Contractors Sued In Personal Injury Litigation Must Honor Liens Properly Served Under The Health Care Services Lien Act

By: Jim McConkey, Special Counsel

Contractors sued in personal injury litigation are certainly aware of their responsibility to honor workers’ compensation liens, particularly where the workers’ compensation carrier has intervened in the lawsuit in which the contractor is a defendant. They should give the same deference to liens served under the Illinois Health Care Services Lien Act (HCSLA). The HCSLA became effective on July 1, 2003 and repealed eight previous lien statutes that allowed for various medical service providers to assert liens for their services against the recovery of an injured party. There are two categories of health care providers covered by the HCSLA: health care professionals (i.e., doctors) and health care providers (i.e., hospitals). 770 ILCS23/10(a). The total amounts of all liens paid under the HCSLA are not to exceed 40% of the verdict, judgment, award, or settlement secured by the injured person on his or her claim Id. Furthermore, neither of the individual categories – health care professionals and health care providers – can receive greater than 33% of the recovery. 770 ILCS 23/10(c). And, if the total of all liens under the HCSLA are 40% or greater, the total amount of attorney liens recoverable under the Attorneys’ Lien Act cannot exceed 30% of the verdict, judgment, award or settlement. Id.

To be perfected, the lien is to include a written notice containing the name and address of the injured person, the date of the injury, the name and address of the health care professional or provider and the name of the party alleged to be liable to make compensation to the injured person for his injuries. 770 ILCS23/10(b). It is to be served on both the injured person and the party against whom the claim exists and is to be served by registered or certified mail or in person. Id. Once properly served, the lien attaches to any verdict, judgment, award, settlement or compromise secured by the injured party. 770 ILCS 23/20. Health care services rendered under the Illinois Workers’ Compensation Act do not fall under the ambit of the HCSLA, nor are payments made by Medicare, Medicare Part D and Medicaid subject to the 40% cap set forth in the HCSLA. 770 ILCS 23/10(a), McKim v. Southern Illinois Hospital Services, 2016 ILApp (5th)140405. Unlike the Workers’ Compensation Act, there is no provision in the HCSLA allowing the health care professional or provider to intervene. cf, 820 ILCS 305/5(b).

Should the injured party secure a judgment or settlement, he or she would then be required to give notice of the judgment or settlement to the health care professional and/or provider who properly served their liens under the HCSLA. 770 ILCS 23/15. At that point, either the injured party or the health care professional or provider would file a petition with the circuit court asking it to adjudicate the rights of all interested parties and to enforce their liens. 770 ILCS 23/30. In all likelihood, should an injured party in a construction litigation matter fail to give the health care professional or provider notice of a judgment or settlement and should the health care professional/provider learn that the case was resolved and their lien was neither honored nor adjudicated, they would go after the injured party. But, assuming the lien was properly served on a contractor defendant and the contractor defendant was aware of its existence, the health care professional/provider would likewise have recourse against the contractor for failing to honor its lien, which automatically attached to the judgment or settlement once properly served.

The takeaway, then, is before a contractor defendant makes payment on a judgment or settlement to an injured party where a lien has been properly served pursuant to the HCSLA, the contractor should insist that the injured party seek adjudication of the lien rights of all parties with properly served liens, because the HCSLA does not provide a mechanism for the party at fault, in this scenario the contractor defendant, to do so. If the injured party refuses to do that, then the names of the health care professionals/providers should be placed on the settlement check to avoid the health care professionals/providers from seeking recourse against the contractor for failing to honor their liens.

Chicago, Illinois 312-377-1501 | Crown Point, Indiana 219-488-2590

Chicago, Illinois


Crown Point, Indiana