An Intro Guide to the Illinois Lien Act

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Received a medical lien or unpaid bill from your accident?

If you suffered injuries that necessitated medical treatment as a result of a driver’s negligence, you may find yourself looking at a “Notice of Lien” from your hospital or physician and wondering what this means. Put simply, a lien is a security interest that the medical provider places against any recovery you may receive in your claim.

Medical providers will place liens on personal injury claims in order to protect their interest in the settlement recovery. With lien holders, they will often provide or render medical treatment to the claimant while allowing him or her to defer payment until the conclusion of the case.

The Health Care Services Lien Act (“Lien Act”), codified as 770 ILCS 23/1, et seq., is the law that spells out what a lien is, how it is created, and how the treater is to be reimbursed. First, one of the most important things to take note of is that the Lien Act caps what all the lien holders are entitled to. The law explicitly states that “the total amount of all liens under this Act….shall not exceed 40% of the verdict, judgment, award, settlement, or compromise secured by or on behalf of the injured person on his or her claim or right of action.” 770 ILCS 23/10(a). 

A Guide to the Illinois Lien Act

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Lien Requirements

First, the notice of lien, which must be in writing, must contain:

  • the name and address of the injured person,
  • the date on which the injury was sustained, 
  • the name and address of the health care professional 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. 770 ILCS 23/10(b). 

The notice of lien, containing all of the above information, must be served on both the allegedly negligent party and the party who was injured as a result of the negligent act. Service of the lien shall be made by certified mail or by personal delivery.

The Illinois Lien Act in Practice

As stated above, the total amount of the liens shall not exceed 40% of the recovery amount. Should the liens exceed the common fund set aside for liens, the Lien Act breaks the liens into two separate and distinct categories:

  1. the health care professionals: 
  2. the health care providers.

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Health Care Professionals vs. Health Care Providers According to the Lien Act

According to the Lien act, a health care professional is any individual “in any of the following license categories: licensed physician, licensed dentist, licensed optometrist, licensed clinical psychologist, or licensed physical therapist.” 770 ILCS 23/5.

A health care provider applies to any entity in the following categories: 

  1. licensed hospital, 
  2. licensed home health agency, 
  3. licensed ambulatory surgical treatment center,
  4. licensed long term care facilities, and
  5. licensed emergency medical services personnel. 770 ILCS 23/5.

Put simply, a health care professional includes physicians, therapists, and other doctors. A health care provider applies to hospitals, emergency rooms, and the like. The common fund (again, the 40% of the settlement, verdict, or judgment set aside to satisfy lien holders) is split evenly between the health care professionals and the health care providers. The amount that each medical provider receives is proportionate to the bills it charged and is subject to the common fund limits.

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Examples of How a Medical Lien Is Payed Out

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

Health Care Providers – $7,000
Emergency Room Lien of $7,000

Health Care Professionals – $8,000
Physical Therapy Lien: $6,500
MRI Imaging Lien: $1,500

Here, the common fund would be $10,000  (40% of the $25,000 arbitration award), and because the total amount of liens exceed the statutory limit of 40%, we must reduce the liens to no more than the $10,000 lien limit.  Based on the lien act, the final lien numbers will look closer to this:

Common Fund: $10,000

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

Health Care Professionals: $5,000
Physical Therapy Lien: $4,062.50
MRI Imaging Lien: $937.50

The Emergency Room is entitled to the entire $5,000 of the health care provider portion of the common fund because it is the only lien present. The health care professional liens are calculated and reduced to their pro-rata share based on the bills incurred. 

What Isn’t Included in the Illinois Lien Act

It is important to note that Medicare, Medicaid, litigation loans, Blue Cross Blue Shield,  and other health insurance liens are not subject to the Lien Act, and in fact, take priority over all other medical lien holders. It is equally important to note that the Lien Act’s intent is to help facilitate settlement discussions and disbursement of funds, and it does not extinguish the health care provider’s right to pursue the remaining balance of the injured party’s account.

If you were injured due to someone’s negligence or have questions about Illinois medical liens, do not hesitate to contact an attorney at the Kryder Law Group by phone at 312-223-1700, by email at info@kryderlaw.com, or through the interactive chat client on our website for a free and confidential consultation

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