Key Legal Issues to Resolve

The fact that personal injury commonly involves several different sources of payment means that, in certain instances, chiropractic physicians have a greater chance of being paid in full. Nevertheless, several key legal issues need to be answered in each state before time and energy is invested in discovering, verifying, and billing the various sources of payment. These issues include:

• Can providers legally expect a right of direct payment from either the MedPay or PIP carrier? What must they do to protect that right?
• Can providers legally expect a right of direct payment from the liability or UM adjuster in cases where the patient is not represented by legal counsel? What must providers do to protect this right?
• Can providers legally expect a right of direct payment from the attorney upon receipt of funds relating to the patient’s accident? What must providers do to protect this right?
• Must providers file claims with the various payers in any particular sequential order, or can the provider file claims simultaneously? In cases where the provider can file simultaneously, what must the provider do when overpaid?

The answers to these questions depend largely on (1) which state law controls in any given personal injury case, and (2) how the controlling law addresses each issue. At a minimum, chiropractic physicians are encouraged to understand the relevant laws in their own states.

Discovery of Insurance Information

There are numerous ways of obtaining automobile insurance information in any given PIP case. The following represent some of the key ways:

• Completion of the Accident Information Form by the patient.
• Police Reports, Accident Exchange of Information Forms and/or “courtesy slips.”
• Copy of the patient’s registration, automobile insurance card, and/or copy of the insurance declaration page.

In the case of business insurance, chiropractic physicians should simply call the place of business and inquire as to who their insurance carrier is, and then call that insurance carrier to verify coverage.

Essential information needed before submitting claims to an adjuster usually includes the insured’s name, the policy number, the date of the accident/loss, the personal injury claim number assigned to the case, the name and address of the adjuster, and the preferred method of billing.

Generally, liability and UM adjusters request a list of charges upon “release from care.” PIP and MedPay carriers usually accept claims submitted either on a 1500 Claim Form, or on their forms.

Liens and Assignment

Letters of Protection (Resource 160), a.k.a. Personal Injury/Medical Liens, should be used by every chiropractic office that provides injury recovery care to car accident and other personal injury patients. These liens are a simple and effective way to help ensure that you get paid from the proceeds of the patient’s insurance settlement for injury recovery services that you provided to them. However, many providers don’t know how to draft or effectively use them. Depending on how you draft your assignment and lien and the protocols you follow, you can solve a host of payment problems in the area of health insurance and all forms of accident insurance. Knowledge can save tens of thousands of dollars in lost revenue, as well as stress, aggravation, and lost time.

When you have a patient sign a lien, it’s important to have that lien filed with the attorney on record. It’s equally important to document that the attorney has received your lien as well. Not all attorneys will sign a lien and send it back to you. If you do not confirm the receipt of your lien with your patient’s attorney, you can find yourself at the mercy of your patient, their client! Attorneys have their first responsibility to their clients. If the client chooses to instruct the attorney not to pay your bills, even if that attorney happens to be a close friend or family member to you, that attorney must follow the client’s instructions and not pay your bills!

If an attorney has accepted your lien, they have a legal obligation to pay your bills from the settlement proceeds, even if your patient instructs them otherwise! So get that lien signed by your patient and their attorney as soon as possible! There are many methods to prove receipt of lien by the attorney, but a returned signed copy is best. While liens appear to be a great legal instrument to force payment, they are not foolproof. Most liability insurance company's do not recognize the legal obligation of a Chiropractors patient lien. In many states when patients file for bankruptcy, they will subject your lien to steep discounting or even dissolution, with only a hospital and attorney lien being able to survive the bankruptcy. Do what you can to get Chiropractors included in that same hospital lien survivability category.

It is important to be aware of individual state laws regarding the assignment of benefit provisions. For example, in the state of Virginia, the law requires the provider to bill the health insurance first if they are an in-network provider.

CLICK HERE for more information on liens and a sample lien agreement.

