If I'm settling a car-accident injury claim and the insurer wants me to sign a hold-harmless agreement, can the insurer use that to avoid paying my chiropractor's medical lien?
Plain-English summary
Representative Denise Garner asked the AG about a problem her constituents (and the state's medical providers) were running into. A patient injured in a car accident gets treated by a chiropractor or other provider. The provider files a medical lien under Arkansas's Medical, Nursing, Hospital, and Ambulance Service Lien Act so they get paid out of the eventual settlement. Then the auto insurer settles with the patient and asks the patient (and sometimes the patient's lawyer) to sign a hold-harmless agreement promising not to come back at the insurer if the lien is unpaid. The insurer hands the patient a check, the lien sits unpaid, and the medical provider is left empty-handed.
Attorney General Tim Griffin held that this scheme does not work. Two provisions of the Lien Act make the insurer's plan illegal in advance.
A.C.A. § 18-46-112 forbids the tortfeasor or its insurer from paying the patient any settlement money during the 60 days after the lien notice is served, and at any time after the lien is recorded with the county clerk, unless the lien is first paid or released in writing. If the insurer pays the patient anyway, the insurer becomes liable to the medical provider for the value of the lien.
A.C.A. § 18-46-113 prevents a patient with notice of a medical lien from waiving or releasing their personal-injury claim against the tortfeasor and its insurer until the lien is paid or released. If the patient does sign such a waiver, it is void.
Together, the two provisions make a hold-harmless agreement, in which the patient agrees not to enforce a perfected lien against the insurer, void as against public policy. The provider's lien is enforceable directly against the insurer regardless. The 1939 Arkansas Supreme Court case Buchanan v. Beirne Lumber Co. came out the same way and is still good authority: a perfected medical lien cannot be evaded by a private settlement.
What this means for you
If you are a patient who had medical treatment after an accident
If your provider has filed a medical lien (you would have received notice of it), do not sign a hold-harmless agreement that asks you to indemnify the insurer for unpaid lien amounts. The contract is likely void on public-policy grounds, but signing it puts you in the middle of a future fight where the insurer may try to come after you (or your lawyer) for reimbursement. Better to insist that the lien be paid out of the settlement before you sign anything releasing the insurer.
If you are a personal-injury lawyer in Arkansas
Be skeptical of release language that asks you, the lawyer, to indemnify the insurer for unpaid medical liens. That kind of personal indemnity by counsel is the subject of multiple state-bar ethics opinions across the country (Texas, Los Angeles County) holding it improper. The AG's opinion cites that line of authority. As a practical matter, you should pay perfected medical liens out of settlement proceeds before disbursing to the client.
If you are an insurance claims adjuster handling Arkansas accident files
Once a medical lien is perfected (notice served and recorded with the county clerk), do not pay the patient until the lien is paid or you have a written release of the lien from the provider. If you cut a check to the patient anyway, your company will still owe the lien amount to the medical provider, plus litigation costs. The hold-harmless provision in your release does not protect you. Build the lien-payoff into your settlement worksheet rather than treating it as a downstream patient-side problem.
If you are a medical provider with patients in active personal-injury litigation
Perfect your lien promptly. Under § 18-46-105, perfection is complete when notice is served and filed (recorded) with the county clerk. Once those steps are done, both the patient's release of claim and the insurer's settlement payment are constrained by the Lien Act, and you have a direct cause of action against the insurer for the lien amount if it gets paid around you.
If you are a state legislator looking at this area
The opinion identifies two anchors: the 60-day no-pay window and the void-waiver rule. If you wanted to harden the scheme further, the targets are statutory language closing off "patient consents" or "lawyer indemnifications" and explicit fee-shifting against insurers who pay around perfected liens. The current statute already produces the right answer; the practical problem is enforcement.
Common questions
Q: What's the Arkansas Medical Lien Act?
A: A statute (A.C.A. §§ 18-46-101 to -117) that lets medical providers (hospitals, nursing facilities, ambulance services, and most other treating providers) file a lien against a patient's eventual personal-injury settlement or judgment so they can be paid for treatment provided after an accident. It exists because patients are often unable to pay up front and providers need a way to get paid out of the settlement.
Q: What is a "perfected" lien?
A: One where the provider has both (a) served notice of the claim of lien and (b) filed (recorded) the notice with the local county clerk. Once those two steps are done, no additional steps are needed for the lien to be enforceable.
Q: What's a hold-harmless or indemnity agreement in this context?
A: A clause in the insurer's settlement release in which the patient (and sometimes the patient's lawyer) promises not to hold the insurer responsible for any unpaid medical liens, and to indemnify the insurer for any future claims by lien-holders. Insurers use it to shift the risk of unpaid liens off their books.
Q: Why don't these agreements work?
A: Two reasons. First, the Lien Act flatly bars the insurer from paying the patient before the lien is paid or released, so the underlying conduct the agreement is supposed to enable is unlawful. Second, the Lien Act voids any patient waiver or release of the personal-injury claim while a perfected lien is unpaid. The contract sits on top of two statutory prohibitions, so it is void on public-policy grounds.
