NOTICE OF CLAIM OF HEALTHCARE PROVIDER LIEN FREQUENTLY ASKED QUESTIONS

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Justina Newman
5 years ago
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John Peick jpeick@peicklaw.com Peick Law Group P.S. A Pacific Northwest Law Firm 1813-115th Ave. NE Bellevue, Washington 98004 Tel. # Fax.

1 John Peick Peick Law Group P.S. A Pacific Northwest Law Firm th Ave. NE Bellevue, Washington Tel. # Fax. # NOTICE OF CLAIM OF HEALTHCARE PROVIDER LIEN WHY DO I NEED TO FILE A LIEN? Page 1 FREQUENTLY ASKED QUESTIONS To give you a better chance of recovering payment for your services. RCW provides a mechanism to help insure health care providers obtain payment for their goods and services rendered to a person suffering from traumatically induced injuries. A lien creates a priority right to payment out of a specific property or fund, notably a monetary claim, right of action or money. The fund in the case of health care providers is generally either a direct insurance claim or personal injury settlement. WHO IS AFFECTED BY THE LIEN? The lien is upon any claim, right of action or money to which your patient is entitled against the at fault party (tortfeasor). Accordingly, anyone with control over payment of such claim or monies, (adjusters or attorneys)who is given notice of the existence of a valid lien, would be affected by the lien filing. WHAT ARE THE CONSEQUENCES OF IGNORING THE LIEN? If a person having control over the payment of funds to your patient arising from a claim or right of action against the tortfeasor, knowing of the valid lien, ignores the lien and pays out the monies to other parties, including the patient, they will remain liable to the provider for those misdirected funds, plus owe the provider reimbursement for the reasonable attorneys fees incurred in collection activities. If you have been denied payment of your valid lien, call us and we can refer you to a collection attorney. WHEN DO I HAVE TO FILE? The provider must file the lien within 20 days of the date of injury or receipt of care, unless the case has not settled. If settlement has not occurred, then you can file the lien at any time up to the date of settlement. You can also re-file the lien to gain an extension of one year, so long as that extended re-file occurs prior to the settlement of the case. WHERE DO I FILE?

2 In order to be valid, your lien must be filed with the county auditor of the county in which the services were rendered within the time limits noted herein. There are certain formatting requirements that must be met for your lien document. (See example) These formats may vary from county to county, so check with your auditor. At the time of this memo, the cost of filing your lien is $8.00 for the first page, and $1.00 for each successive page. Be sure to call and double-check these filing fees since they are subject to change. Be sure to send along a copy of the lien with a SASE envelope and request the Auditor s office to return the copy marked Received for your records. While it does not seem required by the statute, it is important that in addition to filing that you send a copy of the notarized lien to your patient s attorney, your patient s insurer, tortfeasor s attorney and tortfeasor s insurance adjuster by return receipt, postage prepaid correspondence. Call to verify receipt by the adverse carrier and document the name of the person acknowledging receipt. ARE THERE ANY LIMITATIONS ON FILING THIS LIEN? Yes. First, the patient must have suffered traumatically induced injuries for which he or she has a claim or right of action, either PIP, Homeowners, third party liability, UM/UIM, etc. Second, this lien is inapplicable to Workmen Compensation cases. Third, the accumulated debt for ALL health care providers for the case cannot exceed twenty-five per cent (25%) of the recovery. This latter point requires some explanation. Your lien is security for your debt. It is not the debt itself. Accordingly, even if your lien rights are limited to 25% of the total recovery, your right to recover 100% of your debt directly from the patient by other means (i.e. debt collection agencies, small claims court, etc) is preserved unless you sign a release of such debt. However, the persons against whom the lien is effective, attorneys, insurers, and tortfeasors are immune from further recovery once they satisfy that 25% of the aggregate recovery. You must also recognize that the statute purports to limit recovery for ALL healthcare liens to 25%, so if there are multiple providers with liens, you may find yourselves sharing that 25% share of the recovery. Nevertheless, many attorneys request providers to sign 100% releases of the patient debt in consideration of paying the 25% of recovery. You are not required to sign that release if you choose not to do so. Stand up for your rights. HOW DO I CREATE THIS HEALTHCARE LIEN? You will need to obtain the following information for the lien itself: Patient s Name and address Tortfeasor s name and address Tortfeasor s Insurance Company Date of Accident Place of Accident (address, city, state) Nature of Injuries Sustained in Accident By Patient Information you will need to insure proper handling of the lien process: 1. Name and address of patient s attorney Page 2 L-2

