What steps are needed to identify and resolve hospital or insurer liens before disbursing settlement funds in SC?

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Detailed Answer: Steps to Identify and Resolve Hospital or Insurer Liens

Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.

Before disbursing settlement funds in South Carolina, you must identify and clear any liens asserted by hospitals, medical providers, Medicaid, or private insurers. Failing to address these liens can expose you or your client to liability for unpaid medical bills. Below are the key steps under South Carolina law:

1. Obtain Complete Medical and Billing Records

Request all medical records and billing statements from each provider who treated the injured party. These records form the basis for lien identification and potential dispute. Confirm dates of service, total charges, and payments received.

2. Search for Hospital Liens

Under the South Carolina Hospital Lien Act (SC Code Ann. §44-48-10 et seq.), qualifying hospitals may file liens against a patient’s settlement. To locate liens:

  • Check the clerk of court’s lien records in counties where treatment occurred.
  • Search the statewide database (if available).
  • Confirm filing dates; liens must be recorded within six months of the last treatment (SC Code Ann. §44-48-40).

3. Request Lien Statements and Validations

Send written requests to each hospital and medical provider demanding a detailed statement of the lien, including:

  • Total billed charges versus payments already applied.
  • Itemized services and dates.
  • Basis for the lien claim (statute or contract).

4. Identify Medicaid or Medicare Liabilities

South Carolina law (SC Code Ann. §44-6-650) requires Medicaid to assert a lien to recover benefits. To address Medicaid:

  • Notify the South Carolina Department of Health and Human Services CDHHS of the pending settlement.
  • Obtain a demand for repayment of medical benefits paid.
  • Negotiate a reduction where permitted in cases of hardship or partial settlement.

5. Review Private-Insurer Subrogation Claims

Private health insurers often assert subrogation or reimbursement rights based on policy terms. To resolve these claims:

  • Review the insurance policy’s subrogation clause.
  • Request a reimbursement statement from the insurer.
  • Evaluate whether the insurer honored its obligation to advance or pay claims timely.
  • Negotiate a pro rata reduction to reflect the insured’s net recovery (equitable apportionment).

6. Negotiate Reductions and Settle Lien Amounts

Once you receive validation statements, negotiate with lienholders to reduce balances. Strategies include:

  • Arguing billing errors or duplicate charges.
  • Claiming provider discounts or write-offs.
  • Asserting that full payment would exhaust the client’s funds, leaving them without post-settlement resources.

7. Obtain Lien Releases and Payoffs

After negotiation, secure written lien releases or payoff statements stating that the provider or insurer waives further claim against the settlement. Ensure releases:

  • Reference the specific case or claim.
  • State the exact amount paid.
  • Confirm no additional balance remains.

8. Confirm Satisfaction and Disburse Funds

Before disbursing any settlement funds, review all releases, ensure no undisclosed lien remains, and maintain a final accounting. Then, distribute the net proceeds to the client, attorneys, and other authorized recipients.

Helpful Hints

  • Start lien identification early to avoid last-minute delays.
  • Maintain a written audit trail of all lien communications.
  • Use certified mail for lien requests and releases.
  • Document all negotiations to support reductions in case of dispute.
  • Consult a knowledgeable attorney to ensure compliance with SC Code §44-48-10 et seq. and §44-6-650.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney. See full disclaimer.