Michigan PIP Ran Out? Lien Doctors and Who Pays Your Bills

Your lawyer sent you to “their” doctor. The treatment felt fine, until you saw the $48,000 bill carved out of your settlement.

Your Michigan PIP had run out, and you didn’t pay a dime up front. Someone told you not to worry, that the bill would “come out of the case at the end.” Then the case settled, the accounting sheet hit your kitchen table, and the money you were counting on to catch up on rent, replace the car, or just breathe again was mostly gone.

If that’s where you are right now, take a breath. You’re not the first Michigander this has happened to. And you’re not stuck.

What is a medical lien or letter of protection?

It’s a written promise that a provider will treat you now and get paid later, out of your settlement or verdict. A medical lien is often called a letter of protection (LOP), and you or your lawyer sign it.

No insurance card. No bill in the mail. No collections calls. Just a signature and a promise that the provider will be paid “off the top” when your case resolves.

On paper, it sounds like a lifeline, and sometimes it is. If your PIP medical limit is used up, if you opted out of PIP medical under Michigan’s 2019 reform, or if you’ve hit a gap your health insurance won’t touch, a letter of protection can be the difference between getting treated and going without while your case drags on.

The trouble isn’t the concept. The trouble is the price tag.

Who pays when Michigan PIP runs out?

Your health coverage may step in, the at-fault driver can owe the excess, and lien providers fill the gap in between. Here’s the order to think about it in:

1. Health insurance, Medicare, or Medicaid. Once PIP is exhausted, these may cover crash care at their negotiated rates. They may seek repayment from your settlement, but the starting number is usually far lower than a lien bill.
2. The at-fault driver. Medical bills above your PIP limit are recoverable in your third-party claim under MCL 500.3135(3)(c), and this part doesn’t require meeting the serious-impairment threshold (the injury test for pain-and-suffering claims). It’s how lien bills ultimately get paid: out of what the at-fault driver’s insurer pays you. See who pays what after a Michigan crash.
3. A lien provider. If neither of the first two pays for treatment now, a lien provider may treat you and wait for the settlement.

Why do Michigan patients end up on liens?

Because the 2019 no-fault reform ended guaranteed unlimited medical for most new policies. Before the reform, Michigan PIP covered crash-related medical care for life. Now drivers choose a limit.

For policies issued or renewed after July 1, 2020, the choices are $250,000, $500,000, or unlimited (MCL 500.3107c). Qualifying Medicaid enrollees can choose $50,000, and qualifying Medicare enrollees can opt out of PIP medical entirely (MCL 500.3107d). Family-provided attendant care was capped, and a provider fee schedule took effect in July 2021 (MCL 500.3157).

The result, six years in, is a patchwork. You might be:

• PIP-exhausted: you used up a $50,000 or $250,000 limit on the ER, surgery, and early rehab
• Opted-out: you’re on Medicare and chose not to carry PIP medical
• Coverage-gapped: your insurer is denying treatment as “not reasonably necessary,” or slow-paying your providers until they drop you (here’s how that happens)
• Fee-schedule stranded: providers who used to take auto patients stopped, because the fee schedule cut their reimbursement (more on why doctors are dropping crash patients)

When any of those happen, you still need treatment. It just stops being paid for. That’s the vacuum lien-based providers fill.

Which providers treat on liens?

Mostly pain management, surgery centers, therapy chains, and imaging shops. Not every doctor takes liens; most don’t. The ones who do tend to fall into a few buckets:

• Pain management clinics doing injections, nerve blocks, and medication management
• Orthopedic and spine surgery centers, especially ambulatory surgery centers doing fusions, discectomies, and shoulder scopes
• Chiropractic and physical therapy chains that run long treatment plans
• Diagnostic imaging shops: MRIs, EMGs, nerve conduction studies
• Some neurologists and psychologists who focus on injury cases

A lot of these providers are legitimate. Some aren’t. The tell is almost never the diploma on the wall. It’s the referral pattern.

Why are lien bills so much higher?

Because nobody negotiates the price before you’re treated. When a health insurer or Medicare pays for an MRI, an injection, or a surgery, it pays a set or negotiated rate. On a lien, the charge is whatever the provider writes on the invoice, and it can be several times what insurance would have paid.

That’s the trap. Your case value doesn’t grow to match the bills. Your net to you shrinks.

Here’s a hypothetical. A $200,000 settlement sounds life-changing, until $48,000 goes to lien medical, $64,000 goes to a one-third contingency fee (figured after costs), $8,000 goes to case costs, and you walk away with well under half. (Here’s how 33% contingency fees work in Michigan.)

What are the red flags of a lawyer-steered clinic?

A referral you didn’t choose, a clinic that won’t bill your insurance, and prices nobody will tell you. A lawyer is allowed to recommend a doctor. What’s not okay is steering: a referral that exists because of a relationship between the firm and the clinic, not because that provider fits your injury.

Watch for these signals:

• You never chose the doctor. You were handed a name, an address, and an appointment time.
• Every client of that firm goes to the same clinic. If the waiting room is full of people with the same attorney, that’s a pattern.
• The clinic won’t bill your health insurance, even when you have coverage that would pay. “We only work on liens” is a business-model answer, not a clinical one.
• Treatment keeps extending right up until settlement. New injections, new therapy blocks, new imaging, timed to case milestones.
• You can’t get a straight answer on what anything costs until the case resolves.
• The provider’s bills don’t show up until the very end, when you no longer have leverage to negotiate.
• Records read like closing arguments. Every note echoes the legal theory instead of describing what you actually said and felt.

None of these, alone, proves anything. Together, they’re a pattern worth questioning.

What should you ask before signing a letter of protection?

Ask about price, reductions, and what happens if the case loses, in writing if you can:

1. “Will you bill my health insurance, Medicare, or Medicaid instead?” If yes, do that. Insurance-negotiated rates are usually a fraction of lien rates.
2. “What will you charge for each procedure?” Get the CPT codes (the standard billing codes) and dollar amounts. Compare them to Medicare’s published rates.
3. “Will you accept a reduction at the end of the case?” Most lien providers negotiate. Some won’t. Know before you sign.
4. “Will you cap your lien at a percentage of my net recovery?” Some will. It protects you if the settlement doesn’t grow to cover the bills.
5. “How did my lawyer’s office come to refer me here?” Is there a formal relationship or marketing arrangement? You’re allowed to ask.
6. “Can I see the full lien ledger before I sign the settlement release?” Yes, you can. Ask for it.
7. “If my case loses or settles low, what happens to this bill?” Some LOPs make you personally liable if the case doesn’t pay out.

If your lawyer gets defensive when you ask these questions, that’s information too. You can switch lawyers mid-case if the answers don’t add up.

When is a lien the right call?

When it’s the only way to get needed treatment and the terms are fair. For some injured Michiganders, especially opted-out or PIP-exhausted clients with serious injuries and no other path to surgery, a lien is the only way to get treated at all. A fair provider, honestly billed, with a cap and a negotiation clause, can be a genuine partner.

The problem is the unfair version: the inflated-bill version, where your lawyer and your doctor know each other well and you’re the one paying for it.

You deserve to know which version you’re in. If you’re not sure, get a free second opinion on your lien bills before you sign the settlement release.

This article is general information about Michigan law, not legal advice for your situation.