Medical Lien Funding: What It Is and Why You Need It

Farmington Hills, MIOkay, so what is medical lien funding anyway. How does it differ from pre-settlement legal funding and how does it apply to you? Well first, we have to talk about the issues at play, and that usually involves an accident in which you are injured through the alleged fault of another party. Someone rear-ended your car while they were busy texting, for example. You have suffered injuries as a result, and you have launched a personal injury lawsuit against the other party for damages and needed compensation to pay for your medical care both now and going forward.

Provided you have good health insurance, your insurance provider will fund your medical care until your case concludes and - once it does - will likely seek total or partial reimbursement for the money paid out for your care. This would be factored in with the damages and compensation you seek when your case goes to verdict, and would not infringe on the compensation you receive for pain and suffering.

However, what happens when you have insufficient health insurance - or worse, no insurance at all? You may have a very good case that would likely see a settlement or a verdict awarding compensation at the end of the day. But that verdict or settlement is likely months or even years away.

You need medical care today. And the disconnect in timelines provides for you a serious problem.

Well, not necessarily. You have options - although not all options are created equal, as you will see here.

One option is for a sympathetic physician, or other health care provider, to treat you with the expectation that your personal injury case will conclude in a successful verdict or settlement, after which he or she can collect fees for service. Essentially, the care provider has a medical lien against your settlement or compensation dollars assuming the verdict goes to the plaintiff. This means, once the verdict or settlement is finalized, anyone with a lien against the verdict or settlement will get paid first, before you do. There is some risk here, for the doctor. For one, he will be providing you initial or ongoing treatment without any compensation until your case concludes. Nor can he charge any interest while he waits to be paid, while still potentially providing service. And if your case fails, nobody gets anything. Well, not completely: you benefited from treatment, at least, even if there is no settlement or compensation dollars for you at the end of the day. The physician, on the other hand, takes a total loss.

Even if there is compensation at the end of the rainbow, now the physician has a medical lien that he has to track and pursue. That takes time way from his patients or eats up valuable staff resources.

There is another way…

Medical lien funding. This is a product similar to pre-settlement funding and post-settlement funding. Medical lien funding is essentially a lawsuit loan that is made against the expected compensation amount that your case, if successful, generates, and is repaid if and when your case settles or concludes. The funds are used for your ongoing medical care needed while your case percolates through the courts. The advantage to a treating physician or other health care providers is that they are paid on an ongoing basis. There is no need for a medical lien from them. Instead, they are paid throughout the process much as they would be from a health insurance provider, if you had one.

Akin to other pre-settlement legal funding, post-settlement funding or other lawsuit advance loans, there is typically no requirement for health care providers to repay the medical lien funding if your case fails. The medical lien funding has fees built-in that compensate the funding provider for the risk he or she is taking by advancing the funds for your medical care without a guarantee of payment.

Chances are pretty good, however, that the foregoing scenario won’t happen, due to the careful evaluation of each case by the medical lien funding provider. In other words, everybody has their eyes open going in.

To qualify for medical lien funding, the plaintiff/patient must be actively involved in a personal injury case represented by an attorney. Injuries that require treatment must be related to an accident or other event where liability on the part of the other party is clear. Then, your attorney is required to acknowledge a lien in the amount of the medical bill.

Your attorney will be conversant with such options and will likely be in a position to recommend a medical lien funding provider, and help you sort out the terms. In this situation, your attorney is not just an advisor but is actively involved in the medical lien, just as he or she is serving as the designated legal counsel for your case.

As always, if there is a cheaper way to go, such options should be explored. Perhaps you have a rich uncle that will agree to fund your care interest free or via a forgivable loan.

Indeed, in a perfect world...

Assuming you don’t have a rich uncle, or any other means to fund your care while you wait for your case to settle or go to verdict, medical lien funding could mean the difference between getting the care you need, versus continuing to suffer needlessly.