Solo Doctors and Medical Liens

I recently represented a doctor who was seeking to collect a debt owed by a patient.  The patient had a personal injury claim, and the doctor was willing to treat the patient and wait to get paid out of the eventual settlement of her claim.  When she got the money, however, the patient took the money and ran.  The doctor had a problem:  the lack of an enforceable lien over the insurance proceeds.

Some jurisdictions have statutes creating liens against insurance settlements in favor of hospitals and doctors.  This “hospital lien” is powerful, and can be enforced against insurance companies and attorneys who disburse funds to the victim without first ensuring that medical providers have been paid for their services.  The problem is that in Colorado, a solo doctor running his own practice might not qualify for such a lien.  Moreover, in order to enforce a hospital lien, the lien must be perfected by, for example, filing it with the Colorado Secretary of State.  If the lien is not perfected, you can’t enforce it!

A doctor in this situation can certainly sue the patient for non-payment on her contract with the doctor, as our client decided to do because of the large amount of money she owed him, but this basically puts the doctor in the same relative position as credit card companies or other unsecured creditors.  Among other things, this may require a lengthy lawsuit against the patient to collect his bill, and the doctor’s debt is potentially vulnerable to discharge in bankruptcy if the patient chooses this course of action.

So, if you are a medical professional in a solo practice, Colorado law is not necessarily going to ensure you are protected.  How do you protect yourself?  As is often the case, what Colorado law does not provide, a contract can.  Hiring an attorney to draft a patient contract specific to your business plan can help create a security interest to protect you in bankruptcy, obligate third parties to ensure you get paid, or otherwise help protect you.  If you are serious about getting paid for your work, do your contracts right!

This post provides general legal information only.  If you need legal advice specific to your situation, please contact us to set up a consultation.