Can A Hospital Put A Lien On Your House For Unpaid Medical Bills

The last thing anyone would want after going through a serious accident or a medical emergency is finding out that the hospital that treated you has placed a legal claim on your house. No one wants to find out about hospital liens through a lien notice sent in the mail or through a title company’s notice about an issue to be flagged during a house sale or a refinance. A hospital’s ability to actually file a lien on your house will depend on the hospital’s state laws, the kind of debt, and if you have a homestead exemption on your primary residence. This guide will detail the processes involved with hospital liens, the implications on assets and properties, and the means available to defend your home — and if you ever need to sell quickly due to financial pressure, Sell My House Fast Houston is here to help.

What Is a Hospital Lien and How Does It Work?

A hospital lien refers to a hospital’s right to establish a claim against a patient’s personal injury claim or settlement after the hospital provides emergency services within 72 hours following a negligent act of a third party. To be enforceable, the lien must be recorded with a county clerk and must contain the patient’s name and address, the name and address of the lien claimant, a description of the services, the total amount claimed, the circumstances of the injury, and the name of the third party’s insurance, if known. The right to file a hospital lien is restricted to licensed hospitals and certain rural emergency medical services providers. The right is also restricted to certain emergency medical services providers who work in designated rural areas.

A hospital lien, which does not give a hospital an ownership interest in a personal injury claim, is similar to a mortgage. The lien is limited to the lesser of the hospital’s charges for the first 100 days of care, 50% of the total recovery, or the jury award, if the claim is litigated, and is not greater than 40% of the settlement. To protect patients who are unavoidably detained in a hospital for more than 100 days, multiple hospitals may file multiple liens. If a lien is recorded against a title, that lien must be satisfied before the insurance may be paid, and the settlement may be concluded.

Why You Received a Hospital Lien Notice After Your Accident

Lien filing is appealing to hospitals for a multitude of reasons. One advantage is that under EMTALA, emergency departments must treat all accident victims, including those who cannot pay. With personal injury settlements, hospitals are more likely to recover costs faster than they would by billings or collections. Instead of waiting to see if a patient has insurance or will pursue a personal injury lawsuit, hospitals will automatically file a lien for each qualifying emergency case. They will then remove the lien once they determine insurance has paid or that there is no third-party case. These liens are filed pre-suit, and they are only relevant if the emergency treatment is done within 72 hours of the accident.

It is important to consider that hospitals are not required to tell the patient, their attorney, or the insurance adjuster when a lien is filed. The lien will be filed in the public record, so many adjusters and attorneys do not find them in a timely manner, and are free to settle claims. It is generally the responsibility of the adjuster or attorney to do a lien search in the property records, as they are paid to do, to avoid the client getting stuck with delinquent medical bills. Conversely, personal injury attorneys must do a lien search to avoid potential legal malpractice claims. The settlements are not final until the attorney or adjusters have signed off, so they also must be diligent and do a lien search before the settlement is finalized.

Who Can File Medical Liens Against Personal Injury Settlement Proceeds?

Not all medical providers have the right to file a lien on personal injury settlements. Usually, the only medical providers permitted to file liens are licensed hospitals and, in some cases, providers of emergency medical services. The bar on what qualifies as a hospital admission has loosened. For a lien to attach, there is no longer a need for a patient to be formally admitted to a hospital as an inpatient. Access to a hospital department, treatment, and services, or even outpatient lab and radiology services, is sufficient for a hospital to establish lien rights. Multiple hospitals that provide treatment for the same injury can file a lien after the same accident, and multiple liens can be filed for the same settlement.

Outside of emergency medical services, individual providers and transport services are, in most cases, ineligible to file a lien. In some cases, providers of emergency medical services may have separate lien rights that are governed by different laws with their own limits and timeframes for filing a lien. In most cases, a hospital may pursue a lien for treatment provided to a personal injury settlement if the hospital is the first to provide treatment after the accident, and there are no limitations on the number or value of liens that may be filed for the same accident.

What Property and Assets Does a Medical Lien Actually Affect?

Hospital liens attach to personal injury settlements, judgments, and claims under survival statutes, but not to a person’s real property, e.g., their home. Hospital liens do not attach to claims for uninsured/underinsured motorist benefits, PIP or Med-Pay, wrongful death claims, workers’ compensation claims, or claims under the Federal Employees Liability Act. However, since hospital liens are recorded in the same county property records as mortgaged and tax liens, title companies require hospital liens to be satisfied or addressed formally prior to issuing a title insurance policy for a sale or refinance. As a result, a hospital lien that does not attach to real property will likely delay or affect a real property transaction.

Some state laws permit the filing of a hospital lien against a real property title, while others do not. However, in any state, hospitals have statutory lien protection against a release or settlement that does not satisfy their lien. The release of a claim against which the hospital lien has attached will not be a valid release against the hospital unless the hospital has been paid or the hospital is a party to that release. Patients whose injuries require treatment across state lines may also be subject to unfamiliar laws regarding liens, which is why local counsel is advised.

Can a Hospital Put a Lien on Your House?

