State legislators working to change laws on liens

A small number of states recently enacted laws precluding hospitals from filing liens before billing patients’ commercial health insurers.

South Dakota’s governor signed the latest one just a few months ago. Had it been in effect in 2015, it would have prevented Avera McKennan Hospital in Sioux Falls from filing roughly $142,000 in liens on Marlyn and Kathlene Bootsma’s injury settlement from a motorcycle accident, which the parties are still battling in court.

Sioux Falls-based Sanford Health always bills health insurance before filing liens, so the new law won’t change its practices, said Torrey Sundall, Sanford’s senior director of payer contracting. The health system used to file liens first, but made a “business decision” to change that practice several years ago, he said.

“We know of other providers who staunchly pursue liens,” he said.

Patients have to be sure to present their health insurance information, though. If, after a certain amount of time, Sanford doesn’t have that, it still files liens.

“As long as they provide that information to us and they do it timely, we will attempt to file and seek payment from their personal health insurance,” Sundall said.

Nevada lawmakers approved a similar bill in 2017 that says hospitals can’t file liens before billing health insurance. They can still file liens if they don’t contract with the patient’s health insurer or if the patient is uninsured.

Before the new law, there was no uniformity regarding hospitals’ practices, said Justin Watkins, a Las Vegas attorney who represents patients affected by liens and a former Nevada assemblyman who helped pass the law. “In my estimation, they were gaming the system,” he said. Colorado lawmakers approved a measure in 2015 requiring hospitals to bill patients’ primary medical benefits providers and property and casualty insurers before filing liens.

Many state legislatures passed their original hospital lien statutes decades ago when fewer people had insurance. They were meant to ensure hospitals got paid after treating uninsured auto accident victims, said Mitch Burgess, a Kansas City, Mo., attorney who has won class-action settlements for hundreds of patients. Hospitals are no longer following the original intent of those laws, he said.

“Now, they’re using it as a sword rather than a shield,” Burgess said. “Even when people have health insurance, they’re just choosing not to submit.”