Arizona Court of Appeals Voids Financial Lien Section of Arizona Law

Arizona Court of Appeals Voids Financial Lien Section of Arizona LawOn March 13, 2019, that a three-judge appellate court ruled that the practice of allowing hospitals to file financial liens against people who, despite having AHCCCS, medical treaters claim owe money violated federal law. Per the Capitol Times:

“In a precedent-setting ruling, the judges voided sections of state law that specifically allow hospitals to impose financial liens when the amount paid by the Arizona Health Care Cost Containment System doesn’t cover what they say are the full bill charges. Appellate Judge Diane Johnsen, writing for the unanimous three-judge panel, said the practice – and the Arizona statutes that have until now allowed it – violate federal law.”

More than 50 medical patients had filed a lawsuit contesting the right of hospitals to use the lien process. The hospitals had argued that “state law specifically permits them to impose a lien – essentially a claim – on any funds that may be due the patient from someone who was responsible for causing that person’s injury.”

In other words, when the hospitals could not go after a patient directly one way, they simply found a loophole. After the Ansley decision made it impossible for hospital to balance bill for patients using the Arizona Health Care Cost Containment System (AHCCCS), the hospitals realized that the law didn’t prohibit them from placing a lien against AHCCCS consumers.

The appellate decision was written by Judge Diane Johnsen. She ruled that the state laws had to defer to the federal laws. The federal laws prohibit hospitals from “filing a financial lien on patients to collect money the patient may be owed.” Furthermore, Judge Johnsen wrote, “Just as the hospital may not seize a patient’s car or impose a lien against the patient’s home, the hospital may not use state lien laws to seize the patient’s tort recovery.”

The ruling also confirmed a trial court ruling that precludes hospital from “imposing financial liens on patients in the future.”

The typical recovery processes

Generally, in Arizona, if someone is injured in a car accident, on the property of another, or is hurt due to any type of accident, the victim can file a personal injury lawsuit against the responsible party. Physicians and hospitals do have the right to get paid for the services they provide. The question is how, and how much, they get paid.

When patients use the AHCCCS

In Arizona, when patients are on Medicaid, their medical bills (such as hospital bills) are paid through the AHCCCS. Hospitals and doctors agree to accept the amounts offered by the AHCCCS, subject to copay and deductible requirements. Whatever the hospital agrees to, that is what they can get – period.

When patients don’t go through the AHCCCS

If the accident victim has his/her own health insurance, that insurance can be used to pay the medical bills. The problem arises when the victim doesn’t have enough insurance to pay the balance of any hospital bills. Often, physicians and hospitals will accept a letter of protection in which they agree to wait to be paid until the case settles or there is a verdict and the insurance company for the responsible parties pays. The hospital is usually paid off the top.

If the health provider is still owed money (because the settlement or jury award wasn’t enough or because the defendant didn’t have enough insurance), the hospital may try to collect the balance. Often, they will try to work out a payment plan with the patient. They may try more aggressive strategies which are subject to Arizona and federal law.

The latest ruling means that, if a hospital accepts a patient on Medicaid, it cannot impose liens as a way to circumvent the laws against balance billing. As of now, however, patients with their own personal insurance may still receive additional bills. If you received a surprise bill, or were subjected to a medical lien, Plattner Verderame, P.C., can help. Please call our Phoenix office today at 602-266-2002 or complete our contact form.

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