Medical Funding: Why It’s Important Medical Providers Do Not Become Medical Funders

It’s no secret that medical care is really, really expensive. Not to mention if that care is administered during an emergency after an accident. And the burden only continues to compound for those who have been injured who do not have health insurance, or who have a policy with a high deductible.

It can be tempting in this kind of financial pinch to turn to anyone for help, including medical providers themselves. These are called medical liens, and in a recent post by Felton Banks PLLC, a North Carolina-based law group, they described just how they work:

Medical providers who are owed money for services rendered can claim a lien against your recovery if they (i) provide notice of the lien, (ii) provide medical bills for free, and (iii) provide medical records for free.

If you’re reading carefully, you probably notice the tremendous up-side that these statutes carry. Basically, they allow medical providers to treat you today and secure payment for that treatment once you settle your personal injury claim. This is huge news for injured people who can’t afford to pay out-of-pocket for their treatment, and it makes the process more manageable for pretty much everybody involved.

But, not all medical liens are non-recourse. The point of view Felton Banks is sharing above is specific to North Carolina law. For instance, the state of Texas passed paid vs. incurred legislation in which healthcare providers holding liens cannot hold a lien at all, because they have determined healthcare providers are not a business and should not be governed, in this instance, like a business.

There are countless other examples of the complexity of medical funding and whether or not they should be non-recourse in nature, including the Michigan Covenant Medical Center v. State Farm case, but what it all boils down to is that medical funding is not that simple and the laws governing these cases vary greatly from state to state.

Third Party Medical Funding
Regardless of whether a medical lien is determined to be non-recourse or not in a given state, although an important distinction, there is still the complication of medical providers functioning like financiers.

Medical funding through a third party, like Cherokee Funding for instance, preserves the role of all parties. Attorneys, plaintiffs and doctors are all best served when an independent, third-party is the source for medical funding. Medical providers should never take on this role, or have a financial interest in the outcome of a case by holding their own liens. Their job is to provide the best medical care, period. The same is true for attorneys and providing the best legal advice in pursuit of their clients’ claims. In either scenario, there is an inherent conflict of interest, where on one hand a doctor’s deposition or testimony could be compromised by defense counsel detracting from the facts of the case and focusing on the doctor’s financial interest in the outcome of the case or on the other, where the party providing funds would potentially be willing to settle a case for less than it is worth to secure their own repayment.

Neither of these scenarios can happen.

A third-party funding company, like Cherokee Funding for instance, independently underwrites the case and has no input or ability to influence the outcome of the case, thus preserving the unbiased position of everyone involved.

It is my opinion that attorneys and doctors should have no ownership interest in the outcome of their clients’ cases, nor should they receive any compensation other than the value owed to the doctor for their professional services at the time of treatment and the time value granted the attorney to maximize case values.

In Summary
A serious shift in conversation takes place when a defense team finds a medical provider is also funding their own services, and thus the case. A doctor’s opinion and treatment plan should be based solely on patient needs and never on whether or not they will be paid for their services. In other legal circumstances, this is referred to as the separation of church and state, of which I am a firm believer.


Medical Funding

Medical Liens

Pre-Settlement Funding

Legal Funding


Letter of Protection