3 2. Name and address of tortfeasor s attorney and/or adjustor 3. Claim numbers for tortfeasor insurance 4. Claim numbers for patient s insurance The claimant is the healthcare provider. The tortfeasor is the person that injured your patient, also referred to as the defendant. Formatting of the lien form is important since the Auditor will not accept it for filing without compliance. The first page must have a 3 margin on the top, and 1 on all sides. Subsequent pages must have 1 margins on all sides. No information or seals can intrude into this margin space, EXCEPT the return address can be in the upper left corner of the document inside the 3 margin. All information must be legible (read typed) and capable of being imaged. There can be nothing affixed to the pages by tape, staple, etc. Font size must be a minimum of 8 point. The page must be 8 1/2 x 14 or less. The attached form should be self-explanatory. If there are any questions, feel free to give us a call. INSTRUCTIONS FOR UTILIZATION OF LIEN: 1. Fill in all blocks of information. 2. Have physician or corporate officer sign in front of notary public. Remember the notary must see the document be actually signed or the Notary seal is defective. 3. Call the county auditor and verify the proper formatting for the lien in terms of inches of space from the top, bottom, right and left. Some counties are very strict about such page formatting and will reject the filing if not compatible with the requirements. 3. Send to the proper county (county in which patient resides) auditor for recording. Send along extra copy with return envelope for the auditor to stamp received and mail back. Check with auditor re filing fees. 4. Send copy of recorded lien to patient, all attorneys of record, and all insurance companies, including PIP/UIM and adverse carrier involved with claim. 5. Docket in your calendar system 11 months from date of filing a note to renew the lien. They are only valid for 12 months from date of filing and then lapse automatically. You can always file another lien so long as the claim has not been settled. Page 3 L-3

4 FROM: JOHN C. PEICK TO: Healthcare Providers/Practitioners RE: Liens and Assignment of Proceeds MEMO There is considerable confusion regarding the difference between properly filing a statutory healthcare lien, and obtaining an assignment of proceeds from the patient and their attorneys. An assignment of proceeds has none of the statutory protection of a lien, but conversely is not limited by the statute limiting providers' recovery to 25.0% of the settlement or judgment proceeds. In a perfect world, you would obtain both a healthcare lien, properly filed with the County and mailed to all participants in the claim, and obtain an assignment of proceeds before embarking upon an extension of credit for your patients. Some attorneys have objected to assignments on a variety of grounds. These grounds can be summarized as follows: Creates a conflict of interest with the client. There is some merit to this concern, since the attorney owes a duty to the client, not to the provider. However, this conflict can be eliminated by clarifying the attorney's role is simply following the client's instructions, and the attorney has no independent obligation to pay the provider from funds other than the client's share of proceeds. (See our suggested form) The ABA Model Rules for Professional Conduct do have a provision requiring attorneys to heed the obligations of their clients to third parties, but Washington State has not adopted that particular rule. However, the Washington state bar association has issued a formal opinion (see below) that allows attorneys to guarantee payment from client s funds upon client consent. Creates an obligation to pay client obligations. This is a bona fide concern, and unfortunately, many of the assignment forms that we see in our practice do not distinguish between the client's share of proceeds, and the attorney's share of the proceeds payable as fees or reimbursed costs. The Washington State Bar Association, and the Washington State Supreme Court Rules of Professional Conduct prohibit attorneys from guaranteeing the obligations of their clients. This problem can be resolved by clearly delineating the source of the funds for payment to the provider (See our suggested form Third Party Determination that Billings Are not Related or Reasonable. This argument ignores the reality of the marketplace and judicial system by somehow suggesting a jury of untrained laypersons can be called upon to accurately or scientifically determine the reasonableness or necessity of healthcare, or the usual and customary charges for such care. The jury system may be the hallmark of the American system of justice, but there are few plaintiff attorneys that truly believe the decisions, good or bad from our perspective, are always grounded in superlative logic and an extraordinary grasp of the factual reality. It is a little disingenuous for a plaintiff lawyer to take a case to court arguing that all services and billings are appropriate, and then when the jury fails to buy his or her arguments on that score, expect the provider to take the Page 4 L-4

