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How Are Medical Liens Handled In Colorado Personal Injury Claims?

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What Is A Medical Lien?

A medical lien is a contract between the hospital and the injured person stating that the hospital will cover the cost of the persons medical treatment until a personal injury settlement is awarded and then will be repaid with funds from the awarded settlement. These are very common when the injured person doesn’t have a form of medical insurance to cover the costs or the cash on hand to pay for their treatment. This is very beneficial if you have injuries that need medical care right away but their injury settlement won’t come in for months or years afterwards because personal injury settlement timelines can vary drastically due to many different factors.

doctor telling injured patient they will need a medical lien to pay their hospital bill

The Possible Issue With Medical Liens

Unfortunately, not all medical liens are a perfect option. They can be issued with interest accruing on them which can turn into a substantial amount more than the initial costs if it takes a long period of time to get your settlement and pay off the lien. The lien providers also want to collect this interest so they can make money, even when there may be better options for you to cover these costs, so make sure to speak with a personal injury attorney near you before signing off on a medical lien or before you learn about what questions to ask before accepting a structured injury settlement or lump sum settlement.

Medical liens can sometimes be used against you in your claim as well. If the opposing party or insurance company thinks your medical bills were too high, they may try to claim that they don’t need to pay you the full amount either. These things can make a big difference when it comes time to pay off the lien and if the settlement doesn’t cover all of the costs, then you could end up collecting a lot less than you thought you would at the outset.

Does Medical Insurance, Medicare Or Medicaid Make A Difference?

Yes, medical insurance, medicaid or medicare can typically cover the costs of your medical treatment after an accident, avoiding the need for a medical lien. Your insurance will cover the costs upfront, but if you are awarded a settlement, you can be sure that your insurance provider will come and ask for their money back out of that settlement check you received.
This process is called subrogation and usually catches most people off guard. Subrogation means that if your insurer paid for your medical costs to help you recover (as they should), they have the right to come back and collect that money directly from your personal injury settlement.
So let’s say you had $50,000 in medical expenses that the insurance company paid for and then you sue the person that was at fault and win $150,000 in compensation. The insurance company will now demand that you pay them back the $50,000 they paid for your medical treatment because they are legally entitled to it.
Even though it may not seem fair since you pay for insurance specifically to be able to cover these unexpected costs, this law is meant to ensure that personal injury claims aren’t used to receive windfall settlements. If you already had the $50,000 paid off by insurance and then were able to keep the $150,000 settlement which includes the costs of your medical bills, then you would come out with $150,000 and the insurer with a $50,000 loss.
A client-centered personal injury lawyer will always talk to you about subrogation at the outset of the attorney client relationship so your expectations are aligned with reality.  Also, a good personal injury lawyer will negotiate with subrogation lien holders, such as insurance companies, to try to negotiate a reduction in what they will accept out of your personal injury settlement.  These are all great questions to ask when you’re talking to a potential attorney to represent you in an accident or injury case, and an experienced lawyer will have no problem talking you through these various issues pertaining to subrogation.

Is There A Cap On How Much They Can Take From My Settlement?

Technically, a medical lien has the right to take 100% or more of your settlement if your lien is higher than the settlement amount. This is usually when the victim does not have medical insurance so they resort to a medical lien and then their settlement turns out to be less than the cost to repay the medical lien. If your bill is higher than the settlement, they will take the full settlement and then come after you to repay the remainder of the bill.
If you have medical insurance, they will cover the costs but if a settlement is awarded to you, the insurer will use their right to subrogation and come back for reimbursement for what they paid. In some states there is a limit on how much they can take in subrogation, but if it is a hospital lien, these limits do not exist and they can come after all of it. However, Colorado has recently changed the laws surrounding these types of medical liens which we will cover below.

What Happens If You Lose Your Injury Claim?

Bad news if you lose your injury claim. Certain medical liens may still have to be repaid in full even if you lose your injury claim and don’t receive a settlement to recover those costs. If you don’t have insurance, then you can be held liable for the entire amount of these costs, plus the interest that accrues on them in the meantime depending on the specifics of the lien. This has all changed for Colorado injury victims recently though so make sure to read our section about the new Colorado law for clarification.

Negotiating Medical Liens

Yes, medical liens can be negotiated. They can be negotiated before the lien agreement is signed as well as afterwards if both parties agree to the new terms. This lien is a contract, so make sure to have an injury lawyer help you with negotiations before accepting the lien agreement. Also, in the event that you lose your personal injury claim and do not receive compensation for these bills, some hospitals may be willing to negotiate with you on a feasible repayment plan or lowered amount.
This can be common with small medical practices that don’t want to deal with going to court over the issue or don’t want to pursue collections against the injured person.  If a health insurance provider is pressuring you to sign a lien, you might want to explore other options to pay for your treatment that exist before doing so, or speak with your attorney.

Colorado's New Law Helps Injury Victims

Luckily, Colorado has recently implemented new laws that help injury victims. After all, the whole point in personal injury law is to make sure that the injured person is compensated for their injuries if caused by another person’s negligence and that the negligent party is held responsible for their actions. Here are some of the main takeaways from the new law change which went into effect for Colorado injury cases on September 7th of 2021.
  • Before a medical lien can be issued, the injured party must be informed of the alternate methods available to pay for their medical bills such as workers comp, health insurance, medicare, etc.
  • In the event that you do not receive a settlement to cover these costs, you are not liable for any part of the medical lien which is great news for persons injured in Colorado.
  • If you do receive a settlement, but the total amount is less than what the medical lien is, then you are not responsible for paying the amount that exceeds your settlement. However, the lien holder will still take the full settlement in these cases to recoup most of the costs.
  • If a lien is assigned to a third party(typically debt collectors that buy your debt for a reduced cost) this reduced cost is not allowed to be used against you during settlement negotiations so you can get compensation for the full amount that the lien was for instead of the reduced amount the third party paid, even though they will make you pay back the full amount plus interest. Another win for the victim.
  • Medical liens can no longer be assigned to debt collection agencies. Debt collection can severely impact your credit score and ability to acquire loans in the future, so this law change is a big win for people injured in Colorado that don’t have the funds to pay for their medical bills.

Overall, the House Bill 21-1300 is a major win for anyone injured in Colorado due to another person or company’s negligence. These changes have major impacts on uninsured persons and is a big step in the right direction for getting the medical care you need in these types of situations without facing financial ruin.

Get Help From Our Injury Attorneys

If you’ve been injured in an accident, make sure you give our personal injury law firm a call to discuss your case with professionals who deal with these types of issues on a daily basis. We will guide you through the process, make sure you aren’t signing anything you shouldn’t and build a strong defense for your case so that you can get the maximum amount of compensation possible for your injuries. We have dealt with an incredible variety of injury claims and have won favorable outcomes against even the toughest lawyers and insurance companies. There is a reason why all of our clients are so happy they chose us, so come see the difference. You can reach our firm 24/7 by giving us a call at (719) 578-1106 or by stopping by our office. We look forward to meeting you!

Areas We Serve

We serve clients injured anywhere throughout the state of Colorado, but we focus on residents of these areas: Colorado Springs, Manitou Springs, Fountain, Briargate, Monument, Black Forest, Pueblo, Canon City, Larkspur, Security-Widefield, Peyton, Castle Rock, Teller County, El Paso County, Elbert County, Park County, Douglas County and beyond.