Selling Lien, LOP Receivables: What Orthopedic Surgeons and Practices Should Know

Practice Management

This article is written by Lawrence Hoffman, owner of and, has been a personal injury attorney for 15 years.
One solution for medical professionals attempting to get paid more quickly for medical services rendered is to sell your Lien and Letter of Protection receivables (LOP). The first step in understanding this option is to know what a Lien and LOP is:

A lien is a document which states you will be paid from the proceeds of your patient's personal injury case. The lien is signed by your patient and his/her attorney. The patient instructs the attorney to pay for your services out of the proceeds of the patient's personal injury case settlement or aware. The attorney signs, acknowledging instructions of his or her client and promises to repay you at the conclusion of the personal injury case. A lien is necessary in the event that there is no insurance to pay for your services.

A LOP is very similar to a lien. A LOP is a letter from the attorney requesting that you treat the patient with payment deferred until the successful resolution of the personal injury claim. Sometimes the attorney will put the amount he/she is willing to repay to you at the conclusion of the personal injury case. Therefore, you may not get paid for treatment you provide in excess of that amount.

If your office treats personal injury case patients, you likely have an existing portfolio of liens/LOPs against personal injury cases. Accepting lien/LOP cases is a necessary part of most orthopedic practices which treat personal injury accident patients.  There are many benefits which include the steady inflow of patients who you would not otherwise treat and you will make money from treating.  

Lien practice management has its headaches:

o    You pay staff to manage, track, collect and negotiate these liens
o    You have provided services for which you hope to get paid in the future
o    For which the money you should be paid is losing value against inflation (as you are not charging interest on these liens)  
o    You have not evaluated each individual personal injury case to determine if there is even a likelihood the case will bear a financial recovery so you can get paid  
o    Your office is not trained or skilled to negotiate with lawyers who will wish to reduce your lien on almost every case  

Primary solution: The solution I focus on is to present your portfolio for analysis to a medical lien purchasing company. The medical lien purchasing company will do a review and analysis of the portfolio and present you with a purchase offer. When the sale is completed you will receive a large cash infusion and be relieved of all the risk, stress and work associated with managing and collecting fees due on outstanding liens. The benefits of selling your LOP cases are also an immediate large cash infusion, which allows you to use your money today for your benefit instead of leaving "phantom" money tied up in the letter of protection cases.

The money you hope you have in the letter of protection cases is not earning interest and is losing value against inflation every year, whereas by selling your portfolio and receiving your money today you have multiple positive options to utilize your money. This will substantially reduce employee time spent billing, following up and tracking liens and trying to collect. Once you sell your lien/LOP cases you will have no risk of lost case and not getting paid or the lawyer negotiating the lien down in two or three years when case settle. You will also gain the ability to present stronger trial testimony by being able to testify that you have no financial interest in the outcome of the trial.  

Secondary solution: A sub solution is to sell individual lien/LOP cases as they occur, rather than sell then off as a part of a larger portfolio. This will significantly increase your revenues without any risk or cost. This option comes into play when you are treating a patient who has been involved in an accident where there is a pending claim for damages for the injuries sustained. When there is no insurance to pay for your medical services needed to treat injuries caused by an accident, either the treatment does not take place or you agree to perform the treatment on a lien against your patient's personal injury case. Either scenario is problematic for you:

Scenario 1- No treatment is given
•    The patient is unable to get much needed treatment
•    You are unable to generate the revenues which would come from providing the treatment

Scenario 2- You treat the patient on a lien
•    You have no idea if the personal injury case is viable so you don't really know if there will ever be money for you to receive payment
•    If there is payment it may not come for a few years causing you to basically advance an interest-free loan and lose money against inflation every year  
•    If there is payment, you will be asked to reduce the amount of the lien
•    You have to spend time and money tracking the status of these liens  

The solution is to call a medical lien purchasing company. If there is a viable personal injury case the funding company will work out a lien with the patient and his/her lawyer wherein you will get paid immediately for services rendered with no risk or cost to you. The funding company will evaluate the underlying personal injury case to see if the case seems viable to enter into a lien agreement with the patient and her or her attorney. If the funding company feels this is a viable case they will pay you at that time for the cost of the medical services and the funding company will get paid back at the conclusion of the personal injury case.

Having a funding company involved means that the only thing the medical service provider has to do is determine if medical services are necessary and related to the accident case. Once the funding company is called and the medical service provider provides the funding company with a breakdown of fees for services to be approved, the funding company will determine if it is a viable case, and if a case is approved, payment will be sent upon confirmation the services were rendered; they will handle the rest.

Benefits of selling individual lien cases as they occur are significant

•    Substantially increase revenues by providing medical services which would otherwise not occur
•    Get paid immediately for the services provided
•    Gain more patients when attorneys and other doctors know they can refer you "lien"- or "letter of protection"-type cases because you now accept those patients
•    Substantially reduce employee time spent billing, following up and tracking liens and trying to collect
•    No risk of lost case and not getting paid. You get paid at the time you provide the service  
•    No lawyer negotiating the lien down in two or three years when case settles
•    If a funding company evaluates and rejects a case (in their case evaluation expertise), it's probably good for you to know so maybe you won't provide the medical service on a lien and risk not getting paid  
•    Your patient is happier with your services because you were able to continue to provide them with excellent healthcare, as well as help them in a time of financial hardship
•    Gain the ability to present stronger trial testimony by being able to testify that you have no financial interest in the outcome of the trial.

Selling your lien/LOP cases is a great solution for most medical providers to increase their cash flow immediately with no risk or cost. It opens up the opportunity for medical service providers to treat a new group of patients they might normally have to turn away, and increase revenues without waiting for payment or dealing with the hassle of trying to collect.

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