It is important to note that physicians may contract with their patients, through the patient's attorney of record, by use of a Physician/Doctor Lien. These documents are often simple, one page agreements, and set forth that the physician is given a lien on any settlement, claim, judgment, or verdict resulting from the underlying accident or illness. Furthermore, such documents have the patient acknowledge that the debt is due, recognize that such agreement is for the protection of the physician, and finally, that payment is not contingent upon the outcome of the personal injury case. The documents are signed by both the patient and their attorney, and may be filed with the court of record for the personal injury case.
Physician/Doctor Liens may not always be in the physician's best interest, when initially attempting to collect an overdue bill. The physician must remember that he or she retains the right to take immediate action against the patient for such overdue bill, and may refer such accounts to a professional for collection, litigation and post-judgment remedies to collect the debt. In most cases, the physician should view a Physician/Doctor Lien as the "last resort" in his or her attempts to collect the debt from the patient.
The physician must realize that traditional collection efforts are often frustrated by the following categories of patients. Efforts to collect from "self-pay" patients are often frustrated when the patient is out of work due to the personal injury, may live on a limited budget, and/or have no assets prior to the injury. In many cases, the patient's assets have been depleted by the patient in their attempt to manage financially during their period of injury and/or unemployment. These patients are commonly known as "judgment proof", and traditional means for collecting debts, including garnishment of wages and/or bank accounts, and execution against the patient's personal property, fail.
Likewise, a physician should note that he or she is not insulated from non-payment merely due to the patient's coverage by an approved insurer. In many cases, the patient's personal insurer will refuse to pay the physician for his or her services and/or refuse to pay the patient for his or her injuries during the pendency of the patient's personal injury case. Additionally, some insurers, including Medicare, have not only refused to make further payments for services, but have also requested past pay for services be returned by the physician to the insurer. As noted, in cases such as these, a physician's lien may be the only hope in ever collecting the past due debt.
Upon review of the standards of professional conduct for attorneys, there appears to be no provision that precludes an attorney, with the consent of his or her client, from entering into a Physician/Doctor Lien agreement. SCR 20:1.8(e) provides as follows: "A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation..." Given this provision, physicians should note that the patient's attorney is neither guaranteeing the payment of the debt personally, nor is the attorney guaranteeing that the patient will pay the debt in cases where the patient fails to recover from a third-party in a personal injury action. Physician/Doctor Liens merely ensure that if the patient receives an award or settlement in a personal injury case, then the doctor will be in line to share in those proceeds.
The above sets forth several circumstances which may prompt physician providers to use a Physician/Doctor Lien. Of course, individual circumstances will vary, and the use of such legal devices may not always be in the best interest of the physician. Should you have any questions in regard to the use, applicability and/or effectiveness of Physician/Doctor Liens in your particular matter, please feel free to contact one of our attorneys with any questions or concerns.