Jeffrey P. Gale, P.A. // Florida’s Confusing Hospital Lien Law in Personal Injury Cases

Personal injury lawyers have their work cut out for themselves. Besides having to deal with basic case issues of fault and damages, they are expected to resolve the liens held by hospitals operating in Miami-Dade County. (Depending on local laws, the principles addressed here may apply in other Florida counties.) As the hospitals do not compensate the lawyers for this bill collection work, it’s a great deal for them. (It sure beats selling the debt to bill collection agencies for pennies on the dollar.)

The lien is the right of a hospital to be reimbursed for its services from the proceeds of a judgment or settlement paid by the third party responsible for causing the patient’s injuries. This scenario arises in the context of personal injury cases where the injured party is compensated by the at-fault party for damages sustained.

Miami-Dade County’s lien law, Section 25C-2, Miami-Dade County Code, reads as follows:

[hospitals] shall be entitled to a lien for all reasonable charges for hospital care, treatment and maintenance of ill or injured persons upon any and all causes of action, suits, claims, counterclaims and demands . . . and upon all judgments, settlements and settlement agreements rendered or entered into by virtue thereof, on account of illness or injuries giving rise to such causes of action, suits, claims, counterclaims, demands, judgment, settlement or settlement agreement and which necessitated or shall have necessitated such hospital care, treatment and maintenance.

Liability insurance companies have learned to be careful with hospital liens. In Palm Springs Hospital, Inc. v. State Farm Mutual Insurance Company, 218 So.793 (Fla. 3rd DCA 1969), the insurance carrier was sued by the hospital for impairment of lien for failing to satisfy the lien from the settlement proceeds. To avoid this dilemma, some carriers include the hospital’s name on settlement and judgment checks. This is what happened in Marin v. Infinity Insurance Company, (Fla. 3rd DCA 2018) … and it resulted in a court battle.

Marin resulted in litigation because the plaintiff’s lawyer took issue with the carrier including the hospital’s name on the settlement draft, forcing the lien to be resolved before the money could be disbursed to the client. The holding is confusing because the court, in discussing breach of contract concepts, suggests that had the carrier been instructed by the lawyer in the settlement demand to keep the hospital’s name off of the check, it could have complied without consequence. On the other hand, however, the court seems to suggest that the carrier had no choice but to comply with the lien law by including the hospital’s name on the check.

My takeaways from Marin:

1. Settlement demands should contain explicit language as to who may be a payee on the settlement draft. Here is our form language: “Please tender a single check made out to (add client name) and Jeffrey P. Gale, P.A. (and no other payees) to our office at 9999 NE 2^nd Avenue, Suite 304, Miami Shores, Florida by (add date).”
2. Come to an agreement with the lien-holders (includes Medicare and Medicaid liens) before making the demand and show proof in the settlement demand of the agreement.
3. Indicate in the settlement agreement that the plaintiff will satisfy the liens from the settlement proceeds. This may not provide enough comfort to the carriers.

Interestingly, even in the absence of being informed about the status of the lien, most carriers tender settlement checks without including the lien-holder’s name. This is likely due to a line of cases finding carriers in bad faith for including the lien-holder’s name. Time will tell if Marin changes this dynamic.