What is a Letter of Protection?

Posted on by Paul Cannon

A Letter of Protection is a tool used to help an injured person pay for medical care they otherwise cannot afford or obtain without substantial financial hardship.  This article is to help people understand them and why they are used.

Often, when you go to the doctor you will see a notice that says something like: “payment is expected at the time services are rendered.”   But what many people do not realize is that many health insurance plans refuse to pay for medical care incurred as a result of injuries that come from an automobile collision.  They expect you to look to the auto insurance carrier for the responsible party to pay the bills.

Automobile liability insurance carriers, however, will not pay for your medical care as you go.  They expect you to pay for the care, then submit all of the bills at once and they then may make you an offer to settle the case (or they may low ball you or simply tell you to go jump in a lake).  If the medical care lasts for months or longer, the auto liability insurers typically still expect the injured person to front those costs.  Many doctors have come to expect this from insurance companies.  As a result, many doctors refuse to treat people via their regular health insurance if the injury is the result of an automobile collision.

What do you do if you are injured, cannot work, do not have the funds for the care and your doctor will not accept the health insurance?  Similarly, what does a person do if they do not have health insurance at all?

This is where a Letter of Protection comes in.  A Letter of Protection is a letter sent by the attorney of an injured party to a medical provider agreeing to pay the medical expenses owed by the patient out of any future recovery whether by settlement or by trial and judgment.  It is a contractual agreement that allows the injured person to get the care they need effectively on credit with the creditor (the medical provider) agreeing to wait until the conclusion of the case to demand payment.  If the attorney settles the case or obtains a judgment in the case, the attorney then has an obligation to make sure the medical provider’s bill gets settled out of those funds.  If there is no recovery (i.e. the injured person goes to trial and loses the case), then the injured person is still responsible for the bill and the medical provider retains the right to pursue them for the full bill just like any other debt.

In addition to the above, Letters of Protection are sometimes used to delay collection on a previously incurred medical bill.  For example: Assume you are in a wreck.  You go to a medical facility for care.  They submit the bill to your health insurance carrier who later refuses to pay the claim because it is for care rendered as the result of an automobile collision.  You cannot afford the expensive bill.  Your personal injury lawyer may be able to provide the medical facility with a Letter of Protection in exchange for the medical provider not filing the bill against your credit or otherwise pursuing collection efforts.  In the same manner as above, the Letter of Protection allows the injured person to wait until the case is resolved in exchange for an agreement to pay the bill out of any proceeds from the claim.  If there are no proceeds at the conclusion of the claim, the medical provider then still has the right to pursue collection efforts against the injured person.

Insurance company lawyers often try to use Letters of Protection against the injured party by insinuating that the doctor is biased because his bill is still outstanding.  Sadly, Letters of Protection would not even be necessary if the insurance companies paid the bills for the injured person from the git go.   They put many people in a position where they have no choice but to seek help under a Letter of Protection and then they try to use the Letter of Protection to avoid responsibility for paying the bills at trial.

Now you know.

Personal injury trial lawyer in Houston for Simmons & Fletcher, P.C. Paul Cannon is board certified by the Texas Board of Legal Specialization in trial law, a distinction only a small percentage of trial attorneys in Texas earn.

Posted in Frequently Asked Questions, Uncategorized | Tagged , | 3 Comments
3 comments on “What is a Letter of Protection?
  1. David Tumosa says:

    Can a provider bill an insurance company that they have a contract with and then whatever the insurance company pays the provider can get the rest from the personal injury case. Example an LOP for a personal injury car crash. Patient has insurance so provider bills the patients insurance company for services. The provider has a contract with the carrier which pays 80% of the bill. Can the remainder be collected from the settlement of the injury case or because the insurance company was paying does is that considered paid in full and the patient can’t be billed for the remaining amount?

    • paul says:

      It depends upon what the letter of protection says. A Letter of Protection is simply a contract that says the injured party’s lawyer agrees to hold the money in trust until the providers bill is paid in exchange for the provider agreeing to treat the person on credit. You can write such an agreement that agrees to give away all of the settlement money to charity if you really want to.

      The real question is: why would someone write such a letter when the client has health insurance that covers the bill? I can think of a few scenarios where this might happen:

      1) The client cannot afford the co-pays and deductibles so a letter of protection is written to cover those. In such case, the letter really needs to specify what it covers.

      2) The client does not tell his/her lawyer they have health insurance and then later decides to use it. In this case, look at the health insurance contract and the LOP. One can argue that a health insurance contract that says effectively: the provider accepts “x” as payment in full no longer has an interest and thus, a letter that says “we will protect your interest” is now offering to protect zero because payment is made. (Keep in mind you may get the privilege of litigating this issue.)

      3) The client obtains insurance which treating under an LOP and switches. In this case, the LOP should be withdrawn as to future care or modified to only cover bills not covered by health insurance. otherwise, you will be back in the same position as scenario #2.

      The real problem with all of this is that you will probably not be allowed to ask for the excess above the insurance payments and copays/deductibles from a jury. Between the paid/incurred law and the ‘reasonable and necessary medical care’ requirements, I cannot see a judge allowing you to claim payments made that you were not legally obligated to pay but voluntarily agreed to pay.

  2. deca durabolin says:

    I admit, I have not been on http://www.simmonsandfletcher.com in a long time however it was another joy to see It is such an important topic and ignored by so many, even professionals. I thank you to help making people more aware of possible issues.

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