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Coding & Billing
Should You Host Cases Tied to Lawsuits?
Judie English
Publish Date: October 10, 2007   |  Tags:   Financial Management

Judie English One of your surgeons wants to bring "in litigation" cases to your facility. Should you accept these cases? What can you do to protect yourself?

Judie English\ When and if you'll get paid
"In litigation" cases or, more properly, Letter of Protection (LOP) cases entail hosting cases for patients involved in a product liability case, automobile accident, disputed workers' compensation claim, homeowner's liability case or any other surgical case tied to a lawsuit.

Whether your facility gets paid for these cases depends on the legal resolution. One of the issues the litigants contest is who foots the medical bills. Before you accept an LOP case, research the case to determine the resolution timetable and how much you'll ultimately collect. Some issues to consider:

  • What are the chances you'll be paid? Lawyers' fees are usually paid before the remaining proceeds are distributed to the case-related creditors. Find out the proceed portion designated for the lawyer. Investigate the case history to learn if there's a long line of creditors ahead of you. A three-year-old case, with three years of previous surgeries, rehabilitation, labs, radiology and physician visits may severely limit funds remaining to pay your bill.
  • What about the surgeon? Consider whether the surgeon has a vested interest in the financial success of the facility. Does he bring you quality cases or does he dump unwanted cases on your center? A physician-owner is much less likely than an outside surgeon to bring in a probable money-loser.
  • Are these high-cost procedures? Ask the surgeon to provide you a prospective list of procedures related to the case. Are these high-cost procedures, such as orthopedic implant cases? A case requiring $5,000 worth of supplies and an LOP on a five-year-old claim could end up biting you.
  • What's your money-loss risk? Will a 50-cents-on-the-dollar reimbursement cover case costs? How about 25-cents-on-the-dollar?
  • Is cash flow critical at your facility? Be prepared to wait a significantly longer time to collect on an LOP case. Prompt payments for LOPs are measured in months or even years.

Billing for LOP cases
If the case sounds promising, you still should take several follow-up steps to maximize your collection potential. Be patient and make sure the surgeon is agreeable to every step.

First, make sure the LOP is worded to your liking and in your hands before the date of surgery. Have your lawyer review the LOP, or at least give you an outline of what terms you'll want listed. Don't accept an LOP that says there's no patient liability if the suit is unsuccessful or you'll never see a penny if the patient loses in court. On the flip side, some LOPs have a clause saying there "is not a guarantee of payment" even if the patient wins. If there is such as clause, demand it be changed or turn down the case.

Don't accept the case if the LOP specifies a payment order (Dr. X gets the first $10,000, then General Hospital gets the next $10,000 and you and 20 other providers fight over the last $5,000). Make sure that providers will be paid an equal percentage of the proceeds.

Be wary of creative solutions to securing the facility fee. For example, don't let the surgeon give you a set fee or a percentage of your fee in return for letting him bill the facility and surgeon's fee to the lawyer. You'll get a satisfactory payment up front, but this may be considered an illegal inducement to bring cases to your facility.

Here are tips for optimizing your payment prospects.

  • Contact the lawyer listed on the LOP to confirm the case is still open and when and if he expects settlement or a court hearing. Get the name of a contact person in the firm's office with whom you can follow up the claim.
  • Submit a reimbursement claim directly to the lawyer. Follow up immediately to make sure the firm received it.
  • Follow up with a new billing statement every month and confirm the claim is on file. Your billing notes will get very long, but you'll be sure to stay on a first-name basis with the lawyer's office. Otherwise, you may pick up the phone one day and hear, "Oh, we're sorry. We settled the case six months ago. We forgot about your claim. The proceeds? They've already been dispersed."

A final word to the wise. If you don't think you have the resources to execute all of these steps, you may want to reconsider accepting LOP cases.

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