Accident Victims (and Their Doctors) Sometimes Get Shafted by Letters of Protection

If your personal injury lawyer wants you to sign a letter of protection for your health care bills, be aware of some potential pitfalls.

A Band-Aid on a $100 bill.
(Image credit: Getty Images)

There is a lot to like about Texas. Texans are known for being down-to-earth, helpful and friendly. Texas-style BBQ is famous worldwide. And who hasn’t heard Deep in the Heart of Texas?

However, the state ranks high among those with the most vehicular deaths, with Houston earning the dubious distinction of being the city with the greatest number of red light wreck fatalities from 2004-2018, according to the National Coalition for Safer Roads.

“That’s why I would always count one...two...three before driving into an intersection when my light turned green,” “Art” wrote to me, adding, “and, you can’t imagine how many red-light runners I saw during those three seconds!”

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Bad Accident Leads to Hiring a Personal Injury Law Firm

One day, while Art was counting at a stoplight, the driver behind him was texting, failed to slow down, and crashed into him, totaling both cars and leaving Art with severe neck and lower back trauma.

“His insurance company said that I caused the accident by not promptly driving off when my light turned green! On top of that, while I had auto medical payments insurance, the limits were not adequate for my needs.

“So, I hired a Houston attorney – whose ad I saw on television – and he assured me there would be no problem in getting the care I needed. ‘We will send our Letter of Protection (LOP) to the doctors you treat with. This assures them of being paid when the case settles,’ they told me, but none of the physicians I have seen will take my case as long as I am represented by this law firm. What’s going on?”

How a Letter of Protection is Supposed to Work

A letter of protection, also called a medical lien, is commonly defined as:

  • A contract between the lawyer, physician and client/patient that assures payment for professional services provided to the patient when there is a financial recovery, by settlement or by trial.
  • The treating physician agrees to wait for payment until the case is resolved.
  • If there is no monetary recovery, the client who was injured is still obligated to pay the doctor’s bill, but sometimes the lawyer might try to negotiate with the doctor.

That’s fairly straightforward, wouldn’t you agree? In fact, ethics opinions of the State Bar of Texas – and just about every other state bar – make it clear that the LOP creates a fiduciary relationship in which the lawyer is obligated to protect the financial interest of the treating physician.

Lawyers Who Pay Themselves First!

But then, just spend a few minutes talking with the office manager at a clinic specializing in pain management in San Antonio, Texas, and you, too will wind up shaking your head in disbelief, as I did, wondering how some lawyers can justify completely ignoring their legal obligation to protect the doctor’s financial rights the LOP creates. Here is what she shared with me:

“I just read your article When Lawyers Refuse to Pay a Client’s Bill. Our pain management clinic in San Antonio sees a large number of personal injury patients. The LOPs have, in the past couple of years, become almost meaningless. They are NOT letters of protection. In fact, they disclaim any responsibility to pay. Here is typical wording from an LOP we received today:

“‘THIS FIRM IS NOT ASSUMING RESPONSIBILITY FOR THE PAYMENT OF FEES OR SERVICES RENDERED TO OUR CLIENT. However, if compensation is recovered on our client’s behalf, your fees will be reimbursed from any money recovered, provided said recovery is reasonable. Whether or not such recovery is reasonable shall be determined at the sole discretion of this law firm.’

“They are saying, ‘We don’t have to pay you, Doctor, unless we want to!’

“This is so unfair, so wrong! Do you have any insights into how to handle this sort of non-LOP? It seems this has become the norm, and our clinic is considering refusing to accept PI (personal injury) cases now. It’s a waste of time to have bills in the thousands for very expensive procedures only to recover less than enough to pay for the medical assistant’s time, much less to pay the doctor or cover cost of meds and equipment. Thanks for any input you might have.”

I have seen LOPs from several Texas lawyers that make one thing clear. They pay themselves first and in full. The physicians must, on a pro rata basis, reduce their bills, but the lawyers impose no such requirement on themselves!

Every request I had to speak with attorneys whose LOPs have similar language was ignored.

Difficult for Patients to Find Doctors Who Will Treat Them

My reader Art told me that he has had referrals to several physicians, and none will treat him if he remains with the same law firm. Attorney Pennington confirmed that many physicians are rejecting attorney referrals with LOPs for the same reasons.

Texas is not alone with these issues. Florida is a carbon copy and in many instances, far worse.

And the remedy? On condition of anonymity, a Texas legal ethics law school professor told me, “Part of the problem is greed – by physicians who are charging several times what is a reasonable fee and lawyers who ignore their legal obligation under the LOP. It is time for the state bar and medical board to get involved and set proper standards.”

What Patients Should Do

  • Read the lien or LOP carefully. To determine that you are dealing with a legitimate letter of protection, look for language that says, in so many words, “We agree to pay reasonable and customary charges for medical services.”
  • Be sure to also read the LOP together with the doctor or office manager, and if you see language that says something like, “We decide to pay or not to pay the doctor,” then this is not a true LOP. (And if you run into this issue, the section below discusses the next steps to take.)
  • Realize that you, as a patient, are always responsible for the bill in the event that there is no settlement or you lose in court.
  • For people who have no private insurance or other means of paying for personal injury-related treatment, they should be referred to the appropriate public hospital.

One more thing: Medical payments coverage isn’t all that expensive and high limits of PIP coverage, if available in your state, can be money well spent.

What Health Providers Should Do

Know that you do not have to accept a lien or LOP that gives the attorney the sole right to pay or not pay you. If you accept such a lien, expect trouble. Instead, it never hurts to cross out the offending language on the document, initial it, have your patient initial it, and insist upon the lawyer also initialing it and returning it to you before scheduling medical procedures.

Do not trust lawyers to do the right thing unless it is spelled out in black and white and they have signed it. If asked for a reduction on your bill, insist on seeing a complete breakdown of the case settlement or jury verdict. Is the lawyer taking a reduction or treating you like a sucker?

If you have a case where the lawyer did not protect your bill despite a signed lien, file a complaint with your state's bar association.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

H. Dennis Beaver, Esq.
Attorney at Law, Author of "You and the Law"

After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law." Through his column he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift."