice, chiropractic practice, or traumatic burn care medical practice filing such claim or lien first submitted a claim to each health insurer of the injured person, if such injured person has health insurance coverage, and had such claim rejected.” (emphasis added)
So in order to perfect a lien, the hospital has to file the charges to a health insurer. Straightforward…or not.
I anticipate there will be litigation or perhaps more clarity needed by the legislature on several issues.
- What if any duty does the hospital have to investigate whether the patient has health insurance? Many accident victims may not have the wherewithal to provide their health insurance card. If the patient doesn’t provide the card, does the hospital have to request the information or can they claim ignorance? If they discover the health insurance later, do they have to release the lien? What if it is discovered after the time for filing a claim has lapsed?
- How will the term “rejected” be interpreted? Health insurance claims can be denied or rejected and those terms can have different meanings. Claims can be rejected for having the wrong coding. Does the hospital have a duty to correct the coding and resubmit? What if they do and it’s rejected again? The hospital could miss the tight deadlines to file the lien. Denials can come up for non-covered services or coordination of benefits issues. It will be interesting to see if those two terms will be interpreted as interchangeable.
- How will the governmental payers be treated in this new scheme? Is Medicare considered “health insurance coverage”? There are roughly 65 million people who depend on Medicare to pay their medical bills. But Federal law and regulations require that hospitals first seek other responsible payers before filing charges to Medicare. Will the changes to the law run afoul of that mandate and will this end up being a federal preemption issue? Medicaid is considered a “payer of last resort” but the lien statute seems to indicate that you can’t file a lien for payment until a claim to Medicaid is rejected.
The new changes to the hospital lien statute answer some questions, but open up the door for plenty more challenges. I suppose that’s why lawyers like to answer so many questions with “It depends.”
If you have questions about the hospital lien laws, please contact Matson Law Firm.
