What is a Letter of Protection in Texas?

A letter of protection (LOP) is a letter sent to a medical professional by a personal injury lawyer to a medical provider that guarantees payment for medical treatment from a future lawsuit settlement or verdict in exchange for the medical provider not demanding payment upfront or pursuing collections actions against the injured party while the injury claim is pending. The letter is a binding contract in Texas. Upon conclusion of the personal injury claim, payment is made by the lawyer directly to the provider before distributing the proceeds to the client.

What is the Purpose of a Letter of Protection?

A letter of protection or LOP allows an injured party to obtain necessary medical care after an accident without having to come up with the money to pay the medical bills out-of-pocket. Remember those signs at the doctor’s office that read “Payment is required at the time services are rendered?”  A LOP essentially enables the patient not to have to pay until they are able to get the money from the responsible party’s insurance company.

Are LOP’s Necessary?

A cartoon hand sticks up from a person buried under dollar bills.

A letter of protection can keep the bills from drowning you while you are trying to recover from an injury.

Letters of protection may or may not be required in your case depending upon your injuries and your circumstances. When your injury is severe or life-threatening, an emergency room cannot turn you away regardless of whether you can pay the bill. However, when you suffer a more common injury like whiplash that is painful but not life-threatening, the chiropractor or therapist will expect you to make payment arrangements before treating you. If you do not have the money to pay as you go, a letter of protection can allow you to get necessary medical care that you might not otherwise be able to get. Additionally, many medical providers will not accept the injured party’s medical insurance as a guarantee of payment for medical services rendered from an accident. This is because private health insurance commonly contains a clause making it secondary to any available liability insurance such as auto liability insurance, homeowner’s insurance, and/or commercial general liability insurance. That means your health insurance could deny the provider’s claim and force them to try to collect their bill from the negligent party–which is a lot of collections work that doctors often do not have the time or resources to pursue.

Letter of Protection for a Work Injury

When someone is hurt at work, the injured person’s health insurance might point the finger at the employer’s worker’s compensation insurance. Financial liability for a fall injury might be redirected to the building or property owner’s insurance for example.

A letter of protection written by the patient’s attorney allows the injured party in this predicament to obtain the medical care they otherwise cannot afford on credit or cash, in exchange for a promise to pay for the services directly out of a settlement or judgment.  They are utilized in all types of personal injury claims including car accidents, slip-and-falls, on-the job-injuries, or any other injury caused by negligence. This article is to help people understand them and why they are used.

Letter of Protection and Automobile Injuries

When you go to the doctor you will see a notice that says something like: “Payment is expected at the time services are rendered.”   However, 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 lowball 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.

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.

Letters of Protection to Delay Collections and/or Damage to Your Credit

In addition to the above, a letter of protection is 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 way 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.

Form LOP

Below is an example of what a letter of protection from an attorney to a medical provider may look like:

Attn: Billing
Doctor Address

RE: Our Client: Joe Client
D/Accident: 1/1/1111
Amount of Bill: $1000
D/Service: 1/2/1111
Subject: LETTER OF PROTECTION

Dear Sir/Madam:

Please be advised that Joe Client was injured as a result of the negligence of XXX whose insurance company has failed to take financial responsibility for his actions. Our Firm has been employed in connection with the personal injuries and damages sustained by Joe Client as a result of the above-referenced accident. Due to the financial hardship caused by the negligence of XXX, we would appreciate your accepting this letter as our agreement that we will protect your interest for services rendered on behalf of Joe Client out of any settlement or Judgment recovered from XXX and/or his insurance company in this case.

Of course, should there be no recovery made in this case, Joe Client will remain fully responsible for the entire balance of your bill.

Please direct any future bills or letters of collection regarding our client’s bill to the undersigned during the pending of this claim. If you have any questions, please do not hesitate to contact me.

Sincerely,

Client’s Attorney

Frequently Asked Questions About Letter of Protection

What is the Legal Meaning of a Letter of Protection (LOP)?

A Letter of Protection operates as a legal contract between you, the medical provider, and your lawyer wherein you and your attorney promise to pay the medical provider’s bills out of any money your recover from your personal injury case in exchange for the medical provider treating you for  injuries related to the personal injury case at no up front charge to you.

When Should You Use a Letter of Protection?

When you are injured due to someone else’s negligence and their insurance company refuses to take responsibility and pay your medical bills as you go, you should consider using a letter of protection to get necessary medical care.  Any good personal injury lawyer can issue one. Insurance companies regularly tell claimants “just go get the care you need and submit it all at the end and we will consider it.” They do this because they know the financial hardship paying medical bills out-of-pocket causes and they know that many people will stop getting the care they need because they cannot afford it. When you stop following the doctor’s instructions or stop going altogether, you have now set up the defense to argue that “you must not have been very hurt if you didn’t go get care.” Do not fall for the adjuster’s tricks when filing an insurance claim after an accident. Talk to a lawyer about your rights.

How Do You Qualify for a Letter of Protection?

A Letter of Protection must be issued by a personal injury attorney representing the individual in need of medical care in an injury claim or lawsuit against a negligent party. In general, the lawyer is not going to take the case and issue a letter of protection unless he/she believes that there is legal liability and that there is insurance coverage to pay any settlement or judgment obtained in the case.

What Are the Benefits of a Letter of Protection?

A letter of protection gives your medical care creditors the assurance they need that they will get paid out of any settlement or judgment so that they do not take steps to negatively affect your credit and it gives you the ability to get the medical care you need without having to come out-of-pocket to pay your medical bills at the time the services are rendered. As a result, a letter of protection can prevent:

  • having to use credit cards or take out loans to get needed medical care
  • incurring deductibles and copays
  • having to fight your health  insurance company when they deny medical care due to a secondary payor clause in the policy for auto insurance
  • having liens filed against you by medical providers
  • damage to your credit score due to outstanding unpaid debt on your credit score.

Can A Letter of Protection be Used Against Me?

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 get-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.

Medical Claim DeniedIs it Better to Use a Letter of Protection vs Health Insurance?

If you have health insurance and can afford the copays and deductibles, it can be a better option than a letter of protection, particularly if there are liability issues in your case. If there is no recovery made, then you will only be out what you paid in deductibles and copays. If you use LOP’s and there is no recovery in the case, you will be stuck negotiating a settlement with your medical providers that you have to pay out-of-pocket. While this is rare in the personal injury world, it does happen sometimes due to unforeseen circumstances. Keep in mind that you often do not get a choice because man medical providers will not accept your insurance and some will refuse treatment altogether when they hear the injures are the basis of a injury claim.

Can My Lawyer Refuse to Give Me the Settlement Money and Let Me Pay the LOP Providers?

Yes. Your lawyer enters into a legally binding contract when he sends out a letter of protection to your medical providers promising to protect their reimbursement rights out of any settlement or judgment. If the lawyer fails to honor a letter of protection, the provider has the right to sue the lawyer directly to collect his bill regardless of whether the money was given to the client. The provider may also so you for the bill.

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