Personal injury financiers get boost with new Colorado law

Personal injury financiers get boost with new Colorado law

Utah poised to consider similar lawBill comes after courts allowed evidence about medical liens

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(Reuters) – Financing companies that cover the medical bills of personal-injury plaintiffs in exchange for a cut of their damage awards or settlements recently won new protections in Colorado and have beaten back attempts to curb their activities in two other states, legislative records show.

The Colorado law, which went into effect last month, keeps information about a victim’s use of the financing, known as a medical lien, away from defense attorneys, jurors and judges. A nearly identical bill will soon be introduced in Utah, according to Nate Ormond, the founder of Colorado-based national medical lien company Well States Healthcare, which lobbied on behalf of the Colorado bill.

Bills that would limit medical lien companies’ activities, which the industry opposed, were recently debated in Georgia and Florida but did not become law, according to legislative records.

Medical lien companies typically work through personal-injury attorneys who have identified clients they believe have cases worth taking but who lack health insurance or want help paying for medical care.

The companies generally negotiate a lower rate with medical providers but then obtain a lien on the settlement or damages for the full billed amount of the care.

Lien companies say they allow for speedy treatment of a crash victim’s injuries and prompt payment to providers.

Insurers and their defense lawyers say medical lien companies are unnecessary middlemen that help plaintiffs’ attorneys increase the damages in their cases and ultimately inflate premiums for everyone.

The Colorado law, which went into effect on Sept. 7, was passed after state judges increasingly were allowing insurers and their defense teams to present evidence of the difference between what the lien company was trying to collect and what was paid to the patient’s medical providers, according to attorneys on both sides of the issue.

Revealing that differential to the jury puts the lien companies’ revenue stream in jeopardy, since juries and defense attorneys are likely to want the damages or settlements to be equal to what was paid for the care, according to the law’s proponents.

In 2018, Denver County District Court Judge Robert McGahey allowed testimony about the medical financier’s relationship with medical providers. The plaintiff’s attorneys argued that the medical lien company should be treated the same as health insurers, which don’t have to reveal what they paid for medical treatment under Colorado law. The judge disagreed.

“They do not negotiate with medical providers for the benefit of plaintiffs, (and) they expect payment from the plaintiff that exceeds the amounts actually paid,” he said.

Ormond calculates a market size of more than $150 billion, concentrated in relatively few companies. State laws allow for medical lien companies’ business model in 30 states, he said.

The Colorado law puts some restrictions on the liens, said state House Rep. Mike Weissman, a Democrat and one of the sponsors of the bill. It prevents medical lien companies from collecting from injured parties if they don’t receive a payout, and it bars them from sending the bill to a debt collector.

The industry has also claimed credit for crushing two bills that attempted to limit the use of medical liens.

Florida’s Senate last year considered a bill that would have restricted personal injury damages to what insurers or Medicare pay for care, but it died in committee, according to legislative records.

In 2019, Georgia debated a bill that would have made the amount a medical lien funder paid for a patient’s medical care admissible in court — essentially the opposite of Colorado’s law. That bill didn’t go anywhere, either

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