Q: Does the insurer have to file a health-insurance claim before the medical lien can be enforced?
A: No. The Lien Act does not require or preclude a provider from filing a health-insurance claim before pursuing the lien. The provider can pursue the lien either way.
Q: Can a medical provider charge whatever they want and just file a lien for that amount?
A: Not exactly. The Mounce decision says a medical provider cannot ignore contractually negotiated rates and terms in provider agreements when determining the underlying debt amount. If the provider has a contract rate with the patient's health insurer, the lien value is constrained by that rate.
Q: What about Medicare/Medicaid liens, which run on federal law?
A: This opinion is about state-law medical liens under the Arkansas statute, not federal Medicare Secondary Payer liens. The federal-law analysis is different. Footnote 1 of the opinion notes the related ethics issue for lawyers asked to indemnify insurers for federal-MSP liens.
Background and statutory framework
Medical lien statutes originated in many states during the 1930s, after the Great Depression made it routine for accident victims to be unable to pay for treatment up front. Arkansas's Medical Lien Act is in this lineage. The 1939 Arkansas Supreme Court case Buchanan v. Beirne Lumber Co. arose out of essentially the situation Representative Garner described: a doctor treated an injured trucker, the trucker sued, the trucker's lawyer settled with the trucking company without notice to the doctor, and the doctor was cut out. The Supreme Court held that the "remedial object of the statute was to prevent the very thing that... occurred" and that a perfected lien "cannot be evaded by a settlement." That principle still controls.
The two statutory provisions the AG relies on were enacted to enforce the Buchanan principle. Section 18-46-112 imposes a 60-day blackout on settlement payments after lien notice and an indefinite blackout after the lien is recorded; section 18-46-113 voids any patient waiver of the personal-injury claim while the lien is unpaid. The AG reads the two provisions together as making contract-around-the-lien schemes void on public-policy grounds, citing the Supreme Court's familiar rule (Town of Newton v. Rumery) that a contract is unenforceable when its enforcement is outweighed by a public policy harmed by enforcement.
The opinion also notes, in footnote 1, that several jurisdictions (Texas, Los Angeles County) have held that personal indemnity by an attorney for unpaid liens is professionally improper. That is a related but distinct issue.
Citations and references
Statutes:
- A.C.A. §§ 18-46-101 to -117 (Medical, Nursing, Hospital, and Ambulance Service Lien Act)
- A.C.A. § 18-46-105 (lien perfection)
- A.C.A. § 18-46-112 (no settlement payment until lien is paid or released)
- A.C.A. § 18-46-113 (void waivers)
Cases:
- Buchanan v. Beirne Lumber Co., 197 Ark. 635, 124 S.W.2d 813 (1939)
- Stuttgart Regional Medical Center v. Cox, 343 Ark. 209, 33 S.W.3d 142 (2000)
- Mounce v. CHSPSC, LLC, 2017 WL 4392048 (W.D. Ark. Sept. 29, 2017)
- In re Miller, 444 B.R. 178 (Bankr. E.D. Ark. 2011)
- Town of Newton v. Rumery, 480 U.S. 386 (1987)
- Pollo Operations, Inc. v. Tripp, 906 So. 2d 1101 (Fla. Dist. Ct. App. 2005)
Secondary sources:
- Beard & March, Arbitrary Healthcare Pricing and the Misuse of Hospital Lien Statutes by Healthcare Providers, 38 Am. J. Trial Advoc. 255 (2014)
- 41 C.J.S. Hospitals § 22
Source
Original opinion text
BOB R. BROOKS JR. JUSTICE BUILDING
101 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
Opinion No. 2025-039
August 27, 2025
The Honorable Denise Garner
State Representative
Post Office Box 646
Fayetteville, Arkansas 72702
Dear Representative Garner:
I am responding to your request for an opinion on A.C.A. §§ 18-46-101 et seq. concerning personal injury lawsuits and hold-harmless agreements between insurers, their insured, and the insured's legal counsel. You noted that medical providers, such as chiropractors, often (1) treat patients who have experienced motor-vehicle accidents and (2) defer payment until the matter is resolved. Additionally, you mentioned that these providers typically file medical liens under A.C.A. §§ 18-46-101 et seq. You indicate that an issue has arisen in your district and across the state regarding hold-harmless agreements, resulting in unsatisfied medical liens following settlements. Lastly, you indicated that parties to these hold-harmless agreements sometimes refuse to honor the medical lien, claiming that the agreement extinguishes any obligation to satisfy the lien.
Against this background, you ask the following questions:
- Does a hold-harmless agreement between a patient (or their legal counsel) and an insurer comply with Arkansas law, specifically the mandates of the Arkansas Medical Lien Act?
Brief response: No, for reasons explained below, such a hold-harmless agreement does not satisfy the Arkansas Medical, Nursing, Hospital, and Ambulance Lien Act.
- What is the purpose of a medical lien if it can simply be invalidated or ignored by a hold-harmless agreement or other agreements between a patient and their insurer?