Submitting a lien on a patient’s home is not permitted in numerous jurisdictions. Several states have put in place hospital liens that are statutory. These statutory liens are a claim against the proceeds of personal injury settlements. The injury must be the result of the negligence of another person in order for the lien to attach. If an injured person is found to have caused the accident, the lien cannot attach. When the hospital deems the lien is necessary to protect its claim, the hospital is allowed to file the lien. The statutory liens are automatic, and unlike a claim in a court, the statutory lien does not require a court to determine the fault of the third party.

In some jurisdictions, stronger progressive protections ensure that liens on a person’s home are only allowed when the hospital has already sued the person and obtained a court judgment in the hospital’s favor. The hospital has to file this judgment in the county where the person owns the home. These progressive protections allow the patient to raise defenses in court and offer settlements to the hospital before a lien is placed on the patient’s home. In states where the homeowner’s laws provide a homestead exemption, a judgment lien against the primary residence cannot accrue interest, cannot be enforced, and allows the patient to sell or refinance without a judgment lien. These laws provide a home defense against hospital lien collection and for those looking to move on quickly once protections are in place, a company that buys homes in Fort Worth or nearby cities can offer a fast and seamless cash sale with minimal stress.

Hospital Lien Requirements and Legal Validity Standards

Hospital liens can be valuable collection tools, but are not without their limits that can be used as leverage by patients and their attorneys. Lien amounts are not permitted to exceed the amount set by the statute for reasonable and necessary emergency care. Therefore, in order for the lien to attach, hospitals would have to show that their emergency charges are reasonable as well as customary. The courts have invalidated liens that have charged emergency care at amounts that exceeded the Medicare fee schedule without justification, and patients can challenge charges through the Medicare fee schedule during settlement negotiations. If a patient was transferred to another facility for care, that facility would be entitled to its own lien and may even receive its own share of the settlement. Hospital liens would have to be filed in the county property records within 90 days of a patient’s discharge or from the time of the settlement, and any mistakes in the filings, including the patient’s name, would void the lien.

The 90-day filing deadline is significant for patients and their counsel for many reasons. For instance, if a quick settlement is achieved before a hospital realizes that a third-party recovery is a possibility, the hospital’s lien may be avoided. Counsel should never consummate a settlement without making the appropriate arrangements for the outstanding liens. If a lien is left unsatisfied, the attorney and the client will be exposed to liability. Courts allocate settlement proceeds proportionately among competing liens. This system allocates first-claim priority. Additional disputes arise regarding whether a service should be considered an emergency. When considering the evolution of today’s multifaceted emergency divisions, which have shifted from surgical support to performing highly complicated surgical procedures, the legal distinction is no longer clear.

Homestead Exemption Laws Protect Your Primary Residence

Several states’ protections against hospital lien medical debts do not allow for the principal residence to be sold. The strongest states’ protections mean that high-value homes can be treated the same as average, rural homes. The protections extend to primary residences in the form of condos, co-ops, and mobile homes. General civil judgments become liens that can be enforced against property that is not a homestead. Medical debts do not become liens that can be enforced against homestead property. The only debts that can be secured against a homestead property are debts that the homestead owner consents to, which are generally a mortgage or a homestead equity line. Courts also prefer that the homestead owner consents in a clear and unequivocal way to waive homestead rights. Recent changes to the law in a few of the states have also doubled the personal property exemptions to reflect that the debts are incurred from medical emergencies that are not voluntary.

Settling the timing issue in a way that benefits the debtor, courts have created the rule that only liens that are established before the homestead is claimed can survive. The exemption states that a claim cannot be established at the same time as the homestead is claimed. Critics believe that the protections allow wealthy debtors to protect significant assets, but preserving family cohesion and preventing homelessness are essential public policy goals.

What to Do Immediately When You Receive a Hospital Lien Notice

After receiving a notice for a hospital lien, the most important thing to do is to contact a personal injury attorney within 48 hours. If you already have a personal injury attorney for your case, send the notice to them. Do not assume the notice will go away on its own or take a casual or dismissive approach, as this will most likely convert the lien into a judgment case. While you are waiting to receive legal advice, you should begin to collect evidence for the case. You should also receive a signed copy of the itemized bills for a full list of the charges. Bills are frequently incorrect, and an incorrect bill provides both you and your attorney with negotiating leverage. You should document all interactions for possible future use in court.

You have rights, and you are not obligated to accept any actions when hospital practices violate your rights. Hospitals must give a notification about the financial assistance policy along with a signed copy of the itemized bills. They must bill the applicable insurance and give the patient time to apply for aid. They may not pursue actions to collect a debt if a complaint is pending. They must also notify the patient about the planned actions to collect a debt and give a 30-day warning. In the past decade, laws have greatly changed in some locations and have limited or defined hospital lien recipient privileges. Knowing your rights at the beginning helps you to avoid a court case.

Can Your Personal Injury Attorney Negotiate Hospital Lien Amounts?

Personal injury attorneys commonly negotiate hospital lien amounts and can secure greater reductions than patients could achieve on their own. A patient will often recover a greater amount if a lawyer is able to negotiate a hospital lien amount than if the lawyer is not involved. Personal injury lawyers negotiate hospital liens, knowing that the hospital may be required to accept a reduced claim because the amount charged is in excess of the amount that is legally recoverable, or because the hospital did not provide emergency services. Personal injury lawyers understand that a hospital has to provide an itemized bill, a reduced claim amount, and cannot provide unreasonable or extraordinary collection actions while a claim is being processed.

It is better for a patient to start the negotiation process for a hospital lien by contacting the billing department to negotiate the lien amount before the hospital obtains a judgment to enforce the lien. Personal injury lawyers are able to negotiate the lien in a way that provides a greater recovery amount to the client because they have a better understanding of the hospital lien law.

How to Avoid Hospital Liens Before Medical Treatment

Preventing a hospital lien is most effectively accomplished by ensuring the hospital has documented your insurance information before your treatment. Early communication with the hospital billing department is crucial. Hospitals often assume patients are uninsured or underinsured and will file a lien, even if the patient has coverage. Insurance information can often prevent erroneous liens. After an accident, contact your insurance company and make sure the hospital is billing your coverage. Many hospitals will offer patients payment plans and financial assistance if patients contact the hospital before a lien is filed. However, proactively reaching out to the billing department significantly increases the likelihood of being offered a payment plan or financial assistance.

Knowing your insurance before an emergency is important, especially if you are a motorcycle rider or you are self-employed and carry liability insurance. Without the proper insurance coverage, a serious accident can result in a hospital lien in the hundreds of thousands of dollars. Before an accident occurs, it is far less costly to analyze your various insurance policies and mediate any gaps in insurance than to attempt to negotiate a hospital lien. If you are facing the inevitability of emergency treatment and are concerned with your insurance coverage, hiring a personal injury attorney is a good way to ensure the hospital follows the proper procedures.

Hospital Lien Enforcement Limitations and Patient Legal Defenses

Patients dealing with hospital lien enforcement often have more defenses than they think. These defenses can be highly effective depending on how completely and correctly the hospital follows the law. In many areas, lien enforcement for medical debt requires a lawsuit and a favorable judgment. Also, medical debtors are usually entitled to larger exemptions regarding personal property as compared to general debtors. Therefore, a medical judgment may be completely unenforceable for many medical debtors, even if they lose the case, because head of household wages and property, as well as retirement accounts and the cash value of life insurance, are completely outside the reach of the medical creditor. Improper recordation of a judgment lien on homestead property may be removed by a motion to the court. Also, failing to give notice to the debtor’s insurance or failing to show that the services were reasonable and necessary will also provide a basis for challenging the lien or having the lien removed.

A statute of limitations defense can extinguish older liens that a hospital has not converted to a judgment in a timely manner. Patients should also check to see if a lien was both filed and acted upon in a timely manner. Challenging whether fees exceed reasonable and customary fees, determining if notice was sufficient to all necessary parties, and assessing if the services were indeed emergency services are examples of procedural defenses. In some areas, recent legislative changes have restricted exceptional collection efforts related to hospital bills. If a patient encounters a lien that prevents them from refinancing or selling their property, they should be diligent. As a general rule, improperly filed liens can often be removed through a targeted court motion, rather than lengthy litigation and once resolved, working with cash home buyers in Houston or nearby cities can provide a quick and hassle-free path to selling the property without further delays.

FAQs

What Happens If a Hospital Puts a Lien on Your House?

Your unpaid medical bills can lead to your house being the subject of a lien from a hospital. While this can be a slight inconvenience during the sale or refinance of your house, it won’t constitute a sale of your house. A lien will not attach to your property to force a settlement of a personal injury case; a foreclosure will.

What Really Happens If You Don’t Pay Hospital Bills?

Almost 20% of the US population carries medical debt. Many are likely to face financial hardship. Hospitals can and do bring lawsuits and obtain judgments and liens on settlement proceeds and other property. However, they cannot force the sale of your primary residence because of the Homestead Exemption.

Can I Lose My House Over Hospital Bills?

In the event a hospital obtains a court ruling regarding a debt, it still cannot compel the sale of your primary residence to collect the medical debt because of the Homestead Exemption. This legislation protects debtors from losing their primary residence. However, if a lien is placed on your home, it will create additional difficulties when you decide to sell or refinance the home until the lien is lifted.

How to Protect Your House From Medical Debt?

If you occupy your primary residence, you should apply for the Homestead Exemption, which shields you from involuntary sales stemming from medical debt. Reach out to hospitals regarding payment options, check your insurance for coverage, and seek legal counsel for medical debt and liens in your state.

Facing a hospital lien on your home and need to sell fast? A lien doesn’t have to mean facing significant financial loss. Sell My House Fast Houston helps homeowners in exactly these situations, offering fair cash purchases that close quickly even with liens or unpaid medical bills involved. We manage all necessary documentation and details so you can move forward without the stress. Contact us at (281) 502-4750 for a no-obligation cash offer today.