The Paperwork You Sign at the Medical Office May Cost You Your Entire Recovery

After a car crash, everyone warns you to be careful about what the insurance company asks you to sign. That is good advice. But in thirty years of representing injured people in the Fox Valley area, I have seen more clients hurt by what they signed at a medical clinic than by anything they ever signed for an adjuster.

So here is the rule I give every client, and I will give it to you now:

If any doctor — medical or chiropractic — tells you they will not bill your health insurance, and instead asks you to sign a document putting a lien on your injury case, run, do not walk, out of that office.

It is usually a chiropractic clinic that will try this, but some medical doctors also attempt it. Either way, the paperwork is nearly always the same, and it is nearly always worse for the patient than it looks.

The terms to look out for

The lien, or “letter of protection.” You agree that the clinic will not bill your health insurance. Instead, the clinic gets paid out of your settlement — and you personally guarantee the balance if the settlement does not cover the bill. That last part is the part nobody reads out loud to you. Also, look for any terms giving the clinic the right to charge you late fees, interest, and attorney’s fees.

Why would a clinic turn down guaranteed money from your health insurance?

That is the question that should bother you. Your health insurer pays claims in about thirty days. A personal injury case can take a year, two years, sometimes longer. Why would a business choose to wait?

For one reason and one reason only: they want to get paid more than what your health insurance will pay them.

A short course in medical coding

Every medical service has a code. Procedures and office visits are coded under CPT, a system maintained by the American Medical Association. Diagnoses are coded under ICD-10. Supplies and devices use HCPCS.

When a provider bills your health insurance, the code determines what gets paid. The payer applies a fee schedule — Medicare rates, Medicaid rates, or the contracted rate that provider agreed to accept when it joined the network. A chiropractic manipulation billed under CPT 98940 through 98942 has a set allowed amount with that payer, no matter what the office’s list price says. The provider agreed to that amount, writes off the difference, and generally cannot bill you for the balance.

Now take the insurance company out of the picture. The code no longer triggers a fee schedule. Nobody is reviewing anything. The provider is on the honor system, and the honor system says a provider should charge the usual, reasonable, and customary charge for that service in that geographic area. When no payer is checking, “usual, reasonable, and customary” quietly becomes whatever the front office decides to type in.

That is the entire reason the paperwork exists.

The scale of it is not a secret. KFF Health News, reviewing letter-of-protection billing nationally, documented charges running several times what insurance would have paid — a medical billing expert who reviewed those files concluded that true usual and customary charges were less than one-fourth of what had been billed, and in one case a spine surgeon billed nearly $400,000 for procedures Medicare pays under $20,000.

A $20,000 chiropractic bill is not a $20,000 case

Here is what patients usually learn far too late. The defendant’s insurance company is not obligated to pay the number printed on the bill. It is obligated to pay the reasonable value of necessary medical care. Those are two very different things.

Illinois law on this is settled. In Arthur v. Catour, 216 Ill. 2d 72, 833 N.E.2d 847 (2005), our Supreme Court reaffirmed that to recover medical expenses a plaintiff must prove three things: that she paid or became liable to pay the bill, that the expense was necessarily incurred because of the defendant’s negligence, and that the charges were reasonable. As the Court put it, “the only relevant question in the litigation between plaintiff and defendants is the reasonable value of the services rendered.”

The Fifth District filled in the practical consequence in Baker v. Hutson, 333 Ill. App. 3d 486, 775 N.E.2d 631 (5th Dist. 2002). A bill that has actually been paid carries a presumption in its favor, because “the free and voluntary payment of a charge for a service by a consumer is presumptive evidence of the reasonable or fair market value of that service.” A bill that nobody has paid gets no such presumption. And even after a bill is admitted into evidence, the court held, the jury remains free to award “none, part, or all of the bill as damages.”

Wills v. Foster, 229 Ill. 2d 393, 892 N.E.2d 1018 (2008), confirmed that the measure of recovery is the reasonable value of the care, whoever paid for it.

Even the lien statute itself uses the word. Under the Health Care Services Lien Act, a provider may pursue collection “of its reasonable charges for the services it furnishes to an injured person.” 770 ILCS 23/45.

So here is how it actually plays out. The defense hires a coding and billing expert. That expert pulls the fee schedules and the regional charge data, and testifies that a $20,000 course of chiropractic treatment was worth $4,000. Sometimes the defense is wrong. Sometimes it is right. Either way, that $16,000 gap does not evaporate. It lands on the patient.

Illinois caps on liens do not help

Illinois does cap health care liens. Under 770 ILCS 23/10, all health care liens together cannot exceed 40% of the verdict, judgment, or settlement — split 20% for health care professionals and 20% for health care providers, with no single licensed category taking more than one-third. When health care liens hit that 40%, attorney liens are capped at 30%.

That sounds protective, and as far as it goes, it is. But the cap limits only what a clinic can take out of your settlement. It does not erase the debt. Whatever the lien does not cover, the clinic is free to keep chasing — and the office that quietly declined to bill your health insurance is not usually the office that forgives a balance.

The fine print that follows you home

Some clinics go further still. Their intake agreement gives them the right to add late fees, interest, and their attorney’s fees if they decide to sue you for the full bill.

That last item matters more than people realize. Illinois follows the American Rule: each side pays its own attorney’s fees unless a statute or a contract says otherwise. The clipboard you signed at the front desk is that contract. On interest, absent an applicable exemption, Illinois caps the contract rate at 9% per year under 815 ILCS 205/4 — but 9% running on a $20,000 balance you are actively disputing is not a small problem.

What to do instead

• Treat where your health insurance is accepted. Use the coverage you already pay for. The contracted rate protects you twice: the bill is smaller, and the network write-off cannot be billed back to you.
• Use your auto medical payments coverage for copays and deductibles. Most Illinois auto policies include med-pay, which covers accident-related treatment regardless of fault. Your lawyer coordinates it with your health plan. Generally, the amount of coverage on these policies is not great. So it is best to let your health insurance take care of the bills and use the medical payments coverage to fill in the gap for copays and deductibles.
• Ask one question at intake: “Will you bill my health insurance?” If the answer is no, thank them and leave.
• Do not sign anything containing the words lien, assignment, personal guarantee, interest, or attorney’s fees without your lawyer reading it first.
• Bring the paperwork in before you sign it, not after. Afterward, my options are limited to arguing about a document you already agreed to.

The takeaway

Insurance companies review medical bills. When you are the patient, that review feels like an obstacle. In a lien case, it is the only thing that would have stood between you and a bill nobody was checking.

A clinic that avoids your health insurer is not doing you a favor. It is removing the one party with both the data and the incentive to ask whether the charge is reasonable — and it is moving the risk of that answer onto you.

Treat at offices that bill your health insurance. That single decision will protect more of your recovery than almost anything else you do after a crash.

Terry Heady has represented injured people across Chicagoland for thirty years. If a clinic has handed you a lien agreement, an assignment of benefits, or a bill you did not expect, bring the paperwork to Heady Law Office, 54 West Downer Place, Suite 106, Aurora, Illinois 60506, or call (630) 892-8109. Consultations are free.

This article is general information about Illinois law, not legal advice, and does not create an attorney-client relationship. Every case turns on its own facts.