Detailed Answer
When you settle a personal injury claim in Rhode Island, you must clear any hospital or insurer liens before distributing settlement proceeds. Under Rhode Island’s hospital lien law (R.I. Gen. Laws § 34-18-1 et seq.) and insurance subrogation statutes (R.I. Gen. Laws § 27-7-1 et seq.), both medical providers and insurers can assert claims against your recovery. Follow these steps to identify and resolve liens effectively:
1. Gather Treatment and Coverage Information
Ask the client for a complete list of medical providers and treatment dates. Obtain copies of health insurance, auto no-fault (PIP), or employer benefit policies. This lets you determine who may have paid medical bills and who might assert a lien.
2. Request Lien Statements
Send written requests to hospitals, physicians, and insurers for lien or subrogation statements. Rhode Island hospitals must file lien notices with the court clerk under R.I. Gen. Laws § 34-18-2. Insurers pursuing subrogation rights should provide itemized statements under R.I. Gen. Laws § 27-7-4. Keep records of all correspondence.
3. Verify and Challenge Amounts
Review each statement for accuracy and reasonableness. Compare billed charges to usual and customary rates. Under equitable principles, you can negotiate reductions or contest excessive fees. Document any disputes in writing.
4. Negotiate and Obtain Lien Releases
Negotiate settlement of each lien at a reduced rate, if possible. Once agreed, secure written releases or satisfactions from the hospital or insurer. For Rhode Island hospital liens, the release should reference R.I. Gen. Laws § 34-18-3 and be filed with the court clerk.
5. Hold Funds in Escrow If Needed
If a lien remains unresolved at the time of closing, place the disputed amount in a trust or escrow account. State the escrow arrangement clearly in the settlement agreement to protect all parties until final resolution.
6. Disburse Settlement Proceeds
After you secure releases for all liens, obtain your client’s signed settlement authorization. Pay attorney fees, costs, and any lien amounts in the order agreed. Deliver net proceeds to your client, keeping detailed disbursement records for auditing and tax purposes.
Statute References
Hospital Liens: R.I. Gen. Laws § 34-18-1 et seq.
Insurer Subrogation: R.I. Gen. Laws § 27-7-1 et seq.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance tailored to your situation.
Helpful Hints
- Start lien discovery early to avoid closing delays.
- Maintain a centralized file for all lien correspondence.
- Review client’s insurance policies for subrogation clauses.
- Compare billed amounts to Rhode Island’s usual and customary fee schedules.
- Consider mediation if lienholders reject reasonable reductions.
- Use escrow for disputed lien amounts at closing.
- Obtain written releases for all resolved liens before disbursement.
- Keep precise records of all payments to lienholders.