CO-294: Payment Made to Attorney
CO-294 means payment to the attorney is contractually required. Work with the attorney or file a lien to recover your portion from the legal settlement.
What Does CO-294 Mean?
When CARC 294 appears with CO, the payer is indicating the payment redirection to the attorney is a contractual obligation, possibly due to a court order or binding legal assignment. The provider's recovery options are limited to collecting from the attorney or through the legal process.
CARC 294 indicates that the payer processed the claim but directed payment to an attorney rather than the billing provider. This code appears in cases involving legal proceedings such as personal injury claims, workers' compensation disputes, or other litigation where an attorney has obtained a legal right to receive insurance payments on behalf of the patient.
In legal cases, attorneys may file a lien or obtain a payment assignment that directs insurance proceeds to their office. This is common in auto accident cases, slip-and-fall injuries, and medical malpractice situations where the attorney is managing the settlement funds. The payer honors these legal assignments and routes payment accordingly, which means the provider does not receive direct reimbursement through the normal claims payment process.
Providers who treat patients involved in litigation need to understand that CARC 294 is not a denial of coverage but rather a redirection of payment. The service was covered and processed, but the funds went to the attorney. Recovery requires coordination with the attorney's office to obtain the provider's share of the payment from the legal settlement or judgment funds.
Common Causes
| Cause | Frequency |
|---|---|
| Legal proceedings directing payment Patient is involved in a legal case where the attorney has a lien or assignment directing insurance payments to them | Most Common |
| Payment assignment to attorney Patient or court has assigned the right to receive insurance payments to the attorney handling the case | Common |
| Communication breakdown Lack of coordination between the healthcare provider and the patient's legal representation regarding payment routing | Common |
| Incorrect billing configuration Provider mistakenly billed for services that should have been covered by a patient's attorney or legal settlement | Occasional |
| Payer policy on legal cases Insurance company follows specific guidelines for cases involving litigation that direct payment to the attorney of record | Occasional |
How to Resolve
Contact the attorney who received payment, verify the legal assignment, and arrange to recover the provider's portion of the funds.
- Verify the legal basis Obtain documentation of the court order or payment assignment that directed funds to the attorney.
- File a provider lien If not already done, file a provider lien to ensure your payment is protected in any legal settlement.
How to Prevent CO-294
- Require signed payment agreements from patients involved in legal cases before treatment
- File provider liens proactively when treating patients with active litigation
General Prevention
- Identify patients involved in legal cases during intake and verify payment routing expectations
- Establish clear communication with attorneys regarding payment assignments before rendering services
- Maintain accurate documentation of any liens or payment assignments
- Implement billing workflows that flag accounts with attorney involvement
Also Filed As
The same CARC 294 may appear with different Group Codes:
Related Denial Codes
Sources
- https://www.mdclarity.com/denial-code/294
- https://x12.org/codes/claim-adjustment-reason-codes
- Codes maintained by X12. Visit x12.org for official definitions.