Texas Hospital Liens

What is a Hospital Lien?

The Texas hospital lien statute, found in Texas Property Code Section 55.002(a), which states: A hospital has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person.  A hospital lien gives a hospital a superior legal right to recovery.  In other words, in Texas, hospitals can get paid back before you do.

Hospitals commonly file liens against accident victim patients in order to recover their charges.  All hospitals have done this, whether you saw a doctor at Methodist Hospital, Texas Children’s Hospital, Texas Orthopedic Hospital, or one of the other many hospitals in Houston – hospital liens are filed in the public county property records and secure the hospital’s right to payment for the debt.  Hospital liens will appear in credit checks and searches of public records and hospitals generally strictly enforce their liens. Because hospital liens are very strong, if you settle your case but didn’t realize that there was a hospital lien, or simply ignored it, the hospital can sue you for the charges, and also collect attorney’s fees.  Therefore, it is important to understand the rules regarding hospital liens to ensure that you don’t overpay a lien as well as ensure that you properly obtain a Release of Hospital Lien.

Care must be within 72 hours.  In order for a hospital lien to be valid, it must pertain to a hospital admission within 72 hours of the accident causing the injury.  If the treatment happened more than 72 hours after the accident, the lien is invalid.

The Notice of Hospital Lien must contain the following information: 

1. patient’s name and address;

2. the date of the accident;

3. name and address of hospital;

4. name of the person who is liable for the injury

The notice of lien must contain all of that information or the lien is not valid.  One common thing to look for is whether the notice lists the patient as being the person who is liable for the injury.  If the notice lists the patient as being the liable party, the lien is invalid.

The Hospital Lien Must Have Reasonable & Regular Charges

In order for the lien to be valid, the charges must be reasonable and regular, and hospitals are not permitted to overcharge.  Hospitals may recover more under a hospital lien than it would be reimbursed through health insurance.  For this reason, the billing personnel at hospitals frequently, and incorrectly, inform patients that health insurance will not cover the charges.  Almost all health insurance plans would cover at least a part of the charges, but since the insurance company reimbursement rate to the hospital is low, hospital billing offices frequently steer patients away from insurance and proceed with a hospital lien. Hospitals can probably get away with charging a little higher under a lien than they get paid through health insurance, but they cannot price gouge.

Fraudulent Hospital Liens 

We find that a significant percentage of hospital liens contain unreasonable and unenforceable charges.  If you have a hospital lien filed against you and there are charges that appear unreasonable (ex. thousands of dollars for a CT scan), you need to consult with a lawyer.  There are multiple legal options to address a hospital that filed a lien with inflated prices.  Our primary way to obtain relief in these situations is through the fraudulent lien statute, Chapter 12 of the Texas Civil Practice & Remedies Code.  Under the law, a patient can file a lawsuit against the hospital for filing a fraudulent hospital lien.  The law is very favorable to the patient.  For example, if the lien is found to be fraudulent due to unreasonable and irregular charges, the hospital must automatically pay patient $10,000, or a higher amount in the amount of the fraudulent charges, in addition to court costs, attorney’s fees, and punitive damages determined by the court.  The Texas Supreme Court recently held in North Cypress Medical Center Operating Co., Ltd, that the amount that a hospital accepts under health insurance is discoverable in cases of alleged hospital overcharging and filing fraudulent hospital liens.  Therefore, there is a great deal of potential leverage to be used against hospitals when they file hospital liens in over charging situations.

Timing of Lien

In order to be enforceable against a lawsuit settlement, the lien must have been filed in the county property records before the distribution of settlement funds.

Notice of Lien

The law states that patients have proper notice of the lien by simply filing the lien in the county property records.  There is no requirement to send you a copy by Certified Mail or any other way.  So, when contemplating settling a personal injury case, it is critical to perform a search of the county property records to be sure that there are no liens.

Hospital Lien Doesn’t Apply to Wrongful Death Claims But Does Apply to Survival Claims

Hospital liens don’t apply to wrongful death claims.  However, most wrongful death claims also include a claim for “survival.”  Survival claims seek compensation for the pain and mental anguish a person may have suffered after the accident but before dying.  We recommend contacting a lawyer if you have such a claim for a family member or loved one.

Hospital Lien Doesn’t Apply to Personal Injury Protection (PIP), Underinsured/Uninsured Motorists Claims (UIM/UM), or Worker’s Compensation Claims

As the title says, hospital liens do not apply to PIP, UIM/UM claims.  If you have an underinsured claim where you obtain money from another person’s liability carrier, as well as money from your own underinsured motorist coverage, you have no obligation to inform the hospital of the UIM portion of the gross settlement amount, nor do you have to pay them from that portion.

How To Get a Hospital Lien Removed?

The hospital (or the lien holder) is responsible for filing a Release of Hospital Lien.  A Release of Hospital Lien is a short statement indicating that the hospital lien was satisfied.  The hospital must file the release of lien in the county property records immediately after resolution of the hospital lien.  Resolution of the hospital lien occurs upon payment, either in full, or a negotiated reduced payment, or if you are successful in proving that the lien was invalid or unenforceable.  It is common practice to insist that the hospital forward a copy of the filed Release of Hospital Lien to the patient and his lawyer.

Lawyers Contacting Accident Victims Regarding Hospital Liens

If you received a Hospital Lien with a letter from a lawyer offering to represent you – BEWARE.  In Texas, there are strict rules prohibiting lawyers soliciting clients in personal injury cases.  Some clever, although questionably unethical lawyers, have found a way around the personal injury anti-solicitation rules.  Those law firms are searching the property records and contacting accident victims to notify them of a hospital lien, and offering their services to assist with handling the lien.  However, the true intent of the law firm is to get hired to represent the person in their accident case.  Many times those firms would not be the first, second or third choice of the consumer to be entrusted with their personal injury case.  Contacting potential clients that way reduces the chance that the consumer will research the law firm before hiring them, initially thinking its only for the lien.  If you have been contacted by a law firm seeking to represent you in regards to a hospital lien, please understand that the lien should not be negotiated until AFTER settlement of the personal injury case.  You seek reductions of the hospital lien after you settle the case so that you can obtain as much as possible in the settlement based upon the full bills, and then you can pocket the amount of the subsequent reduction.