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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Employment Law
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Experience:  20+ Years of Employment Law Experience
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For PaulMJD..Question What are my options after I, the health

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For PaulMJD..Question What are my options after I, the health provider, filed a small claims, with UCC-1 Lien, against the patient due to patient request of nonpayment of all health providers of settlement from MVA. Attorney Filed interpleader and impleaded settlement funds from a third party MVA settlement.( I will fill in more detail once accepted) Thanks.
Thank you for your question. I look forward to working with you again.

If you filed the lien, your next step is in the settlement you file the UCC and seek the court to attach those funds that you are due from the settlement. What happens is that the settlement then is tied up in court until all claims against that third party settlement are satisfied and the patient cannot collect any of the settlement until those claims are resolved.

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Customer: replied 4 years ago.

The hearing for the interpleader was yesterday. My initial small claims case was added to the interpleader case, after the interpleading attorney found out I filed a small claims so he showed up at the small claims case and explained to the judge to combine them because there were other creditors involved. At the interpleader was my attorney, the attorney that filed the interpleader, and 4 other attorneys representing hospital bills. Between the 5 clinics seeking payment there was $21 in bills without attorney fees and interest. The available amount impleaded, if I am saying that correctly, was $20k. My attorney's stance in front of the judge, after all 5 attorney's mediated in the "discussion room" was that I should be paid in full, with interest, and attorney fees because my UCC-1 lien agreement has terms such as:,



I hereby assign to the Office to the extent permitted by law, but only to the extent of my Charges, all of my claims to, rights to, and interests in, Proceeds, whether resolved or unresolved, including ownership rights, which I may have now or in the future relating directly or indirectly to my Charges, condition, or causes of my condition (“Claims to Proceeds”). Claims to Proceeds shall further include, without limit, any and all causes of action, receivables, payment intangibles, and remedies that I might have against or with respect to any Payer now or in the future, and the right to prosecute, seek, settle, or otherwise resolve such Claims to Proceeds either in my name or in the Office’s name and as the Office otherwise sees fit.


I further intend for this Assignment & Lien to create a security interest under the applicable Uniform Commercial Code.

Accordingly, I hereby grant to the Office a primary, non-contingent security interest in all of my Claims to Proceeds to the extent permitted by law for the purpose of securing payment of my Charges, the attachment and perfection of which shall relate back to, and be effective as of, the date and time that the initial cause of my condition occurred.


In the event that I retain one or more attorneys who receive(s) Proceeds from one or more Payers, I hereby direct (and the Office hereby requests) each attorney to provide immediate notice to the Office regarding such Proceeds, to promptly pay the Office in-full out of such Proceeds, and to provide a full accounting of such Proceeds to the Office. I agree that the purpose of such Proceeds shall be primarily to pay my Charges. If I have a dispute regarding the Charges, any remedies I may have shall not include instructing my attorney to withhold or delay payment of Proceeds to the Office

So my attorney argued the UCC-1 and gave examples of "Auto" liens, Liens on homes, etc. but did not reference the proceeds as "Property" and basically lost the argument because the other 4 attorneys argued that doctors in TN do not have liens and only "Hospitals" have liens.

My attorney lost the argument so everyone was was prorated payment at 94% and I basically did not recover my court cost of my initial small claims suit and my attorney fees, nor interest.

Options at this point my attorney said we could appeal in 10 days but he would need 10 hours of work. We are talking about $4k in interest, court costs, and attorney fees that I currently do not have. Which the judge did award me a judgment on that amount but I would have to recover that from the patient.

I do not understand that Judges get the "Glazed look" in their eyes when they hear "UCC-1" . Also most attorneys say it is not enforceable and is "theory". What do you think and what options may I have. NOTE: Attorney fees and interest is in my liens.

Other Note: The hospital's had agreements with the patient of course, but did not file liens, so I am not sure why my security interest was not paid first out of the impleaded funds. Also I am not sure why the interpleading attorney did not pay me directly based on my filed lien that I gave a faxed notice to him before he filed the interpleader.

