Letters of Protection: the Good, the Bad and the Ugly... Everything Consumers and Doctors Need to Know About LOPs.
I am hot on the topic of LOPs. LOP stands for “Letter of Protection.” This is the common use name for a contractual lien that doctors have patients sign to assure payment for medical services related to an injury case. Before we can understand the problem with LOPs we should understand a bit about medical billing in accident cases.
Example: Ms. Linda Jones gets hurt in an automobile accident. She goes to Dr. Mark Smith. When Dr. Smith sees her he will want to know how he is getting paid.
There are numerous sources a medical provider must look to for payment in every accident case. Let’s start with the premise that few people have the money to pay for any significant medical care in cash. Some do, but they are usually wealthy enough to have great insurance, so they don’t need to.
If the accident case is from an automobile accident the doctor must first bill the mandatory PIP (Personal Injury Protection) insurance. PIP is automobile insurance for medical bills and lost wages, but it is limited to $10,000. Many times a patient’s PIP benefits will run out after the first hospital visit.
If the PIP limit is exhausted, or if the accident happened outside of a car, like in a department store, the doctor should look for a medical payments policy (called Med Pay). Med Pay does pay for any medical bills, but since it isn’t a mandatory insurance, only a few people purchase it. Even when it is purchased it is often in a very small amount, like $1,000 or $5,000. So Med Pay also runs out quickly.
After that, the doctor must look to health insurance. Health insurance has three issues:
1) First, many people simply don’t have health insurance. That leaves the doctor with
2) Second, health insurance does not pay well.
3) And finally, third, health insurance, like government insurance (Medicare), wants to be
paid back after if the patient/victim/client gets any settlement money from the accident
Many doctors prefer not to use health insurance if there is another way to get paid. That is what leads us to the LOP. We will discuss that after we look at one final method of getting paid.
The last insurance the doctor can look to, assuming there is no health insurance, is government payments. Government payments are Medicare, which generally covers older Americans, and Medicaid, which is really akin to government charity for the poor. Getting paid by the government is the lowest reimbursement for the doctor. Therefore, the better doctors avoid using government insurance when possible. Similar to health insurance, the government must be repaid from the client’s/patient’s future verdict or settlement.
Finally! This is where the LOP comes into play. Doctors who were friends with personal injury lawyers came up with a better system of getting paid on accident cases. They created a contract between the patient, the doctor and sometimes even the patient’s lawyer. That contract says the patient instructs the lawyer to pay the doctor’s bill out of the settlement or verdict. On its face, that sounds pretty fair. The patient needs medical care and doesn’t have the funds to pay for the care. The lawyer wants the client to get good medical care because the insurance company for the defendant needs that information to make a settlement offer. So, the patient, lawyer and doctor can all cooperate to get the victim the best care.
The problem arises when a lawyer chooses the more important relationship at the end of the case… On such relationship is of the doctor and attorney. They may be buddies, and they refer patients/clients to each other. That creates a business relationship, where the doctor can charge higher than normal fees for their care, and the lawyer can help his friend by protecting his overinflated bill in trade for a steady stream of injured victims. The patient gets good care, but at an unreasonable premium.
The other option is that the doctor works in good faith, and at the end of the case the lawyer does his job and “zealously” represents his client’s interests. That means negotiating the doctor down to the lowest possible payment. That means the doctor took the risk that the case would settle, waited to get paid, treated the victim and in the end has to fight tooth and nail to get paid a reasonable fee. That is completely unfair to the doctor who is not accustomed to or isn’t set up for fighting over payments. So in the end, the doctor typically relents and gets paid a fraction of their true value to the client.
Our firm represents many medical providers. We represent the full gamut of medical providers, from hospitals to single-person physical therapy centers. We have clients in Massachusetts, Ohio and all over Florida. We are hoping to enter Kentucky and Minnesota and Michigan this year. The LOP is used by lawyers and doctors all over the USA. Most other jurisdictions don’t call them LOPs. They call them “BI Liens.” BI stands for Bodily Injury Insurance. That refers to the type of insurance that protects the defendant and gives money to the victims if a defendant hurts them in an accident. BI can be attached to an automobile or a building where it is typically called simply the Liability Policy.
Our firm has come to a simple conclusion: while the LOP/BI Lien is a generally accepted tool to get medical care for uninsured or underinsured victims, they lead to multiple problems for all parties. We are doing our best to avoid the LOP in all injury-related cases. While some doctors still insist on using this tool, we are trying to convince our medical providers they are best served in avoiding it when possible.
In my next blog I discuss: the conspiracy theory juries feel about the LOP.