MEDICAL LIEN REDUCTION....IS IT DONE BEFORE SETTLEMENT OR BEFORE DISBURSEMENT?

Asked about 1 year ago - Alhambra, CA

The parties have agreed on a settlement amount. It is well below what was envisioned. many future medical costs need to be paid. Client wants ALL medical liens by providers reduced substantially, so that there will some additional moneys for future medical care. PL attorney says, providers may not agree to a reduction. PL wants him to try to get a reduction( he is seeking a 30% reduction across the board except Atty fee ) Whats the worst that can happen ? Can PL simply refuse to sign the disbursement documents and to endorse settlement draft unless reduction is obtained OR should he seek a reduction BEFORE settling case. How should client handle attorneys hesitance to even try ??

Attorney answers (9)

  1. David Ian Schoen

    Pro

    Contributor Level 20

    19

    Lawyers agree

    Answered . This is a very good question. I can only speak to what my office has always done in these situations. We have always tried to fix the amount of the lien BEFORE finalizing the settlement for various reasons. First, I believe the client has a right to know this information when making a final decision on whether to settle or not. Second, I believe that the is more leverage with the lien holders before the settlement, in that there is still the risk that they won't get paid if the case goes to trial. Sometimes liens cannot be finalized, such as with medicare where you can only get the amount that you will probably have to pay before settlement, but not know for sure what the exact number is going to be. The goal is always to maximize the amount of money that we put in the client's pocket. This can be very labor intensive and can cost the office many hours of time that could be better spent other ways. However, I believe that this best serves the client. However, not all attorneys do things this way, because not only does it take a lot of time and effort but it will probably delay finalizing the settlement. That said, there comes a time when the case should be settled.

  2. Robert Bruce Kopelson

    Contributor Level 20

    17

    Lawyers agree

    Answered . A case is worth what it is worth, and that is not generally dependent upon the amount of liens. If you dont think you are getting the reasonable value of the case by the present settlement, then dont settle.

    Lien holders may not be as willing to agree to discount if the case isnt settled yet. Most want to know what the settlement is, and what the costs and fees are. They dont want to give a low number, and then you go out and settle for a larger amount. Does the retainer agreement say or has your atty told you that lien negotiation is part of the service he is providing? Depending upon the type of lien, reductions may be standard. if atty isnt willing to do this, you may want to hold off on signing draft and disbursement sheet to motivate him.

  3. Andrew Daniel Myers

    Contributor Level 20

    18

    Lawyers agree

    Answered . Lien holders have grabbed a growing role in the settlement of personal injury cases. Different attorneys approach issues differently. My goal is to identify liens and approach lienholders with reduction negotiations prior to settlement when there is still leverage. For example, if they do not want to reduce the liens now and get a lesser but known amount, then it's their choice to wait a very long time for uncertainty of jury trial. MORE ON LIENS - BLUE LINK BELOW

    Law Offices of Andrew D. Myers, North Andover, MA & Derry, NH provide answers for informational purposes only.... more
  4. Merry Melinda Fountain

    Pro

    Contributor Level 15

    18

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    Answered . You advised that the parties have agreed to a settlement amount. If you have signed a Release, then your case has settled. Attorney negotiations regarding bill reductions can occur either before or after the matter is settled. Your attorney is right, they may not agree to the reductions. I practice in Indiana where the hospitals are difficult to negotiate with because of a statute that protects their rights. There may be similar laws in your state. Some health insurers are very difficult to negotiate with, depending on their legal rights and case law. Generally speaking an attorney does have more leverage negotiating before the case settles, however some providers will not reduce their bills without knowing how much the case settled for. Your attorney is doing the right thing in taking the time to try reduce the bills that have to be paid back so that you receive more yourself out of the settlement.

