Senate Judiciary holds public hearing on bill to cap hospital liens for Medicare, TRICARE and Medicaid patients

Senate Judiciary Chair Senator Arthur Barfoot opened a public hearing on SB210 on hospital liens, saying the bill is intended to prevent hospitals from filing full retail-value liens against patients covered by government payers such as Medicare, TRICARE and Medicaid. The committee heard roughly an hour of pro and con testimony from hospital counsel, private attorneys who represent hospitals, and lawyers who represent injured patients.

The measure would cap the recoverable amount on a hospital lien at a benchmark tied to prospective payment system (PPS) reimbursement rates — largely the Medicare rate — and establish a “quick pay” option that proponents described as a negotiated percentage of the lien amount. Sponsor Senator Barfoot said the bill responds to cases he’s seen in practice where hospitals filed liens for full retail charges against people covered by government payers rather than billing those payers.

Why it matters: testimony highlighted competing policy goals — protecting hospitals’ ability to recover payment for emergency care while preventing elderly, veteran and low-income patients from facing full retail medical liens that can consume the proceeds of third‑party liability recoveries.

Opponents: hospital lawyers and hospital representatives told the committee that curbing lien recovery would deepen existing financial strains on Alabama hospitals. Gordon Armstrong, a private attorney who handles medical collections, said Alabama’s lien statute exists to protect hospital interests and described decades of negotiating compromises on liens in cases where settlement funds were limited. Chris Richard, outside general counsel for the Alabama Hospital Association, said the bill’s cap appears to default to Medicare PPS rates but does not include supplemental add‑on payment programs that hospitals rely on, and he questioned whether the cap plus a quick‑pay percentage would make hospitals whole. Nick Laukus, representing the University of South Alabama health system, told the committee his system has exceeded $100 million a year in uncompensated care in recent years and warned that trimming lien recovery now could threaten hospital viability.

Proponent: Ken Riley, a plaintiff attorney with Ferris, Riley & Pitt, said he supports a legislative fix because the 2019 amendment to Alabama’s lien law removed liens for patients with private health insurance but left a gap for people on Medicare, Medicaid and TRICARE. Riley said Medicare reimbursements typically amount to “17 to 20 percent of the full bill” in his experience and that leaving hospitals able to file full retail liens in those cases can produce unfair outcomes and clog the courts with subrogation disputes.

Details from testimony: witnesses described several specific points the committee raised in questioning — that Alabama’s hospital lien statute dates to 1955 and was amended in 2019 and 2021; that Medicare’s “prompt pay” or coordination-of-benefits period referenced in testimony runs about 120 days before certain submissions; that Medicare, Medicaid and TRICARE retain subrogation rights for amounts they pay; and that the bill’s quick‑pay mechanism was described by one hospital representative as setting payment at a percentage “somewhere between 20–30% of the lien amount.” Counsel for hospitals recommended narrowing any cap to account for supplemental Medicare add‑on payments that are not part of PPS base rates.

Committee questioning and context: several senators asked detailed procedural and policy questions about how liens attach, how settlements are negotiated among hospitals, patients and defense counsel, and how caps might affect high‑value cases. Senators noted the delicate balance between local hospital finances, federal reimbursement rules, and the burden on patients who lack private coverage.

No committee vote: the hearing concluded without a committee vote on SB210; members said negotiations among interested parties will continue before the bill returns to the committee.

Next steps: Chair Barfoot and several witnesses said they expect further work on the measure and additional committee consideration at a later Judiciary meeting.