5 short end of the stick. The argument becomes even more strained if it is suggested that IME results should be used to determine if your bills are appropriate. No plaintiff attorney pays much attention to the defense experts telling him or her that their client's providers are in error or charged too much. To do so gives more credibility to such defense experts than they assuredly deserve. Nevertheless, we provide a dispute mechanism for these attorneys by providing instructions to interplead the monies in the event of a disagreement. While this may not be preferable to getting a check immediately, it is preferable to having the attorney send the disputed funds to his or her client. Non-Revocable Instructions Cause Conflict. This argument is stretching the ethical argument somewhat because it is common for clients to give instructions to attorneys that cannot be revoked once acted upon. Settlement is one good example. If an attorney is authorized to enter into a settlement, and does so with client permission, and then the client decides to rescind that approval, settlement rarely is extinguished. Opposing counsel can move to enforce the agreement if stipulated to in writing or in open court. The client's attorney should be ethically bound to withdraw from representing the person reneging on the settlement, or at least, I would do so. Nevertheless, the dispute mechanism in #3 resolves this problem, because it allows a client to change their mind but to have the funds interplead. An Assignment Changes the Contingent Fee Contract. This is a variation on #2. Unless there is a clear delineation of the source of funds for payment to the provider, this concern has some validity. By delineating client funds, less attorney fees and costs, as the source of funds, this argument should be moot. As a last resort, do not extend credit. While you may lose a patient that way, is it preferable to provide services for which you will not be paid? Page 5 L-5

6 REVISED CODE OF WASHINGTON RE HEALTH CARE LIENS CITATION TITLE Liens authorized Notice of lien--contents--filing Record of claims Taking note--effect on lien Settlement of damages--effect on lien Enforcement of lien--payment as evidence Liens authorized Every operator, whether private, or public, of an ambulance service or of a hospital, and every duly licensed nurse, practitioner, physician, and surgeon rendering service, or transportation and care, for any person who has received a traumatic injury and which is rendered by reason thereof shall have a lien upon any claim, right of action, and/or money to which such person is entitled against any tort-feasor and/or insurer of such tort-feasor for the value of such service, together with costs and such reasonable attorney's fees as the court may allow, incurred in enforcing such lien: PROVIDED, HOWEVER, That nothing in this chapter shall apply to any claim, right of action, or money accruing under the workers' compensation act of the state of Washington, and: PROVIDED, FURTHER, That all the said liens for service rendered to any one person as a result of any one accident or event shall not exceed twenty-five percent of the amount of an award, verdict, report, decision, decree, judgment, or settlement Notice of lien--contents--filing No person shall be entitled to the lien given by RCW unless such person shall, within twenty days after the date of such injury or receipt of transportation or care, or if settlement has not been accomplished and payment made to such injured person, then at any time before such settlement and payment, file for record with the county auditor of the county in which said service was performed, a notice of claim stating the name and address of the person claiming the lien and whether such person claims as a practitioner, physician, nurse, ambulance service, or hospital, the name and address of the patient and place of domicile or residence, the time when and place where the alleged fault or negligence of the tort-feasor occurred, and the nature of the injury if any, the name and address of the tort-feasor, if same or any thereof are known, which claim shall be subscribed by the claimant and verified before a person authorized to administer oaths Record of claims The county auditor shall record the claims mentioned in this chapter in a book to be kept by him for that purpose, which record must be indexed as deeds and other conveyances are required by law to be indexed Taking note--effect on lien The taking of a promissory note or other evidence of indebtedness for any services performed, as provided in this chapter, shall not discharge the lien therefor unless expressly received as a payment for such services and so specified therein. Page 6 L-6

