Letters of Protection

Good morning, and welcome to this week’s installment of our video blog. I’m Marcus Michles here at Michles & Booth. I want to talk to you about something this morning that you hear about from time to time. If you’ve been in the personal injury business or you’ve been a patient or client, and that’s this…it’s called a letter of protection.

We’ve hit on this before in prior installments, but it’s a confusing subject, and something that I think a lot of lawyers get wrong and a lot of clients get misled about it.

When would you need a letter of protection?

It starts in a car accident case with figuring out who and how you’re going to pay for your medical bills, who’s going to be responsible for that. If you haven’t been to this blog or you haven’t been a client in a personal injury action before, you might not realize that you’ve got a $10,000 fund known as your PIP, your personal injury protection, that’s available to take care of you for your medical costs, and also lost wages, but let’s talk about medical costs primarily.

So you’ve got ten thousand dollars to pay for your health care. Right? Pretty simple, but what happens when that $10,000 is used up and you’re still in therapy, still seeing doctors, need medication, that kind of thing?

Well, if you’re lucky and you have group health insurance through your employer or otherwise, your bills can roll over and be paid for by Blue Cross Blue Shield or United or Medicare Medicaid, that kind of thing. The bad news is that if they pay those bills, you’ve got to pay them back if you collect from the person who caused the accident. They have what’s called the right of subrogation, which is just a fancy way of saying they have a right to be repaid.

Ok…so you’ve got your PIP and that $10,000. You may or may not have any health insurance, but what do you do if you’ve got this doctor who says you need surgery, and it’s a lot of money, and you don’t have health insurance or you’ve exhausted your PIP?

What is a letter of protection?

The industry of personal injury has developed a simple IOU, a simple piece of paper just like gangsters used to use back in the days where you wrote on a piece of paper “I owe you ten bucks and if you don’t pay, you know Don and Rocco are going to visit your doorstep”. Well it’s a more sophisticated world, but it works kind of the same way, and that a letter of protection, known as an L-O-P, is a contract that you can sign with your health care provider that says that you guarantee to pay that health care provider out of the proceeds of the case.

How does it work?

Now here’s the hard part. Many if not most health care providers are very reluctant to give those services away just on a promise to be paid at the end. That’s where having a lawyer or a law firm that has a lot of experience can really help you, because if your lawyer or law firm has a track record of signing those deals and getting the health care provider paid promptly after the case, that can encourage the health care provider to enter into that deal.

So what if your doctor, John Doe, and John Does is a knee surgeon. He’s an orthopedic surgeon, and he says “you need knee surgery”, but you don’t have the money, so your lawyer calls John Doe, Doctor Doe, and says “hey, we don’t have the money to pay you”.

Florida Rules of Ethics, by the way, prohibit the lawyer from paying those up front. The lawyer is not permitted ethically to pay those bills. So you’ve got no means to pay so the lawyer calls the doctor and says “we’ll pay you when the case is over, and we’ll pay you 100 cents on the dollar. Well pay your whole bill”.

Well, at that point, the doctor has to say “well, what is the likelihood I’m really going to get paid?” You know they don’t trust lawyers much. They know that they don’t like to work for free nor should they have to. So they enter into an agreement, a letter of protection, that says “yes, we will do the work up front, and we’ll wait to collect our bill. We won’t turn you over to collections, and you’ll pay us off the top of the recovery that you get at the end”, but what happens if there is no recovery?

Well, the doctor loses in that gamble, right? So what the doctor is really betting on is how good is the lawyer. Is the lawyer going to collect enough money to pay the doctor’s bill, and that’s just a handshake. That’s just trust.

When I call a doctor, which I’ll do today and tomorrow and every other day that I work, I’ll call a doctor in one of my cases and say “hey, can you help this patient out?” I’ve done my homework. I’ve done my research. I know how much insurance is available from the other side. I know what the case is worth. I know what your bills going to be, and I can guarantee that you’re going to get paid. Well, that’s no better than my word on anything else, is it? My ability as a lawyer is exactly what that doctor is banking on. They’re betting on that I’m a fast enough horse to get to the finish line, collect the money and get him paid. That “I owe you”, that L-O-P, that letter protection is just an I-O-U, and if somebody were to write you an I-O-U, you’d have to measure whether they look good for it or they’re not good for it.

Somebody wants to borrow $10 from you, you’d say to yourself “what’s the likelihood I’m going to get repaid?” The person that wants to $10 says they promise. Well, how good is their promise? That’s the same thing as an L-O-P. Doctors don’t have to take it. Many doctors won’t take it, and their decision to take it stems mostly upon their trust and confidence in your lawyer. So pick a good one.

Doctors don’t have to take [a letter of protection]. Many doctors won’t take it, and their decision to take it stems mostly upon their trust and confidence in your lawyer. So pick a good one.

That’s it for today on letters of protection. If you have questions or concerns, give me a call. You can see this and other installments of our blog at michlesbooth.com, and you can find us one way or another. We’re on Facebook and all those things. You can find us if you want to. Give me a call. Send me a message. Email us. Let us know what you want to talk about or what questions you have. We’ll be happy to address on one of our future shows. Again, I’m Marcus Michles on behalf of Michles & Booth. We’ll see you next week.


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