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Physicians Liens under §44-49

IMPORTANT: This article assumes that you have read the Liens and Subrogation Overview or that you have a firm understanding of how subrogation relates to North Carolina personal injury claims and settlements.

As you know, there is nothing simple or convenient about being involved in a motor vehicle accident in North Carolina. From seeking treatment to dealing with lost wages, everything about being a victim of a car accident is complicated. Possibly the most thorny issue related to seeking compensation for your car accident is understanding and dealing with medical liens arising from your accident-related treatment. Unfortunately, a gross majority of individuals are surprised to learn that they have medical liens or subrogation interests attached to their North Carolina personal injury settlement. Medical liens and subrogation rights are complex legal concepts created by statute or contract that affect close to all personal injury claims in North Carolina.

In general, physicians liens, under N.C.G.S. §44-49, are the right of a medical provider to secure an interest in the proceeds from a personal injury settlement or judgment, and are governed by North Carolina General Statutes 44-49, 44-50, and 44-50.1. This interest means that a portion of your personal injury settlement must be paid to the medical providers who have properly “perfected” their medical liens against you. However, if the physician lien is not properly “perfected,” you may not be required to pay the medical provider from the proceeds of your settlement. For more information on how medical liens are perfected under N.C.G.S. §44-49, see the “How are medical liens perfected?” section below.

Can Chiropractors Claim Physicians Liens?

In general, any person who provides medical services can claim a physician lien under N.C.G.S. §44-49. This includes but is not limited to physicians, dentists, nurses, and hospitals. North Carolina has never directly addressed whether a chiropractor can establish a medical lien under N.C.G.S. §44-49. While North Carolina law has never directly contemplated whether a North Carolina chiropractor has the right to assert a medical lien under N.C.G.S. §44-49, most medical providers have begun to include “assignment of benefits” and medical liens in their service contracts. An assignment of benefits should be treated the same as a medical lien under N.C.G.S §44-49. Therefore, it is typically fruitless to argue that a chiropractor may not claim subrogation against your personal injury settlement considering that an assignment of benefits and a medical lien are effectively the same under the law.

How Are Medical Liens Perfected?

As previously mentioned, a medical provider must properly perfect their lien in order to receive a portion of the plaintiff’s proceeds from a settlement or judgment. In order to perfect, a medical provider must do three things: (1) The medical provider must furnish all medical record requests to the plaintiff or plaintiff’s attorney free of charge; (2) The medical provider must furnish all medical bill requests to the plaintiff or plaintiff’s attorney free of charge; and (3) The medical provider must give an affirmative written notice of the lien to either the plaintiff or the plaintiff’s attorney. If a medical provider fails to comply with any of the three listed items, then the plaintiff’s attorney is not required to pay the medical bill out of the proceeds of any settlement or judgment.

Let’s look at an illustration of a perfected lien in which portions of the proceeds will have to be used and an invalid lien in which portions of the proceeds will not have to be used. Imagine Steve was in a car accident with James and James was at fault. Steve was injured in the accident and had to go to the hospital for his injuries. While checking out of the hospital, Steve did not have to pay for any of his hospital bills, nor did he have to use his insurance. Two weeks later, Steve’s attorney contacts the hospital and requests both the medical bills and medical records for Steve. The hospital sends Steve’s bill and medical records to the attorney free of charge, along with an affirmative letter stating that the hospital has taken a lien on any proceeds Steve may receive from the accident. In this illustration, the hospital properly “perfected” their lien (they did not charge for medical bills or records and sent an affirmative letter confirming their lien).

Now, suppose when Steve’s attorney requests the medical bills and records, the hospital sent the bill free of charge, but charged $15.00 for Steve’s medical records. Also, the hospital never sent an affirmative written letter confirming a lien on any proceeds received by Steve from a settlement or judgment related to the accident. Here, the hospital has failed to “perfect” their lien for two reasons: (1) the hospital charged for Steve’s medical records, and (2) the hospital failed to send Steve or his attorney an affirmative notice of the lien. In this example, due to the hospital’s “unperfected” lien, Steve’s attorney would not be required to disburse any portion of settlement or judgment proceeds to the hospital.

Statute of Limitations

The statute of limitations for a medical provider to enforce a lien can be tricky (See general explanation of the statute of limitations here) [LINK]. In general, the statute of limitations for medical providers to collect an unpaid debt is 3 years from the date of the last continuous treatment. However, the statute of limitations for a medical provider to collect on a lien may be longer than 3 years. The statute of limitations likely begins to run once the injured person receives the proceeds from a settlement or judgment and then fails to pay the medical provider out of those proceeds. Thus, the medical provider will likely have 3 years from the time the injured person receives the proceeds from a settlement or judgment to collect on that lien.

For example, say Steve was in an accident on January 1st, 2015 and went to the hospital. After being released from the hospital, Steve did not seek any other medical treatment for his injuries sustained in the accident.

The hospital properly “perfected” (see explanation above) a medical provider lien on any proceeds Steve received from the accident. Steve litigated the accident and did not receive payment for his damages until 2019 (4 years later). He then failed to pay the hospital out of the proceeds. If the lien had not been “perfected,” then the hospital would only have until 2018 to sue on debt for the medical services provided to Steve after the accident. In this example, however, because the lien was perfected, the hospital will likely have until 2022 (3 years after Steve received payment from his accident) to sue for the debt due under the lien. This is a result of the violation of the lien not occurring until 2019, when Steve failed to pay the hospital’s lien with the money he received from his accident.

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