    Merry Fountain is licensed to practice law in Indiana. She can be contacted at 1-888-242-HURT. This is not legal... more
  5. Christian K. Lassen II

    Pro

    Contributor Level 20

    15

    Lawyers agree

    Answered . It is best for a client to have the liens negotiated down to pennies on the dollar before a release is signed, or the client's attorney will have no incentive to do so after receiving his fee.

  6. Evan Andrew Gould

    Pro

    Contributor Level 11

    10

    Lawyers agree

    Answered . Either before or after. Many providers won't negotiate with you until they know the settlement amount. Others won't negotiate unless every other provider reduces and (in some cases only then if the attorney reduces as well). The larger the settlement, regardless of whet was "envisioned" the less providers like to reduce. They figure if you are putting a large chunk in your pocket why should they reduce at all. In this economy, everybody wants to be paid. If the client has already signed a release the attorney's job is to try and do the best he/she can with the amount the client agreed to settle for.
    The attorney can rarely if ever guarantee the bottom line. Be reasonable. Do not expect 30% discounts across the board. You can refuse to sign documents but that probably won't result in you ending up with more money.Have faith that your attorney is looking out for your best interest. Don't be greedy. If at the end of the day you feel you have a legitimate fee dispute with the attorney, there is recourse for that as well. Good Luck.

  7. Patrick Martin Buchanan

    Contributor Level 7

    7

    Lawyers agree

    Best Answer
    chosen by asker

    Answered . I'm not sure that the law requires a plaintiff's attorney under these circumstances to sek a reduction in medical bills, however, I can say thatI certainly do as a matter of course where the settlement is not as much as wil adequately compensate my client for injuries and suffering received. This is rare as my firm tends to get good settlements since I used to defend insurance companies and know their tricks and tactics.

    I would suggest a letter to all medical lien holders explaining that the funds are going to be placed into an Interpleader action (and held in trust by the court) so that they can fight it out among themselves UNLESS they are each willing to take a reasonable reduction so that the plaintiff can walk away with something reasonable for his or her trouble.

    If the money is placed into Interpleader, each company/provider has to retain counsel to represent them or forego payment altogether or try and represent themselves (bad option). The cost of retaining counsel for this has a certain nuisance value that incentivizes medical providers to reduce their charges in the interests of getting something now as opposed to a virtual guarrantee that they'll get less later on merely by virtue of the fact they'll have to pay their lawyers to represent them in the Interpleader action.

    A factor worth considering is that Medicare reimbursement and insurance rates are abysmally low, so when they get a cash paying customer, even at, say, a 25% reduction they are still receiving more for their services than they get from Medicare and Insurance reimbursements, who typically "disallow" charges and have agreements to pay fractional amounts in the first place.

    I find that I get 25% reductions easily based upon a mere telephone call. Important note to lawyer, however, do not abuse this or the medical providers will cut you out of the circle of light.

    As far as telling this client how to handle it, pass this information on toyour lawyer who simply may notbe fully aware of all the options or the fractional reimbursement rates of Medicare and insurance companies. It's okay--lawyers can't know everything, and it is a "practice" not a science.

    Best wishes to you.

    Patrick Buchanan, Atty in Oceanside California

  8. Richard Andrew Harting

    Pro

    Contributor Level 18

    9

    Lawyers agree

    Answered . goes both ways - sometimes the liens are addressed before the settlement and sometimes after - it really depends on the attorneys working knowledge of how to deal with certain providers. However, there should be a general idea of what to expect on the medical bill reduction before the settlement is made and the client should have a general idea of what they will net before ever agreeing to a settlement.

  9. David A. Papa

    Contributor Level 16

    8

    Lawyers agree

    Answered . My office will negotiate all liens prior to settlement unless there is a valid tender. If you accept a negotiated settlement amount prior to lien reductions the upper hand goes to the lien holder who can demand full amount forcing an attorney to implead the funds and have the court pay out on a pro rata basis. However, if the lien holder is told of the risks of not taking what is on the table and the offer, albeit lower than the lien amounts, the scare for the lien holders are they could get zero. So negotiate first and than accept amount on the table.

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