Georgia: Contractual & Statutory Liens, Oh My!

The Mighty Team

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The Mighty Team

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January 1, 2021

Published On

January 1, 2021

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Across the country, medical providers protect themselves by signing liens (or letters of protection) when treating personal injury (“PI”) cases. However, the subtle differences in laws require different approaches in different states! Today let’s take a look at the Peach State: Georgia.

Statutory vs. Contractual Liens

Put simply, a statutory lien is a lien that is established by Georgia state law. A contractual lien is generally a contract entered into between the medical provider and your patient.

Which is better? Let’s find out.

What’s The Law on Statutory Liens?

In Georgia, law around statutory medical liens is dictated by the Georgia Code. Broadly speaking, any physician practice with at least one licensed physician can file a lien for the reasonable charges for “care and treatment of an injured person.” This lien is a lien against the causes of action (i.e. the personal injury case), and is not a lien against the injured person him or herself.  

As with most laws, this can get complicated. In order to comply with law, the medical provider must:

  • File in the office of the clerk of the superior court of the medical provider’s county (and the plaintiff’s county, if different) a verified statement containing various information about the patient, the provider, and the dates of treatment, admission, or discharge. Depending if you’re a hospital, nursing home, burn care practice, or physician, there are different requirements on the deadline for filing.
  • At least 15 days before filing the verified statement above, the provider must give written notice to the patient and the firms, corporations, and insurers claimed by the patient to be liable for the damages in first class or certified mail.

The fees add up, often costing $4.50 (or more) for the first page and $2.00 a page afterwards! This doesn’t include additional cancellation and amendment fees, plus the fact that providers might have to file in multiple counties. In aggregate , filing liens can cost providers thousands of dollars per year and consumer hours of support staff time.

What’s The Law on Contractual Liens?

Some healthcare providers prefer not to rely upon statutory liens but instead use contractual liens. Put simply, providers enter into contracts with the patient (often signed by the patient’s attorney as well) that contractually states that the provider will be paid with the proceeds of the PI case. Usually the provider has a template lien or letter of protection (“LOP”), or the patient will have one provided by his or her attorney.

This is clearly easier than filing liens page by page with a court house, so why doesn’t every provider do this? Many providers are worried that \either (i) the attorney will forget to pay the bill once the case settles, and the provider will have no recourse, since the patient will then have the money. or (ii) the attorney will proactively choose to disregard the lien and pay out the settlement to the patient on purpose.

Luckily, attorneys are required to follow the State Bar Handbook in Georgia, or the attorneys are at risk of being disbarred.

According to Rule 1.15(I) SAFEKEEPING PROPERTY - GENERAL, attorneys are held to a specific standard. The handbook explicitly states that “a lawyer may not disregard a third person's interest in funds or other property in the lawyer's possession if:

  1. the interest is known to the lawyer, and
  2. the interest is based upon one of the following:

(i) A statutory lien;

(ii) A final judgment addressing disposition of those funds or property; or

(iii) A written agreement by the client or the lawyer on behalf of the client guaranteeing payment out of those funds or property.”

Put simply, the very same guidelines from the Georgia Bar that require attorneys to pay out statutory liens requires attorneys to pay out contractual liens.

Additionally, the guidelines require attorneys to “promptly notify the client or third person” upon receiving the settlement in which the provider has an interest and upon request to “promptly render a full accounting regarding such property."

In conclusion, contractual liens can be just as effective as statutory liens as long as the attorney has access to the lien and knows of its existence.

The Mighty Team

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