Illinois Medical Lien Act Explained

The Illinois Health Care Services Lien Act impacts both medical providers and injured plaintiffs after an accident. It allows healthcare providers to claim a portion of a lawsuit settlement for the services they provided, while also capping 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 in a car crash or other accident caused by someone else’s negligence, you likely needed hospital care and follow-ups with your doctor or physical therapist, leading to medical bills. You may receive a notice about an unpaid bill and a lien placed on your case by the healthcare provider. This may leave you with questions: What does this mean? What are my healthcare 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 on any compensation a victim may receive from his or her claim. It allows them to claim a portion of the settlement, verdict, award, or any other recovery that was won.

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 healthcare 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 healthcare providers
• 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 registered or certified mail or in person.

How the Lien Act Works

Healthcare professionals include physicians and therapists, while providers are hospitals and emergency rooms. The common fund—40% of the verdict judgment award settlement for lien holders—is split equally between professionals and providers. Each provider’s share is based on their billed amounts within the fund’s 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: $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’s a large hospital lien, it may be possible to negotiate with the provider or facility to reduce it. This is especially helpful if the settlement or verdict doesn’t cover all expenses, leaving the injured party with little or no compensation for pain and suffering.

What Is MedPay?

MedPay is an optional auto insurance benefit that covers medical expenses for you or your passengers after an accident, no matter who’s at fault. It helps with deductibles, copays, hospital visits, and other treatments.

When MedPay is paid, a lien is placed on any personal injury settlement from the accident. Sometimes, insurers communicate, and the at-fault carrier pays the MedPay lien. This removes the lien on the injury claim, but the at-fault carrier gets 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 to be notified. They have priority over other healthcare liens.

The biggest challenge with Medicaid and Medicare liens is how long they take to resolve, even though they’re usually lower than hospital or doctor bills. When attorneys review a Medicaid or Medicare benefits ledger, they see both charges and payments. Since Medicaid has contracted rates with providers, any remaining balances are often written off.

The Illinois Workers’ Compensation Act generally does not allow for medical liens against an injured employee’s claim or any settlement proceeds.

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.