Hospital lien

What it is

When a hospital treats an injured patient, the Hospital Lien Act lets it claim payment of its reasonable charges directly from the patient's recovery against the person who caused the injury.

The California rule

Civil Code 3045.1 gives a licensed hospital that provides emergency and ongoing medical care a lien on the damages the patient recovers by judgment, settlement or compromise. Under section 3045.3, the lien binds the paying party only if the hospital sends written notice before payment. Section 3045.4 makes a party who pays the patient after notice liable to the hospital, but only up to 50 percent of the money due the patient after prior liens are paid; practitioners treat the attorney's lien for fees and costs as a prior lien.

Two Supreme Court decisions narrow the lien further. In Parnell v. Adventist Health System/West (2005), a hospital that accepted the patient's health plan payment as payment in full could not use the lien act to collect the rest of its bill. And under Howell v. Hamilton Meats (2011), the patient's past medical damages are measured by amounts paid or owed, which shapes what a lien can fairly claim.

Why it matters to a plaintiff firm

Hospital liens are often the largest single lien in a serious crash case. Firms ask early whether the hospital billed the client's health plan, compare the notice date with the payment date, and use the 50 percent limit and Parnell in negotiation. Get the reduction in writing before disbursement.