What Is A Letter of Protection & How Does It Work?
A Letter of Protection (LOP) for Texas attorneys, or indeed attorneys in many jurisdictions, functions as a contractual agreement typically used within the context of personal injury law. Here’s how it works:
Purpose:
Guarantee Payment for Medical Services: The primary purpose of an LOP is to ensure that a medical provider will be paid for their services out of the proceeds from a settlement or a court award. This is particularly useful for clients who might not be able to afford medical treatment upfront or who do not want to use their health insurance due to various reasons like high deductibles or coverage limits.
How It Works:
- Injury Occurs: A person gets injured, often due to an accident where someone else might be liable.Legal Representation: The injured party hires an attorney to represent them in a personal injury claim.
- Need for Medical Treatment: The client needs medical attention but might not have the immediate funds or might wish to delay or avoid using their insurance.
- Drafting the LOP: The attorney drafts a Letter of Protection. This letter:
- States that the attorney represents the client for an injury claim.
- Promises that the medical provider will be paid for their services directly from any settlement or judgment the client receives.
- Specifies that if there’s no recovery, the client might still be responsible for the medical bills, although this can vary by agreement.
- Medical Treatment: With the LOP in place, the medical provider treats the client without immediate payment.
- Settlement or Judgment: If the case is settled or won in court: The medical bills are paid directly from the settlement or award amount before the remaining funds are disbursed to the client. This payment is prioritized often because the LOP can be seen as a lien against the settlement.No Recovery: If there is no settlement or award, the responsibility for the medical bills can be: Negotiated: Sometimes, attorneys and medical providers might negotiate a reduced fee or another payment arrangement.
- Client Responsibility: Alternatively, the client may still owe the medical provider, depending on the terms agreed upon in the LOP or any other subsequent agreements.
Benefits:
Access to Care: Ensures that clients can receive necessary medical treatment without upfront costs.
Legal Strategy: Allows attorneys to build a stronger case by documenting all relevant medical treatments, potentially increasing the claim’s value.
Considerations:
Ethics and Legality: The use of LOPs must adhere to legal ethics rules, ensuring that they do not improperly influence medical treatment or create conflicts of interest.
Credit Impact: If there’s no recovery, clients might face debt collection for medical expenses, potentially impacting their credit.
Legal Context:
While not unique to Texas, the usage of LOPs should comply with Texas laws regarding attorney conduct, liens, and contract law. Lawyers must ensure that their use of LOPs does not breach any state-specific regulations or ethical guidelines.
An LOP is a tool for ensuring justice and medical care are accessible to injury victims, but it requires careful handling by all parties involved to ensure fairness and adherence to legal standards.