4 Jan, 2022

Illinois Health Care Services Lien Act

Author Todd A. Strong
Medical Lien – Law, Judgment, Web. Laptop in the office with term on the screen

The Illinois Health Care Services Lien Act States that healthcare professionals and providers who treat and care for an injured person, except in workers’ compensation cases, can hold liens against the injured person’s pending injury claim. These liens are paid upon settling the injured person’s case. The state allows a maximum of 40% liens, meaning the healthcare provider or professional cannot take an amount from the settlement that exceeds 40% of the injured person’s award. All Illinois health care services liens must include written notices.

Medical Lien – Law, Judgment, Web. Laptop in the office with term on the screen

What Is a Medical Lien, and When Is It Put Into Place?

A medical lien is sometimes called a hospital lien. The term refers to an agreement between the doctor or hospital and the patient. It is a legally binding contract that allows the doctor or healthcare center to provide medical care to the patient without requiring money upfront. The patient, or injured person, commits to pay the medical provider a percentage of the proceeds of his or her settlement or jury award in the personal injury case.

People who have adequate health insurance don't have to use liens. The purpose of a lien is to ensure that the patient who has no other means to pay for the healthcare he or she needs after an accident receives timely medical care while going through the steps in a personal injury case.

At the end of the personal injury process, when the plaintiff receives a settlement or jury award, the medical care provider exercises the lien to recover the cost of the care that was provided.

After the doctor and patient sign the lien in Illinois, the doctor notifies all interested parties about the agreement's details. This guarantees that the injured person, the negligent party, or the insurance providers will pay the medical provider first when the injury case is resolved.

Given the inherent risks in liens, not all doctors or hospitals favor this method of accepting payment. Their reimbursement often depends on the success of the victim’s case. Even for victims that succeed in obtaining financial recovery, the state places several limitations on the reimbursement amount enforceable in liens.

What Are the Requirements for a Medical Lien to Be Valid?

When a settlement is awarded to an injured party, he or she must provide written notice to healthcare providers and professionals who may have a valid lien against the judgement or award. For a medical lien to be valid, it must include the following information in the contract:

  • A statement describing the nature and extent of the victim’s injuries
  • A statement detailing the nature and extent of medical care provided to the patient
  • If applicable, a written statement regarding the manner in which the injuries occurred, which may include healthcare records.

Illinois Lien Limits and Limitations

Healthcare providers and professionals enforcing liens should do so within the Illinois Healthcare Services Lien Act. The act states the total amount of liens applied to a settlement can not exceed 40% of the verdict or settlement amount. Additionally, no individual claimant can execute a lien greater than one-third of the settlement award. If the value of all liens applied to a single settlement exceeds 40%, no single party may execute a lien greater than 20% of the settlement value.

Sometimes, healthcare professionals and providers bill their services as a single entity. In this case, the law encourages a reasonable allocation of charges and the separation of liens under the act. This means the provider and care professional can file separate liens when necessary.

How the Illinois Healthcare Services Lien Act Impacts a Personal Injury Settlement

A personal injury settlement award is the compensation you receive, as a victim, from settlement negotiations with the insurance company or a court verdict from a judge or jury. If you win a case against the liable party, you can typically recover damages for medical bills, pain and suffering, lost income, and loss of enjoyment of life.

Regardless of whether a lien is involved, the value of your injury case usually depends on numerous factors, such as:

  • The severity of your injuries
  • The type and nature of the accident
  • The level of property damage/loss
  • The long-term effect of the injuries on your everyday life

When you have a medical lien, the settlement is first and foremost reported to the lien holder. This could be a doctor, a hospital, or both. 

For example, if you have a $60,000 lien and win $600,000 in a settlement, the doctor or hospital will receive the total compensation request, since the lien amount is just 10% of your award. If, however, your judgment award is $60,000, the hospital or healthcare professional cannot claim the entire lien. Instead, they will be limited to a maximum of 40%, which is $24,000.

The healthcare provider or professional may pursue other means to collect the remaining balance owed. Working with an experienced personal injury lawyer in Peoria can prevent the medical center or professional from coming after you once a lien is paid.

Lawyers can often forecast how liens will affect the settlement amount. They will therefore use this analysis to advise you on how much to ask for in a personal injury settlement. This way, the lien payment doesn't leave you in a financial mess.

Contesting Liens

If you disagree with the nature of the enforcement of the lien, you may be able to contest it in court. In that case, a judge will decide, based on the provisions in the Illinois Healthcare Services Liens Act and the particular circumstances of your case, if the lien enforced against you is valid. This is critical in cases that involve multiple liens, as the judge can order which ones to prioritize.

About The Author

Photo of Todd A. Strong
Illinois workers’ compensation and personal injury lawyer Todd A. Strong is the founder of Strong Law Offices in Peoria, Illinois. Todd brings considerable legal knowledge, experience, and skill to the table to ensure injured victims throughout the state are treated with respect, dignity, and fairness.