A letter of protection is a promise by a claimant's attorney to pay a medical provider from the recovery in exchange for treatment without upfront payment. It lets injured claimants obtain care while a case is pending.
The arrangement shifts collection risk to the provider, who is paid only if the case recovers and only to the extent of the recovery. Disputes arise over the reasonable value of the services and over what the provider may collect.
For anyone holding or financing the receivable, the letter is evidence of the obligation and of the provider's position in the order of payment. Its enforceability and the venue's treatment of billed charges affect value.
A letter of protection is not insurance and not a guarantee of payment by the claimant. Payment depends on the outcome of the case.
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