The Illinois Health Care Services Lien Act Explained

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The Illinois Health Care Services Lien Act is legislation affecting both medical care providers and injured plaintiffs in the legal system after an accident. This act lets healthcare providers claim part of a lawsuit settlement for services provided and limits how much they can take.

Understanding the Illinois medical lien act is important for anyone involved in personal injury claim cases in Illinois. The Chicago personal injury lawyers at The Kryder Law Group, LLC Accident and Injury Lawyers, with their deep experience and in-depth knowledge of the act, provide guidance and representation to help injured parties navigate these legal challenges.

Have You Received a Medical Lien After Your Accident?

If you were injured due to someone else’s negligence in a car crash or other accident, you likely ended up in the hospital and needed follow-up care from your primary doctor or a physical therapist resulting in accumulated medical bills. Often, you’ll receive a notice telling you your bill is unpaid and that a lien has been placed on your case by the healthcare provider. This may leave you with questions: What does this mean? What are my health care providers asking for? Why didn’t my health insurance company cover my medical bill? What should I do now?

What Is a Medical Lien?

A medical lien is a security interest that medical providers place against any recovery you may receive in your claim. It attaches to and claims, a portion of a settlement, verdict, award, or whatever compensation you or your personal injury lawyer may have secured.

What Is a Medical Lien?

Why Do Hospitals and Doctors Place Liens?

Medical providers use liens on personal injury claims to ensure they get paid via a part of the settlement or award. They offer medical treatment first, deferring payment until the personal injury case ends. A health care professional prefers liens for services rendered because they typically get more money from settlements than from the patient’s health insurance.

Has a Lien Been Placed Against Me?

According to The Illinois Health Care Services Lien Act 770 ILCS 23/10(b) the written notice of lien must contain:

  • the name and address of the injured person,
  • the date of the injury or when the injury was sustained,
  • the name and address of the healthcare professionals or health care provider, and
  • the name of the party who was allegedly negligent and would be liable to make compensation to the injured person.

The lien notice must be served on both the allegedly negligent party and the injured party. It can be delivered by certified mail or in person.

How the Lien Act Works

Health care professionals are physicians, therapists, and doctors, while health care providers are hospitals and emergency rooms. The common fund—40% of the settlement, verdict, or judgment reserved for lien holders—is divided evenly among professionals and providers. Each provider’s share is based on their billed amounts, within the common fund limits.

Examples of Medical Liens

For example, let’s say that an injured person was awarded $25,000 at arbitration. The amount in medical liens total $15,000 and are as follows:

Health Care Providers – $8,000
Emergency Room Lien of $8,000

Health Care Professionals – $11,000
Chiropractor Lien: $8,500
Diagnostic Imaging Lien: $2,500

Here, the common fund is $10,000 (40% of the $25,000 arbitration award). Since the total liens exceed the 40% statutory limit, they must be reduced to the $10,000 lien limit. Following the lien act, the final lien amounts will be adjusted accordingly:

Common Fund: $10,000

Health Care Providers: $5,000
Emergency Room Lien: $5,000

Health Care Professionals: $5,000
Chiropractor Lien: $3,863.63
Diagnostic Imaging Lien: $1,136.36

What If There Is One Big Hospital Lien?

If there is a large hospital lien, it may be possible to negotiate with the other medical provider or facility to reduce the amount of their lien. This can be especially helpful if the injured party’s settlement or verdict is not enough to cover all of their expenses and they are left with little to no compensation for their pain and suffering.

What is MedPay?

MedPay is an optional benefit in auto insurance that covers medical expenses for you or your passengers after a car accident, regardless of fault. It can help cover deductibles, co-pays, hospital visits, and other medical treatments.

When MedPay is paid, a lien is created against any personal injury settlement claims from the accident. Sometimes, insurance companies will communicate with one another and the at-fault carrier will pay the MedPay lien. This will release the lien against the bodily injury claim, but the at-fault carrier will be entitled to a setoff.

An Example of MedPay in a Personal Injury Lawsuit:

  • Plaintiff has insurance with Company A, which pays $10,000 in MedPay.
  • Defendant’s insurer, Company B, reimburses the insurance Company A the $10,000.
  • When the plaintiff claims bodily injury against the defendant and Company B, valuing the case at $100,000, Company B agrees to pay only $90,000, citing the $10,000 it already paid.

How Much Can Medicaid Take from a Settlement in Illinois?

Like MedPay, Medicaid and Medicare aren’t covered by the Illinois Health Care Services Lien Act and don’t require interested parties be notified. They have priority over other health care liens.

The main issue with Medicaid and Medicare liens is their resolution time, though they’re usually lower than hospital and physician bills. When an attorney reviews a benefits ledger from Medicaid or Medicare, they see lists of charges and payments made. Since Medicaid has contracted rates with treating facilities, any remaining balance is often written off.

I Still Don’t Understand Medical Liens. Who Can Help Me?

If you have any questions about medical liens, or if you were injured due to someone’s negligence, do not hesitate to call The Kryder Law Group, LLC Accident and Injury Lawyers for a free consultation to discuss your injuries.



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