A lien is security interest or legal right acquired in one’s property by a creditor. Under the No-Fault Act a lien by a provider would be an interest in the settlement or verdict of the underlying Plaintiff/Patient.
Why a Lien over an Assignment?
Unlike an assignment that vests the rights of the Plaintiff/Patient into the provider for collection, a lien anticipates that the Plaintiff/Patient will attempt to collect on their bills and the Provider will be compensated pursuant to the lien. A lien does not extinguish the Patient’s rights to collect. Courts have held, and there is case law that supports, that an assignment precludes a patient from collecting the underlying bill in litigation. A lien does not make that preclusion and allows collection of the bill by the patient or their attorney. This is particularly helpful if there is a smaller outstanding balance that would not warrant direct litigation.
What to do with a Lien?
Once the Patient signs the lien, the best course of action is to have the attorney for the Patient sign the lien as well. Many attorneys are willing to sign the lien because they want to include the bill in the primary case so as to bolster the damages claimed in the case. Even if the attorney is not willing to sign the lien, still produce the lien to the attorney in a easily documented way. The Provider can, and should, file the lien with the Court where the case is pending. Filing the lien ensures that all parties receive a copy and are aware. (Also by filing the lien in the Court Case, a Provider may receive case updates and filings).
What if a PIP Policy is exhausted?
If a PIP policy is exhausted, the lien can allow for recovery under a 3rd party claim of the Patient, if the Patient has a claim. Since it would be an excess medical claim it is not fully subject to the general rule of 51%. This means that a recovery is available to a Provider in a third party (BI) action. It is important to note that the fee schedule may not apply to excess claims in 3rd party cases.
What to do once the case settles?
If a case in which a provider has a lien, and has given notice, the provider should first reach out to the attorney to negotiate payment. If payment is denied or there is no communication, the provider should file a Motion under MCL 500.3112 requesting the Court to apportion the proceeds.