If I am paying filing fees to the Tennessee Secretary of State without a product or service in return, in the real word this is usually referred to as a "scam". What would your comments be on this?

Thank you for your response.

Your attorney, while correct in his argument based on your UCC-1, should also be explaining to you that if there is not enough money in the settlement for the payment, you might end up having to take a little less than what you want. As we have to tell clients many times, reality is that the word settlement means something you do not like, but you can live with.

Alternatively, if the person has some property attached to the UCC-1, then you can proceed in court to seize whatever of the patient's property is attached to the UCC-1 to satisfy the debt.

The choice is up to you, but at some point you need to decide how much less you would reasonably take to be done spending money pursuing the debt.
Customer: replied 4 years ago.

I definitely understand why the judge "prorated" the proceeds and I can accept the fact that I may be paid less than my bills.

But how do you separate the "fairness" of prorating the bills from rules of law?

Fairness and Law are not the same, in my opinion.


1. In law does the UCC-1 not provide sufficient strength in protecting security interest identifying the lien holder as priority creditor?


1a. If a creditor has a lien on a house and a debtor goes bankrupt, should/can a judge grant all creditors a piece of the house if those other creditors do not have liens?



2. Is there any strength in enforcing a UCC-1 lien? If so what would you say to a judge if you filed UCC-1 lien if the lien contained proper terminology and provisions?


3. What would your argue with the judge and what references of the UCC-1 would you provide if you were attempting to win a judgment based on the UCC-1?

4. Since I was not able to enforce a secured interest in the assigned property, "settlement proceeds", after filing the UCC-1 am I wasting my time and money on filing the documents with the Secretary of State or is there a better avenue in protecting my services/charges related to a MVA when there is a patient authorized assigned reimbursement of my loan to the patient through the delivery of "settlement proceeds" ?





Thank you for your response.

Yes, fairness and law can be very different things many times. It all depends on each individual situation.

Yes, the UCC would protect you as a secured creditor over the property that the UCC-1 lists as security.

Creditors with liens get paid first as secured creditors. Unsecured creditors get the scraps if any are left once the secured creditors are paid.

You are first in line to collect on the settlement if that is what was securing the UCC-1 and as a secured creditor you should collect first from the proceeds.

My argument would be that I was first in line perfecting the UCC-1 lien and as such I should be the first to collect over all of the other creditors.

In the future, in addition to the UCC-1, you should obtain what is called a "Confession of Judgment" signed by the patient, which states that in the event they do not pay they agree a judgment is entered against them without any lawsuit (essentially).
Customer: replied 4 years ago.

Thank you. Lastly if the personal injury attorney pays some of the medical creditors from settlement proceeds but ignores my UCC-1 Lien which the debtor has:

1.) named the personal property as collateral for the loan

2.) signed a security agreement containing a description of the collateral with a default in payment


the personal injury attorney does not deliver the "property" as settlement proceeds to me,

Would I be successful in getting a judgment against the attorney who did not release the total "property" to me to satisfy the UCC-1 Lien but instead broke the property up in pieces and delivered the property to the other creditors?

If the personal injury attorney states that he "only has an agreement/obligation to his client" and has no obligation releasing the total property to me, what definitions/references of the UCC-1 related to TN code would I reference? Specifically what can I reference in the TN Code from this website or any additional sources you may have?

4.) Above you mentioned: My argument would be that I was first in line perfecting the UCC-1 lien and as such I should be the first to collect over all of the other creditors. - For the State of Tennessee what would you reference for the judge while the other creditor's attorney's are stating that there is no TN Statutes defining liens for medical clinics or health providers?

Thanks again.

Thank you for your response.

If the attorney was aware of a priority lien and failed to pay it as a priority, then you can sue the attorney for not doing so. Also, it can be grounds for you to file a complaint against the attorney with the state bar, since they are to pay all liens on a settlement or judgment before turning over any funds to the client.
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