You are the victim of an accident. You hire lawyer and do all of your treatment. Your lawyer negotiates a fair settlement and everyone agrees. However, it’s been 2 months since that agreement and you still have not received your money. More than likely, this is because your lawyer is attempting to settle and liens held by creditors against your settlement. Personal injury lawyers practicing in Florida are obligated to observe a number of ethical and legal responsibilities while handling personal injury matters, one of which is payment of medical liens. They are legitimate actions taken against physicians, insurance firms, or the state that assure compensation for entities who paid for treatment or provided medical services as soon as an injury claim settles. Negligence in dealing with liens can result in severe legal, financial, and professional consequences for lawyers. In this blog, we address Florida lien statutes, ethical standards, and practical advice to help lawyers navigate this significant aspect of personal injury practice.
Medical Liens in Florida
Medical liens are liens on a percentage of a personal injury settlement or judgment. Common liens in Florida are:
1. Healthcare Provider Liens: Physicians, hospitals, or other health care providers may assert a lien for unpaid medical charges. The Florida law does not allow a lien in the favor of health care providers automatically but only where expressly agreed to by the patient or mandated by a statute.
2. Health Insurance Liens: Private health insurance providers are entitled to a reimbursement of medical charges paid on behalf of the plaintiff under the terms of the policy.
3. Medicare and Medicaid Liens: Those government programs are entitled to reimbursement under federal statute when they cover injury-related medical expenses.
4. Worker’s Compensation Liens: In the event the injury occurred on the job, worker’s compensation insurers can place a claim on the recovery.
5. ERISA Liens: Self-insured employer health benefits covered by the Employee Retirement Income Security Act (ERISA) can also make a request for repayment.
Statutory and Ethical Obligations to Process Liens
Florida attorneys are also bound by state statutes and professional ethics when handling liens. Failure to meet these obligations can lead to lawsuits, bar complaints, and allegations of malpractice.
Florida Rules of Professional Conduct
Florida Rule of Professional Conduct 4-1.15 governs the handling of client funds. Specifically:
- Segregation of Funds: Attorneys must hold money under a lien in a segregated trust account separate from their business accounts.
- Notice and Delivery: Attorneys are required to notice lienholders regarding money received and to deliver any portion of the money due to the lienholder.
Rule 4-1.15(d) dictates third-party claims specifically and asserts attorneys are required to protect third-party interests in settlement funds when the claim is uncontested. When the claim is contested, the attorney must hold the disputed portion in trust until resolved.
Florida Statutes on Medical Liens
There is no statewide uniform medical lien statute in Florida. There are, however, local ordinances enacted in some counties and municipalities, such as Miami-Dade County, that allow healthcare providers to file liens for services rendered to victims of injuries. Attorneys must verify the local statutes to comply.
For Medicaid liens, Florida Statutes § 409.910 governs the Agency for Health Care Administration (AHCA) right to recover Medicaid payments against a third-party settlement or judgment. Lawyers should ensure that the Medicaid lien is satisfied prior to distributing settlement funds.
Federal Obligations
- Medicare Secondary Payer Act (MSPA): Medicare is statutorily entitled to reimbursement for care related to injury under the MSPA. Attorneys must resolve Medicare liens to avoid penalties, which can include double damages.
- ERISA and Private Insurance Plans: Self-funded group health plans governed by ERISA generally have subrogation provisions mandating reimbursement from settlement proceeds.
Practical Considerations for Handling Liens
1. Identify Potential Liens Early
The first step in addressing liens is to find out all potential claimants at the outset of the case. This includes:
- Obtaining a comprehensive list of the client’s health care providers.
- Inspecting insurance policies and insurer or government agency letters.
- Determining if local ordinances allow for health care provider liens.
2. Negotiate and Reduce Liens
Attorneys have an obligation to work in the best interest of the patient, and this includes negotiating the reduction of lien figures. Insurance companies and healthcare providers may agree to accept less, especially if a settlement will not cover all damages.
Example: If a client settles a case for $50,000 and has $60,000 of medical bills they owe, then the attorney is able to negotiate with medical providers to reduce their lien amounts so that the client will receive some funds from the settlement.
3. Comply with Medicare and Medicaid Requirements
For Medicare liens, attorneys must report the settlement to the Centers for Medicare & Medicaid Services (CMS) and request a final demand letter. Attorneys should prioritize paying Medicare’s lien and pay it from the settlement funds before they disburse any funds to the client or recipients.
Medicaid liens need to be resolved under § 409.910 as well, and attorneys should verify that the amount being sought by AHCA is correct. Florida courts have held that Medicaid liens are only for the amount of the portion of the settlement that represents past medical charges (see Gianinni v. State, 312 So. 3d 92 (Fla. 4th DCA 2021)).
4. Resolve Disputes Over Liens
Where there are disputes as to the validity or the quantum of a lien, lawyers must put the funds in dispute into trust pending determination of the issue. This may involve:
- Negotiating with the lienholder.
- Instituting an interpleader action to have a court determine the rightful allocation of funds.
Example: If a health care provider is claiming a lien for services not related to the accident, the attorney needs to dispute the lien and place the disputed amount in trust.
5. Document Everything
Proper documentation is required to establish proof of compliance with legal and ethical standards. Attorneys need to document:
- Notice to lienholders.
- Negotiation and agreement to reduce liens.
- Payment made to settle liens.
- Contact with clients regarding lien resolution.
Consequences of Failure to Address Liens
Failure to address liens in the proper manner can have serious consequences for Florida accident attorneys, including:
- Ethical Violations: Misappropriation of lien funds can lead to Florida Bar disciplinary proceedings.
- Personal Liability: Attorneys are personally liable when they disburse settlement proceeds without satisfying valid liens.
- Malpractice Lawsuits: Clients can sue attorneys for malpractice when mishandling liens results in financial loss.
- Double Damages: Because under the MSPA, non-payment of Medicare liens could trigger double damages as well as other penalties.
Example: In U.S. v. Harris, 334 F. Supp. 3d 1311 (N.D. Fla. 2018), an attorney neglected to remit Medicare’s lien from out of settlement proceeds and was ordered liable personally in an amount of double the lien amount.
Conclusion
As a client, it may be frustrating trying to understand why an agreement has been made on your case but you still have not received your settlement proceeds. Rest assured, this delay is caused by your attorney’s ethical obligations to resolve all liens against your settlement before disbursing funds to you. This process includes Identifying all potential liens early in the case, Negotiating discounts to achieve maximum recovery for the client, Complying with statutory and ethical obligations to lienholders, Documenting every step of the lien resolution process.
At the end of the day, your lawyer does this to protect you.
If you are injured in an accident, call Jaime “Mr. 786Abogado” Suarez today to Get You Paid!