7 Settlement of damages--effect on lien No settlement made by and between the patient and tort feasor and/or insurer shall discharge the lien against any money due or owing by such tort feasor or insurer to the patient or relieve the tort feasor and/or insurer from liability by reason of such lien unless such settlement also provides for the payment and discharge of such lien or unless a written release or waiver of any such claim of lien, signed by the claimant, be filed in the court where any action has been commenced on such claim, or in case no action has been commenced against the tort feasor and/or insurer, then such written release or waiver shall be delivered to the tort feasor and/or insurer Enforcement of lien--payment as evidence Such lien may be enforced by a suit at law brought by the claimant or his assignee within one year after the filing of such lien against the said tort feasor and/or insurer. In the event that such tort feasor and/or insurer shall have made, payment or settlement on account of such injury, the fact of such payment shall only for the purpose of such suit be prima facie evidence of the negligence of the tort feasor and of the liability of the payer to compensate for such negligence. Page 7 L-7

8 Formal Opinion: 185 Year Issued: 1990 Question: What are the ethical duties of a lawyer who guarantees payment, either orally or in writing, on behalf of a client to a creditor such as healthcare provider, from proceeds of settlement or judgment? Discussion: Frequently, a lawyer representing an injured person in a contingent fee case is requested by a healthcare provider or other creditor to guarantee payment of the creditor s claim (not related to the expenses of the litigation) from the proceeds of any settlement or judgment recovered on behalf of the client in return for an agreement by the creditor to forego any attempt to collect the debt in the meantime. At times a creditor such as a healthcare provider may ask the lawyer and/or the client to sign a lien form or other written "guarantee"; at other times, the creditor may merely accept the assurances of the lawyer that the debt will be paid from any settlement or judgment. Assuming that the client consents to such a "guarantee," a lawyer may properly enter into such an arrangement with the client s creditor. The ethical dilemma arises when, after settlement or judgment, the client requests that the lawyer disburse all proceeds of the settlement or judgment directly to the client, without paying the creditor. RPC 1.14(b)(4) requires that a lawyer pay at a client s request all funds in the lawyer s possession which the client is entitled to receive. The question is whether the client is entitled to receive those funds which the lawyer, with the client s consent, has guaranteed would be paid to the creditor. Before the lawyer may guarantee payment of such funds, or advise a client to sign a lien or guarantee, the lawyer must explain the matter to the client "to the extent reasonably necessary to permit the client to make informed decisions regarding" the lien or guarantee. (RPC 1.4(b). This explanation may be included in the written contingent fee agreement. RPC 1.5(c). The explanation should include the advice to the client that once the client has authorized payment of such debts, that authorization is irrevocable by the client. If the client subsequently has a good-faith dispute as to the amount to be paid, the lawyer should advise the client and the creditor that the lawyer will continue to hold the funds in trust until the dispute is resolved. Page 8 L-8