Attorneys

• Refusing to send your clinic a Letter of Protection (LOP).
• Sending you a “weak,” limited, or conditional Letter of Protection (e.g. “I will protect your bills up to $1,000”).
• Declining to sign your assignment/lien.
• Stalling when it comes to paying you.
• Declining to forward the proceeds to you.
• Failing to respond to your calls or letters when checking on the status of the case.
• Repeatedly asking you for large reductions.
• Refusing to tell you any of the details of the settlement saying, “that’s confidential, I can’t tell you.”
• Simply sending partial payment and not even asking if you will take a reduction.
• Failing to tell you that they were fired or that they dropped the case.
• Settling cases, but not communicating this to you in a timely manner.

Patients

• Simply not wanting to retain an attorney.
• Firing their attorneys, or attorneys “dropping” patients/clients.
• Switching attorneys, and you’re unable to find out who the new attorney is.

Payers

• Refusing to pay you directly when you are “out-of-network.”
• Telling you that they will pay you directly, or put your name on the check, and failing to do so.
• For liability or uninsured motorist payers ignoring your assignment, saying that they’re third party and don’t have to honor your assignment.
• Telling you that the PIP (Personal Injury Protection) or Medpay (Medical Payments Benefits) benefits are “exhausted”, and you’ve had no way of verifying this.

PIP or Medpay Payers

• Refusing to pay you promptly, or paying the patient instead (or the patient’s attorney).
• They keep “losing your paperwork,” or saying, “we never got your paperwork.”

Attorneys Have Obligations

There is a body of law that is triggered when you have a well-drafted assignment and lien in hand and follow a few simple protocols.

In the late 80’s, the American Bar Association (ABA) adopted a model rule of professional conduct for the legal profession, entitled “Safekeeping Property Merits Special Attention.” According to Rule 1.15(b), when an attorney receives funds in which a client or “third-person” (e.g., a health care provider) has an “interest,” three duties are triggered: 1) the attorney has a responsibility to promptly notify you of the receipts of the funds, 2) the attorney has a responsibility to promptly pay you based on your interest, 3) the attorney has a responsibility to provide you with a “full accounting” upon request. Knowledge of this rule has been helpful when it comes to collecting outstanding balances in any type of accident case. Whether and how this rule applies in each state can vary based upon the laws of the state.

The ABA Rule 1.15(b) represents just one body of law that supports a well-drafted assignment and lien. Those who spend just a little bit of time for the assurance of a well-drafted assignment and lien, and then follow-up with simple protocols discover how easy it can be to solve many types of payment issues.

Key Elements in Your Lien and Assignment

Many providers don’t know that there are different types of assignments and liens, and that assignments are different from liens. Additionally, each type serves a different purpose. A federal bankruptcy court once explained that the basic difference between an assignment and a lien is that an assignment transfers ownership over the proceeds, while a lien does not. The meaning of the court’s statement was that an assignment of the proceeds will have a better chance of surviving a bankruptcy proceeding, whereas a lien has less of a chance.

Avoid assignment and lien documents which are very limited, because they could fail to include all types of payers and/or all types of proceeds. Don’t restrict your document. Include at least two provisions in your assignment and lien document: 1) a direction to all payers to pay you promptly, directly, and exclusively in your name, 2) include some key definitions of words like “payers,” “proceeds” and “charges.”

Uniform Commercial Code Lien

All states have some form of a health care lien; however, an increasing number of providers have become aware of a universal type lien known as the “Uniform Commercial Code” or “UCC” lien. The lien is available in virtually all states. It’s easy to file and costs as little as $5.00 in some instances. In various jurisdictions, filers are able to submit the lien form electronically. Furthermore, the UCC lien doesn’t have the limitations which many other health care provider liens seem to entail (for example, the Virginia “medical lien” law is limited to $500 for chiropractors). Does the UCC lien law really protect health care providers? Here is an excerpt from the Texas UCC law, it is nearly identical in most states:

“The following security interests are perfected when they attach: ...5) a security interest created by the assignment of a health-care-insurance receivable to the provider of the health care goods or services.” -Texas Business and Commerce Code, Section 9.309