Brief response: As explained in response to Question 1, medical liens cannot be invalidated or ignored through a hold harmless agreement. The purpose of medical liens, which is to encourage treatment, remains.
DISCUSSION
Question 1: Does a hold-harmless agreement between a patient (or their legal counsel) and an insurer comply with Arkansas law, specifically the mandates of the Arkansas Medical Lien Act?
The use of a hold-harmless provision between a patient and an insurer likely does not comply with the Arkansas Medical, Nursing, Hospital, and Ambulance Service Lien Act (the "Act"). The Act, like similar statutes in other states, was enacted to protect medical providers from insolvent patients (injured through the tortious conduct of others) and to encourage those same providers to treat them. Many medical lien statutes originated in the 1930s, following the Great Depression, when economic conditions led to a significant number of patients becoming indigent.
The Act grants a medical provider, who has complied with all the statutory requirements, a lien in a patient's personal-injury settlement or judgment. Said another way, the Act allows a medical provider to "step into the shoes of an injured person for purposes of receiving payment from a tortfeasor or the tortfeasor's insurance company for economic damages." The Act does not require or preclude a medical provider from filing a health-insurance claim before pursuing a medical lien. However, a medical provider cannot ignore contractually negotiated rates and terms contained in provider agreements when it "determines the amount of the underlying debt."
For purposes of this opinion, I assume that any lien is perfected and valid in accordance with the statute's requirements. "Perfection is complete once notice of a claim of lien is served and filed. No additional steps need to be taken." When a lien is perfected, the lienholder has satisfied all the legal requirements for enforcement against the personal-injury settlement and has provided proper notice.
Unsatisfied medical liens represent a significant liability to insurers who issue payments to a patient to resolve a personal injury claim. Insurers often insist on hold-harmless language in their general releases of claims. The patient agrees not to hold the insurance company liable for unpaid medical liens after the patient receives the settlement funds. Typically, an indemnity clause is included alongside a hold-harmless language, by which the patient agrees to cover the insurance company's losses or damages if the medical provider enforces its lien against the insurer. Two provisions of the Act likely render these private contracts invalid.
First, A.C.A. § 18-46-112 prohibits the tortfeasor, the insurance company, or both, from issuing payment to a patient as part of a settlement (whether partial or total) within 60 days of service of the lien notice and at any time after the notice has been recorded with the local county clerk. A settlement payment to the patient can only be made after (1) the lien is paid or (2) the medical practitioner provides a written release of the lien. If the tortfeasor, the insurance company, or both issue payment anyway, they are liable to the medical provider for the value of the lien, as long as that amount does not exceed the amount the patient was entitled to from the tortfeasor or the insurer.
Second, A.C.A. § 18-46-113 prevents patients with notice of a medical lien from waiving or releasing their personal injury claim against the tortfeasor and their insurance company until (1) the medical lien is paid or (2) the medical lien is released. If those two conditions are not met, the patient's waiver or release of their personal injury claim is void.
Together, those two provisions likely render a hold-harmless agreement between a patient and the insurance company void on public policy grounds.
Question 2: What is the purpose of a medical lien if it can simply be invalidated or ignored by a hold harmless agreement or other agreements between a patient and their insurer?
As discussed above, a medical lien under the Act, which (for purposes of the analysis in this opinion) I assume is valid and enforceable, cannot simply be invalidated by including a hold-harmless clause in a release of claims without jeopardizing the patient, tortfeasor, and insurer's private settlement. That was the outcome in Buchanan v. Beirne Lumber Co., decided by the Arkansas Supreme Court in 1939, just a few years after the Act was passed. Dr. A. S. Buchanan, a physician and surgeon, provided services to J. N. Henley, a patient who was injured in a trucking accident. Henley sued the trucking company, and Dr. Buchanan filed a lien, in accordance with the statutes' requirements. Without notifying Dr. Buchanan, the trucking company settled with Henley for $4,000 in exchange for a release of claims, without paying the lien, and secured a dismissal of the lawsuit. Dr. Buchanan intervened and requested that the Court set aside the dismissal. In doing so, the Arkansas Supreme Court noted that, "[t]he remedial object of the statute was to prevent the very thing that... occurred" and that a "lien... cannot be evaded by a settlement."
The Act allows a direct cause of action against a tortfeasor and an insurer to ensure payment to a patient only after a valid and enforceable lien has been resolved. It is a statutory right that obligates all involved parties. A subset of these parties cannot use a private contract to circumvent liability under the statute. Even if a court upholds an insurer's attempt to enforce hold-harmless or indemnity provisions against a patient, it will not invalidate a medical provider's cause of action against the insurer to satisfy the lien. In such cases, the insurance company would be required to pay the lien it previously ignored (including any costs and attorney's fees incurred in enforcing it) and then seek indemnity from the patient, and potentially the patient's lawyer. Such a situation exposes the parties to additional liability and puts attorneys at risk of ethical repercussions.
Assistant Attorney General Justin Hughes prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General