Personal injury claimants can rack up substantial hospital bills after an accident.   However, attorneys are generally prevented from using their own funds to satisfy a client's medical bills. Supreme Court Rule 4-1.8(e) expressly prohibits attorneys (unless they are working pro bono) from paying a client's medical bills with their own funds, because this amounts to providing "financial assistance in connection with pending or contemplated litigation[.]"   In fact, one informal ethics opinion noted that an attorney would violate Rule 4-1.8 by advancing a client the cost of a taxi to and from the treating doctor.

Nevertheless, Appendix 2 to Rule 4 of the Rules of Professional Conduct (captioned "Interprofessional Code for Physicians and Attorneys") encourages attorneys to "do everything possible to assure payment for services rendered by the physician for himself or his client. When the physician has not been fully paid the attorney should request permission of the patient to pay the physician from any recovery which the attorney may receive in [sic] behalf of the patient."    Often, a personal injury claimant's case is subject to liens from hospitals and governmental entities that seek reimbursement for treating patients who are injured by a tortfeasor.   This article examines the ethical and professional obligations of Missouri attorneys in personal injury cases subject to three common types of medical liens: Missouri healthcare liens,  Medicaid liens,  and Medicare liens. 

Missouri Hospital Liens -- §§ 430.225-432.250, RSMo.

Sections 430.225 to 432.250 of the Missouri Revised Statutes (commonly referred to as "the hospital lien statutes") grant certain Missouri healthcare providers (including hospitals) the right to file liens to recoup the cost of treating personal injury claimants.   However, the amount can be recovered through a healthcare lien is limited.  If the hospital liens exceed 50% of the amount due the injured person after attorney's fees and other expenses, the healthcare providers "shall share in up to fifty percent of the net proceeds due the patient, in the proportion that each claim bears to the total amount of all other liens of [healthcare providers]."   For a Missouri hospital lien to be valid, the healthcare provider must send written notice of its lien to the tortfeasor via certified mail or registered mail before the tortfeasor makes any payment to the claimant (or the claimant's attorney) in connection with the case.   Additionally, the healthcare provider must send written notice of the lien to any insurance carrier, "if known," that ensures the tortfeasor against such liability.   When a payment is made to the claimant as compensation for her injuries, and a valid healthcare lien is not paid, the claimant remains liable to the lienholder for the full amount of the lien for a period of one year after such payment was made to the claimant.   However, once a personal injury claimant satisfies a health care lien from any settlement or judgment proceeds, the claimant is "release[d] from further liability on the cost of the services and treatment provided [.]" 

Medicaid Liens - § 208.215, RSMo.

Section 208.215, RSMo., gives the Missouri Department of Social Services (DSS) a statutory right to assert a lien to recover any money that Medicaid paid to satisfy a personal injury claimant's medical expenses.  After receiving notice of a personal injury claim, notice of Medicaid's lien must be served via certified mail or registered mail upon the tortfeasor.   Upon service of the notice of lien, Medicaid's lien attaches to any verdict or judgment entered and to any property that the claimant recovers in the claim against the tortfeasor.   

Medicare Liens -- 42 U.S.C. § 1395y(b)(2)(B)(ii)-(iii)

The Centers for Medicare and Medicaid Services (CMS) has an absolute right to recover any payments Medicare made toward a personal injury claimant's medical expenses.  Medicare liens impose significantly more obligations on parties than other liens.  For instance, a tortfeasor's insurer is considered a "responsible reporting entity" that must provide the Secretary of Health and Human Services with information about the claim, or it could face potential fines.   Once the tortfeasor's insurer pays the claimant in connection with the personal injury claim, CMS has the right to seek reimbursement from any claimant, and any "provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment."  Medicare must be paid its reimbursement monies within 60 days after payment is made to the claimant.   Notably, if a timely reimbursement payment is not paid, the CMS can elect to recover its money from the tortfeasor's insurer even if the insurer already made a payment to the claimant in the personal injury case.  The CMS may collect double damages against the tortfeasor's insurer, the claimant, the claimant's attorney, and anyone else who received a payment from a settlement or judgment in a personal injury case. 

