Like most legal matters, a hospital lien isn’t necessarily a term most people are familiar with. Often times most people will associate a lien with property ownership, and while they may be correct, a hospital lien has distinct differences that are very important to understand.
Before we go into further detail and understand what a hospital lien is, we must first clarify what the function of a lien is.
In Texas, a Lien is defined as:
Any official claim or charge against property or funds for payment of a debt or an amount owed for services rendered.
In laymen terms, a lien is simply an official IOU filed with your local county that ties up your property or money to a particular debt owed to a debtor.
Essentially, a lien is comprised of three parts:
For example, when you take out a mortgage to purchase a home, the mortgage acts like a lien that ties up your new home (property/collateral) to your payments on your mortgage (debt) owed to your lender (debtor). If the debt is not repaid, the debtor is within their rights to foreclose and sell your home. The lien guarantees the debtor value on your debt in one way or another.
So how does a lien apply to hospital and medical services?
A Hospital Lien is defined as:
A statutory lien claimed by a hospital to recover the costs of medical services.
In Texas, hospital lien law can be found in the Texas Property Code, Chapter 55 which states, in part:
- Sec. 55.002. LIEN. (a) A hospital has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person.
Functioning much like a lien, a hospital lien has a debtor (hospital) and debt (your hospital bill).
The statute continues to determine the property/collateral:
- Sec. 55.003. PROPERTY TO WHICH LIEN ATTACHES. (a) A lien under this chapter attaches to:
(1) a cause of action for damages arising from an injury for which the injured individual is admitted to the hospital or receives emergency medical services;
(2) a judgment of a court in this state or the decision of a public agency in a proceeding brought by the injured individual or by another person entitled to bring the suit in case of the death of the individual to recover damages arising from an injury for which the injured individual is admitted to the hospital or receives emergency medical services; and
(3) the proceeds of a settlement of a cause of action or a claim by the injured individual or another person entitled to make the claim, arising from an injury for which the injured individual is admitted to the hospital or receives emergency medical services.
In laymen terms, the property/collateral that the hospital lien would attach to would be any personal injury settlement or judgement an individual would receive. In fact, the lien must be satisfied prior to the individual or their attorney collecting on their potential settlement.
Although Texas law has provided a channel for hospitals to file liens on individuals to collect for services rendered, it does not give hospitals a carte blanche on whom and the manner to which these hospital liens are filed.
Important Details On Texas Hospital Lien Laws
The Texas Hospital Lien statute has specific limitations that are designed to prevent hospitals from abusing the law to collect funds.
The first limitation references who the hospital lien may attach to:
- Sec. 55.002. LIEN. (a) …For the lien to attach, the individual must be admitted to a hospital not later than 72 hours after the accident.
Although many hospitals will argue the facts, there is an inherent difference between being admitted into a hospital and receiving ER treatment as explained here by the Centers for Medicare and Medicaid Services. At times, some statutes can be ambiguous and open for interpretation, however the law is explicitly clear on this matter. If you have not been admitted into a hospital within 72 hours of the accident, the hospital lien cannot legally attach.
The second limitation references the amount of debt the hospital lien
Sec. 55.004. AMOUNT OF LIEN. (d) A hospital lien described by Section 55.002(a) does not cover: (1) charges for other services that exceed a reasonable and regular rate for the services;
This issue is a bit more complicated because the statute does not explicitly state what standard should be used to determine the “reasonable and regular rate,” however, investigating hospital procedure costs and comparing them to costs on the open market or what Medicare/Medicaid reimburses hospitals for those same services, we find that hospitals habitually over-bill patients upwards of 600-1000% over market value for those same services.