Idaho's Hospital Lien Statute

Idaho’s Hospital Lien Statute Favors Hospitals, Not Injury Victims

There has been some discussion recently among some Idaho attorneys about what to do when a hospital files a lien against the proceeds an individual might collect against a third party as a result of injury sustained in an accident caused by that third party. The discussion generally centers on what the injured party can do to deal with the lien when it becomes clear that the injured party will not be made whole from the recovery against the third party. An even more egregious situation occurs when the injured party has health insurance would pay the bills at a lesser amount, but the hospital refuses or is unwilling to bill the charges through the health insurance. I thought it might be instructive to compare hospital lien statutes from two different jurisdictions: Idaho and Tennessee. 

Idaho’s Hospital Lien Statute

Here is Idaho’s hospital lien statute.

Idaho Statutes

Title 45. LIENS, MORTGAGES AND PLEDGES

Chapter 7. HOSPITAL AND NURSING CARE LIENS

§ 45-701. RIGHT TO LIEN CONFERRED

Every individual, partnership, firm, association, corporation, institution or any governmental unit or combination or parts thereof maintaining and operating a hospital in this state shall be entitled to a lien for the reasonable charges for hospital care, treatment and maintenance of an injured person upon any and all causes of action, suits, claims, counterclaims, or demands accruing to the person to whom such care, treatment, or maintenance was furnished, or to the legal representatives of such person, on account of injuries giving rise to such causes of action and which necessitated such hospital care, treatment and maintenance.

It is pretty clear that a lien is created with no strings attached. Nothing in the statute suggests or requires the hospital to bill health insurance. If the lien is properly filed by the hospital, the injured party is basically at the mercy of the hospital in terms of receiving any proceeds from a third party, if the hospital bill is at or exceeds the amount of the recovery against the third party.

Tennessee’s Hospital Lien Statute

Here is Tennessee’s statute.

Tennessee Statutes

Title 29. Remedies And Special Proceedings

Chapter 22. Hospitals' Liens

 § 29-22-101.  Lien created - Application - Priority

(a) Every person, firm, association, corporation, institution, or any governmental unit, including the state of Tennessee, any county or municipalities operating and maintaining a hospital in this state, shall have a lien for all reasonable and necessary charges for hospital care, treatment and maintenance of ill or injured persons upon any and all causes of action, suits, claims, counterclaims or demands accruing to the person to whom such care, treatment or maintenance was furnished, or accruing to the legal representatives of such person in the case of such person's death, on account of illness or injuries giving rise to such causes of action or claims and which necessitated such hospital care, treatment and maintenance.

(b) The hospitallien, however, shall not apply to any amount in excess of one third (1/3) of the damages obtained or recovered by such person by judgment, settlement or compromise rendered or entered into by such person or such person's legal representative by virtue of the cause of action accruing thereto.

(c) The lien herein created shall be subject and subordinate to any attorney's lien whether by contract, suit or judgment upon such claim or cause of action and shall not be applicable to accidents or injuries within the purview of the Tennessee Workers' Compensation Law, compiled in title 50, chapter 6. Any such lien arising out of a motor vehicle accident shall not take priority over a mechanic's lien or prior recorded lien upon a motor vehicle involved in such accident.

Tennessee’s statute is similar in many aspects but differs importantly in regard to the amount of the lien. In Tennessee, the hospital lien cannot exceed one third of the damages recovered against the third party. Also, the hospital lien is subordinate to any attorney lien or fee. So, for example, if an injured party incurred a hospital bill of $5,000.00 and made a recovery against a third party in the amount of $10,000.00, the hospital could only claim a lien of $3,333.33, rather than the full amount of the bill. Or, to state it another way, Idaho’s lien law favors hospitals; Tennessee’s favors injury victims. 

The other aspect to be considered is the economic impact of choosing which lien policy should be advocated in a particular jurisdiction. Community concerns about rising health care costs might logically favor hospitals being paid in full whenever possible to keep rates lower. Others might argue the community has an interest in seeing that injured parties recover something for their pain and suffering and other out of pocket expenses regardless of whether or not funds are available to pay for all hospital care. So what happens to the injured Idaho victim whose third party recovery goes entirely to pay his or her hospital bill? Since he or she has no other funds from which to live on, they depend on family, friends or government programs to get by. And the cost of health care goes up anyway.

Bob Jacobson is a personal injury attorney serving Meridian, Mountain Home and Emmett, Idaho