In this guide
The short version: a letter of protection (LOP) is an arrangement where a doctor or clinic treats you now and agrees to be paid from your future settlement or judgment. You don’t pay up front, but the bill — at whatever rate the provider charges — is paid out of your share. Ask about the rates, whether the provider will reduce the bill at settlement, and what happens if the case doesn’t pay.
How a letter of protection works
- You need treatment but have no insurance, or your coverage won’t pay for injury-related care.
- A provider agrees to treat you in exchange for a promise of payment from your settlement or judgment — often in a letter from your attorney.
- The bill grows as treatment continues, at the rates the provider sets.
- When the case settles, the provider is paid from the settlement funds before you receive your share, like a medical lien.
Florida’s statute defines it broadly: a letter of protection is “any arrangement by which a health care provider renders treatment in exchange for a promise of payment for the claimant’s medical expenses from any judgment or settlement” — whatever the arrangement is called.
What it costs you
Because the bill comes out of your share, every dollar of it — and every dollar it’s reduced — changes what you take home. An illustrative $40,000 settlement:
| Bill paid in full | Bill reduced 30% | |
|---|---|---|
| Settlement | $40,000 | $40,000 |
| Attorney fee (one-third) and costs | −$14,333 | −$14,333 |
| Letter-of-protection bill | −$12,000 | −$8,400 |
| You take home | $13,667 (34.2%) | $17,267 (43.2%) |
In this example a 30% reduction puts $3,600 back in your pocket. Open it in the take-home calculator and enter your own bills.
Florida’s 2023 disclosure rules
Florida’s 2023 tort reform added rules for claims involving letters of protection (Fla. Stat. § 768.0427). Before a claimant can seek damages for medical expenses from treatment under an LOP, the claimant must disclose:
- a copy of the letter of protection;
- all bills for the treatment, itemized and, where applicable, coded;
- if the provider sold the bills to a factoring company or other third party, the buyer’s name and the price paid, including any discount;
- whether the claimant was referred to the provider, and by whom; and
- whether the claimant had health coverage when treated, and what coverage.
The law also makes a referral by the claimant’s own attorney admissible, and treats the law firm’s financial relationship with the provider as relevant to the provider’s bias. Other states handle letters of protection differently, so ask your lawyer which rules apply where your case is filed.
Before you sign a letter of protection: six questions
- What will you charge — your full rates, or the rates an insurer would pay?
- Will you reduce your bill when the case settles, and by how much?
- If my case doesn’t pay out, do I still owe the bill?
- Will you sell my bill to another company?
- Did my lawyer refer me to you, and do you have a financial relationship?
- Could my health insurance, MedPay or PIP pay for this treatment instead?
Frequently asked questions
Do I have to pay a letter of protection if I lose my case?
It depends on the agreement. A letter of protection is a promise that the provider will be paid from a settlement or judgment; what happens if there is no recovery is up to the terms you signed. Ask before treatment begins, and get the answer in writing.
Can letter-of-protection bills be negotiated?
Often, yes. These bills are commonly reduced at settlement, especially when the settlement isn’t large enough to pay everyone in full. Ask the provider up front whether it will reduce its bill when the case resolves, and by how much.
Is a letter of protection the same as a medical lien?
They work in a similar way — the provider is paid out of your settlement before you receive your share — but a letter of protection comes from an agreement, while many liens come from state statutes. Either way, the bill reduces what you take home.
What does Florida require for letters of protection?
Since 2023, Florida law requires a claimant who treated under a letter of protection to disclose the letter, itemized and coded bills, any sale of the bills to a factoring company and the price paid, whether the claimant was referred to the provider and by whom, and whether the claimant had health coverage at the time.
Why would an injured person use a letter of protection?
Usually because they need treatment and have no health insurance, or their coverage won’t pay. It gets care started without paying up front — at the cost of a bill that will come out of the settlement.
Reviewed by
Morgan Hale, Editor. Writes about the financial side of injury claims — fees, liens, timelines and state rules — and checks every page against its sources before it’s published. Not a lawyer; “Morgan Hale” is a pen name. Editorial policy · How we calculate
Sources
Not legal or financial advice. InjuryMath is not a law firm and does not sell or broker funding. This page gives general information based on the sources listed; your contracts and your state’s law control. For advice about your situation, talk to a licensed attorney in your state.