Hospitals Lean on Liens to Collect Debt

by Mike Bevel, CollectionIndustry.com

In an attempt to protect themselves from bad debt expense, some hospitals in Florida are recording liens against patients – not necessarily because the patients haven't paid or are ignoring notices, and often even before the patient has left the hospital.

Hospital officials say — but some attorneys and property title closers disagree — the vast majority of these liens are not against the person or their property, but against the court or insurance settlement stemming from the accident that caused the hospitalization. The liens, which are allowed by statute in 21 of Florida's 67 counties help protect the hospital and property taxpayers, hospital administrators told the Daytona Beach News Journal.

"We file liens to make sure that the person doesn't take the insurance money without passing it to the hospital," said Harry Reese, chief financial officer for Halifax Community Health System.

A 1953 legislative act enabled Volusia County hospitals to impose liens before the patient has a chance to pay. Florida Hospital West Volusia Division spokeswoman Stefanie Macfarlane said the number of liens are increasing as reimbursement for hospital services has become more difficult.

At Halifax Medical Center, Reese attributed the rise in the number of liens to a change in policy that occurred in November 2000 that meant liens were filed in the cases of all accidents, not just auto accidents. At the same time, the hospital started filing amended liens once the patient accumulated another $25,000 in charges after the initial $10,000.

County and hospital records show that the number of lien releases is not keeping pace with the number of filed. But Arvin Lewis, vice president for patient business and financial services, said the hospital rarely files for judgment on its liens. The number of judgments the hospital sought has decreased from 175 in 2002 to 51 this year, he said.

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