9 Assuming that the client has been properly advised of the effect of making or signing a guarantee or lien, and has consented thereto, the Committee is of the opinion that, absent a good-faith dispute as to the amount of debt claimed by the creditor to be due, the client has authorized payment of those funds by the lawyer and is no longer "entitled" to disbursal of those funds by the lawyer. Further, the Committee is of the opinion that failure by the lawyer to honor a guarantee or lien the lawyer has signed or agreed to in connection with representation of a client would violate RPC 4.3 where the lawyer has failed to correct a misunderstanding by an unrepresented person as to the obligation by the lawyer to pay the creditor; and would violate RPC 4.4, which prohibits a lawyer from using means that have no substantial purpose other than to burden a third party, in this case by misleading the creditor into believing that the debt of the client would be paid. If the lawyer had entered into such a "guarantee" without the client s consent, then the lawyer may not withhold the funds from the client if the client requests them. Whether by making such a "guarantee" the lawyer has obligated himself or herself to the creditor is a legal question on which the Committee can render no opinion. However, representing to a creditor of a client that the lawyer had authorization to enter into such an arrangement when the client had not consented to it might constitute a violation of RPC 8.4(c) and might subject the lawyer to discipline. Financial obligations owed by a client, such as medical bills owed to a healthcare provider, must be distinguished from expenses related to litigation, such as expert witness and court reporter fees. See, In re Witteman, 108 Wn.2d 281, 737 P.2d 1268 (1987); Copp v. Breskin, et al., 56 Wn. App. 229, 782 P 2d 1104 (1989). Page 9 L-9

10 Filed for Record by: COUNTY AUDITOR'S OFFICE OF THE STATE OF WASHINGTON In Re Patient, and Tortfeasor. NOTICE OF HEALTHCARE/MEDICAL LIEN PURSUANT TO RCW COMES NOW the following Claimant, licensed as a ; whose address is. The undersigned healthcare provider claims a lien for services and devices in accordance with RCW , et seq. as a. NAME AND ADDRESS OF PATIENT: NAME AND ADDRESS OF TORTFEASOR: PLACE OF ACCIDENT: TIME AND DATE OF ACCIDENT: NATURE OF INJURIES : L-10

11 CURRENT AMOUNT OF LIEN (Amount will increase as additional services are provided): Dated this day of, 20. Physician/Practitioner STATE OF WASHINGTON ) )ss. COUNTY OF ) On this day personally appeared before me to me known to be the individual(s) described in and who executed the within and foregoing instrument, and acknowledged that (he/she/they) signed the same as (his/her/their) free and voluntary act and deed, for the uses and purposes therein mentioned. GIVEN under my hand and official seal this day of, 20. NOTARY PUBLIC in and for the State of Washington, residing at My appointment expires: Print Name: L-11

12 COUNTY AUDITOR'S OFFICE OF THE STATE OF WASHINGTON In Re and FULL RELEASE AND SATISFACTION OF HEALTH CARE/MEDICAL LIEN PURSUANT TO RCW COMES NOW the undersigned lien holder/health care provider, whose business address is:, and states as follows: (1) The undersigned healthcare provider filed a claim of lien for services and devices in accordance with RCW , et seq. as a health care provider under Auditor's File No. on or about the day of,,.involving a patient identified as ; and a tortfeasor identified as relating to an auto accident/other incident which occurred on or about,, 20 ; (2) The undersigned claimant now wishes to irrevocably RELEASE and formally note the FULL SATISFACTION of the foregoing healthcare lien; and, (3) Requests the Auditor to mark such lien as FULLY PAID/SATISFIED and therefore L-12

13 RELEASED. Dated this day of, 20. Printed Name: Business Name: STATE OF WASHINGTON ) )ss. COUNTY OF ) On this day personally appeared before me, the health care provider claiming said lien, and to me known to be the individual(s) described in and who executed the within and foregoing instrument, and acknowledged that (he/she/they) signed the same as (his/her/their) free and voluntary act and deed, for the uses and purposes therein mentioned. GIVEN under my hand and official seal this day of, 20. NOTARY PUBLIC in and for the State of Washington, residing at My appointment expires: Print Name: L-13

IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF PIERCE CLASS ACTION

THE HONORABLE SUSAN K. SERKO IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF PIERCE 1 1 1 1 1 1 0 1 VELMA WALKER, individually and as a class representative; JAMES STUTZ, individually