Hospital Liens vs. Health Plan Claims in California

By the FigureMyTax Editorial Team · How we calculate

A California hospital lien is created by statute, requires written notice before payment, and a payer is liable only up to 50 percent of the money due after prior liens. A health plan's lien comes from your contract and is capped by Civil Code 3040.

The hospital lien

Civil Code 3045.1 gives a licensed hospital that provides emergency and ongoing services to a person injured by an accident or wrongful act a lien on the damages recovered or to be recovered, for the reasonable and necessary charges of the hospital and its affiliated health facilities. It applies whether the damages come by judgment, settlement or compromise (3045.2). It does not apply to workers' compensation claims or, under 3045.6, to claims against certain regulated common carriers.

Notice is what makes it effective

Section 3045.3 says the lien is not effective unless written notice with the injured person's name and address, the date of the accident, the hospital's name and location, the amount claimed and the people alleged to be liable is delivered or mailed by registered mail, return receipt requested, to each person alleged to be liable before any money is paid to the injured person or the attorney. A copy goes to the liability insurer if known.

The 50 percent limit

A payer who pays you after receiving the notice, without paying the hospital, is liable for the amount of the lien claimed, or so much of it as can be satisfied out of 50 percent of the moneys due under a final judgment, compromise or settlement agreement after paying any prior liens (3045.4). The hospital may sue the payer within one year after the payment (3045.5).

How a health plan's claim differs

A health plan's lien comes from your plan contract and is capped by Civil Code 3040: no more than what it actually paid to providers, one-third of your recovery if you have an attorney, and pro rata reduced for your fees and costs. Section 3040 expressly does not apply to hospital liens, so the 50 percent hospital limit and the one-third health plan limit are separate rules. See our post on the health plan caps.

Medi-Cal and Medicare

Medi-Cal has its own recovery rules, limited to the medical portion and reduced by 25 percent and a share of costs; see the Medicare and Medi-Cal post. Enter each claim, and whether the hospital sent timely notice, in the California medical lien calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how California's rules apply to your specific case with a licensed California attorney.