A hospital or other health care provider is generally entitled to place a lien against the proceeds recovered in the patient’s tort suit against the party responsible for the injuries, as a source of payment for the cost of the medical services. In a putative class action currently pending in an Illinois court, however, plaintiffs allege that the provider must seek payment only from the patient’s insurer and that placing a lien against the proceeds of a patient’s tort suit violates the contract with the insurer (which is silent on the issue) as well as the Illinois Consumer Fraud Act.

Recent appellate court opinions on the issue have been construed by some as conflicting, but the better reasoned opinion supports a provider’s right to choose between accepting certain payment from the insurance company, at a discounted rate, or taking its chances on recovering in full from the proceeds of plaintiff’s tort recovery. After all, if the tort suit is unsuccessful, a hospital that has opted to forego payment from the insurance company receives nothing. Under the model advanced by plaintiff in the current class action, the hospital would be required to accept a discounted payment from the insurance company even though the plaintiff can use the full cost of the hospital’s services in its proof of damages in the plaintiff’s tort suit.

The decision in the case may clarify providers’ rights in this area, either by upholding the right to place the lien or by expressly limiting the provider’s lien rights and requiring a provider to seek payment only at the discounted rate from the insurer.