Missouri Rules of Professional Conduct -- Rule 4 

Rule 4-1.1 states that "[a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation."   Accordingly, attorneys for all parties in a personal injury case should be familiar with how medical liens shape the professional obligations and duties owed to their clients.

Liens can have a significant impact on the amount of money a personal injury claimant will recover in a case.  Rule 4-1.5(c) requires that when a personal injury case is resolved, an attorney who has entered into a contingency fee agreement with the claimant must provide a "written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination."   But claimants' attorneys should consider discussing medical liens with their clients, well before a case is resolved, to ensure they have reasonable expectations about the outcome of their case.  Pursuant to Rule 4-1.3, an attorney has a duty to act with commitment and dedication to the client's interests, therefore the claimant's attorney should evaluate whether it would be appropriate to seek a reduction in the lien from the lien holder.  If a medical provider is asserting a lien, claimants' attorneys should investigate whether the lien was "perfected" in accordance with the notice requirements set forth in the Missouri hospital lien statute.   Attorneys should also make sure their client is aware that, once a health care lien is satisfied, the client is no longer personally responsible for the cost of that treatment. 

Defense attorneys should also discuss medical liens with their clients at the outset of the claim, given that liens can significantly delay the resolution of a case and complicate settlement.  Further, defense attorneys should be familiar with a lien's limitations to ensure that clients do not incur unnecessary costs by responding to invalid liens.  For instance, attorneys should know that Missouri health care liens cannot attach to wrongful death settlement proceeds and cannot be used to recover money paid to a client from an uninsured motorist policy.   Further, due to Medicare's strict reporting requirements, defense attorneys should promptly conduct discovery, e.g. written interrogatories, to obtain information about a claimant's Medicare status.

In 2016, one Missouri court held that a medical provider could not bring a cause of action against a personal injury claimant's attorney for failing to ensure that a Missouri health care lien was satisfied from a tortfeasor's payment the attorney's client.   However, outside of Missouri, multiple jurisdictions have found that a claimant's attorney can be held liable for failing to reimburse Medicare for benefits paid to when a client receives a payment from a tort-feasor's insurer.   Accordingly, claimants' attorneys should be sure to inquire about their client's Medicare and Medicaid status during the intake process so that a plan is in place for handling any liens. 

In order to protect their clients, defense attorneys may consider asking a personal injury claimant to indemnify and hold harmless the tortfeasor (and its insurer) in connection with the repayment of medical liens.  However, in a formal opinion, the Advisory Committee of the Supreme Court of Missouri concluded that Rule 1.8(e)  expressly prevents a claimant's attorney from agreeing to indemnify a settling tortfeasor for a debt owed by the claimant.   In fact, this same opinion holds that it would violate Rule 4-8-4 for a defense attorney to request such indemnification from the claimant's attorney.   Thus, it may be prudent attorneys should consider alternative methods for assuring that a lien is satisfied, such as asking a claimant's attorney to provide written confirmation that any liens will be satisfied by the claimant upon receipt of any settlement or judgment monies in the case.

Medical liens are complicated and can lead to significant financial exposure and unnecessary headaches for the parties and attorneys in a personal injury case.  When resolving a case subject to liens, attorneys must be diligent to ensure their ethical and professional obligations are met.  Given that the stakes are high for all involved, attorneys should adopt a spirit of cooperation and strict adherence to Rule 4 and the relevant statutes when handling liens to limit the adverse consequences for all involved.

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¹ The author wishes to acknowledge Susan Dimond of Roberts Perryman for her invaluable contributions to this article.

² See Sarah Kliff, With Medical Bills Skyrocketing, More Hospitals are Suing for Payment, N.Y. Times, February 28, 2020,  https://www.nytimes.com/2019/11/08/us/hospitals-lawsuits-medical-debt.html.

³ Supreme Court Rule 4-1.8.   

⁴ Missouri Informal Ethics Opinion 990111 (1999); see also Rule 4-1.8(e) and Comments [11], [12], [13].

⁵ Rule 4, App. 2.

⁶ Glen E. Bradford & Amy K. Hansen, Liens, Assignments, Subrogation and Other Traps for the Claimant’s Lawyer, 53 J. Mo. B. 248, 248 (1997).

⁷ §§ 430.225 to 432.250, RSMo. (2006).

⁸ § 208.215, RSMo. (2014).

⁹ 42 U.S.C. § 1395y(b)(2)(B)(ii); see also 42 C.F.R. §§ 411.21, 411.24(g)–(i).

¹⁰ Schoedinger v. Beck, 557 S.W.3d 531, 534 (Mo.App. E.D. 2018) (citing § 430.230, RSMo.).

¹¹ Id. (quoting § 432.225.3, RSMo.).

¹² § 432.225.3, RSMo. (2006).

¹³ Id.

¹⁴ § 432.250, RSMo. (2006).

¹⁵ § 432.225.5, RSMo. (2006).

¹⁶ § 208.215, RSMo. (2014).

¹⁷ § 208.215.8, RSMo. (2014).

¹⁸ Id.

¹⁹ 42 U.S.C. § 1395y(b)(2)(B)(ii)-(iii); see also 42 C.F.R. §§ 411.21, 411.24(g)–(i).

²⁰ See 42 U.S.C. § 1395y(b)(8)(A)(i).

²¹ 42 C.F.R. § 411.24(g).

²² 42 C.F.R. § 411.24(h).

²³ 42 C.F.R. § 411.24(g).

²⁴ 42 U.S.C. § 1395y(b)(2)(B)(iii).

²⁵ Rule 4-1.1.   

²⁶ Rule 4-1.5(c).

²⁷ This article does not explore a claimant’s options with respect to obtaining medical lien reductions or challenging the amount a lienholder seeks to recover in a case.  But attorneys often seek reductions on Missouri health care provider liens.  Reppy v. Winters, 351 S.W.3d 717, 721 n.1 (Mo.App. W.D. 2011) (noting that attorneys may negotiate with medical providers to resolve medical liens as a service to their client).  And both Medicaid and Medicare have procedural mechanisms for a beneficiary to pursue a lien reduction.  See Am. Family Mut. Ins. Co. v. Fehling, 970 S.W.2d 844, 851 (Mo.App. W.D. 1998) (noting that Missouri’s Medicaid statute gives the trial court discretion to reduce a Medicaid lien); Fortner v. Price, 1:16-CV-279 SNLJ, 2017 WL 1177712, at *2 (E.D. Mo. Mar. 30, 2017) (“Medicare may reduce or even waive its recovery.”).

²⁸ § 432.225.3, RSMo. (2006).

²⁹ § 432.225.5, RSMo. (2006).

³⁰ Rule 4-1.1.   

³¹ Truman Med. Centers, Inc. v. McKay, 505 S.W.3d 799, 804 (Mo.App. W.D. 2016) (“Because an attorney for the injured person is neither liable to the injured person for the injuries sustained, nor personally compensating the client when forwarding settlement payments, Section 430.250 is inapplicable to attorneys representing an injured client.”).

³² See, e.g., U.S. v. Harris, 2009 WL 891931 (N.D. WVa. 2009), aff’d 334 Fed. Appx. 569 (4th Cir. 2009); U.S. v. Weinberg, 2002 WL 32356399 (E.D. Pa. 2002); United States v. Sosnowski, 822 F. Supp. 570 (W.D. Wis. 1993).

³³ Missouri Formal Opinion 125 (App. 3) (2008).

³⁴ Id.