You might be wondering what health insurance has to do with the personal injury cases I see every day. A portion of the settlement that you receive may be owed to your own health insurance carrier when you receive payment from the party that caused the accident. You may also personally take home a smaller proportion of the settlement if the other party advances medical payments. You may also wind up with more money in your pocket when you do not submit your medical bills to your own health insurance or if you did not have health insurance. To understand how all this can happen, let’s first discuss how health insurance actually works.
How Does Insurance Work?
Insurance is an investment by a collective group of individuals to pool money to cover other members who need the benefits. The bigger the pool of members means more money in the pool which should keep the costs per person lower. It also means that the pool of money will be more financially solvent which means coverage will be there when you need it.
Private Health Insurance Is Driven by Profits
In privately held hands, health insurance is one of the most profitable and lucrative businesses that exist. Like a bank, insurance companies collect billions in premiums and invest those assets, multiplying their financial worth. Insurance companies must keep a certain percentage of their liquid assets in reserve to cover potential claims. After reserves, they are free to make huge profits for their administrators and their shareholders.
All you need to do is look at the amount of money health insurers pay for advertising and the value of their companies on Wall Street to know what a profitable business it is.
Do I Have To Pay Medical Bills From My Settlement?
The short answer is yes. But the amount you may have to repay is dependent upon many factors and is negotiable. As your attorney, I am able to best negotiate with the medical providers, health insurers, and the other party’s insurance carrier to maximize the money in your pocket.
Medical Expenses Are Variable
In practice, our current private health insurance system has led to arbitrary rates for the same services.
It’s not uncommon, for example, for a hospital like UC Davis to charge an insurance carrier several times more for a procedure, like an MRI, while an imaging center charges a fraction of the cost for the same service.
A hospital stay, for example, could cost a private health insurer as much as ten times what a public option like Medicare or Medi-Cal would typically pay for the identical services.
The result is that almost all insurers pay different rates for the same services. This benefits corporate healthcare. It is a drain on providers. And it is a bad deal for consumers that leads to inconsistent settlements in personal injury cases.
Consumers like you can have no idea what your insurance company has agreed to pay and no idea what your share or copay or deductible will be.
How Paying Medical Bills Affects the Value of Personal Injury Cases
The value of personal injury cases is usually based on 3 things: medical expenses, wage losses, and pain and suffering. In California, your recovery for your medical expenses is based upon the amount paid to the healthcare provider, not necessarily the amount billed to the patient.
When your medical expenses are paid and who pays the bills will affect how much you are left with in your pocket at the time of settlement or verdict or judgment. As your lawyer, I have the knowledge and leverage to maximize your net recovery and avoid the pitfalls of the health insurance maze.
Here Are Some Examples of How Health Insurance and Medical Expenses Work In Your Personal Injury Case
Suppose two people go to the same hospital by ambulance and receive the same treatment. Suppose the hospital bill is $25,000. Suppose one person submits his bills to his own health insurance company and the other person does not.
The Person Who Submits Their Bills to Their own Health Insurance Company
Depending on who his insurance company is, the payment to the hospital could be as low as a few thousand dollars for the person who submits their bills to their own health insurance company. Suppose the insurance carrier paid $2,000 as the contracted rate as payment in full on the $25,000 bill. The amount the insured person gets to claim against the other party who caused the accident is $2,000.
The Person Who Doesn’t Submit Their Bills to Their own Health Insurance Company
The person who does not submit the bill to his own health insurance or who does not have any health insurance of his own gets to claim the full $25,000 against the party who caused the accident. This obviously leads to arbitrary results and can actually penalize people who have their own health insurance when it comes to injury accidents.
Now you may think that the person without insurance still owes the provider the $25,000 in our example. He does. But, if the provider has not asserted a lien against the settlement, the person can decide voluntarily whether he pays that medical bill after settlement and suffer the consequences to his credit rating or enter into a payment plan.
The Person Who Doesn’t Submit Their Bills to Their own Health Insurance Company and Has a Lawyer
Alternatively, as your lawyer, I can reach a separate agreement, pending the settlement to pay the hospital medical bills. In this example of leaving the hospital bill unpaid pending settlement, as your lawyer, I am able to claim the full $25,000 from the party that caused the accident and then negotiate a settlement with the hospital for a fraction of the bill. This may mean a lot more money in your pocket at the end of the case.
The Person Who Submits Their Bills to Their own Health Insurance Company and Has a Lawyer
If your bills are paid by your own health insurance carrier, as your lawyer, the law grants me the authority to negotiate a reduced rate of repayment to your own carrier by getting reimbursement for part of the attorney fee you pay to me.
Suppose your health insurance carrier has paid the hospital the contracted amount of $15,000 on the $25,000 bill in our example. I submit the $15,000 paid amount to the party that caused the accident. When the case settles and the party that caused the accident pays, the $15,000 bill will likely get at least a one third reduction in recognition of my part in getting the money from the party that caused the accident, so that your health insurance carrier gets reimbursed for part of what they paid to the hospital.
In this example, you would pocket at least an additional $5,000 at time of settlement because a total of $15,000 is collected from the at-fault party. $10,000 is repaid to your health insurance carrier as full reimbursement on the $15,000 claim because of my negotiations. That leave one third that goes directly to you for sharing the work of your lawyer to collect money for your own insurance carrier. In this case, that’s $5,000.
The Person Who Submitted Their Medical Bills to the At-Fault Party Insurance Carrier Before Settlement
If you try to submit your medical bills to be paid by the at fault party’s insurance carrier in advance of settlement, you will come out behind.
First, prior to a verdict or judgment, you cannot force the other side to pay your medical bills in, causing you to ultimately have to pay for expensive litigation costs.
Second, using our example, if the other party’s insurance carrier did agree to pay the hospital $25,000 at the time of settlement, they will reduce the total value paid to you by that $25,000. You would have lost the ability to negotiate directly with the hospital or with your own insurance carrier that pays the hospital, winding up with less money in your pocket.
I have seen time and again how people fail to maximize their recovery because they do not have the knowledge or the leverage to know how to use the various insurance policies in play.
I have that knowledge and can help you negotiate so that you pocket the greatest amount possible.
Our Current Healthcare System Is Broken and Leads to Arbitrary Settlements in Personal Injury Cases
So, what’s the solution? Everyone currently invests a portion of their income to support Medicare, Medicaid, and Medi-Cal. Providers, in turn, agree to accept uniform payments for Medicare, Medicaid, and Medi-Cal patients. The system works because the number of people eligible to receive Medicare, Medicaid, or Medi-Cal is limited.
Workers and employers would likely be willing to invest more of their income in a single public health insurance option like Medicare, which covers everyone and requires uniform billing from providers and uniform payments from the health insurance fund. Because more people would be investing in a single plan the costs to consumers would be lower than what they or their employers pay for the unpredictable coverage most people now receive.
Providers would still do well since everyone will have coverage and the demand for services will be greater. Since there is no room for profiteering by the insurer, costs and benefits will be much better for consumers and providers.
Since all income earners would be investing, the pool of money available would be huge. The sick and elderly and the poor would receive guaranteed care. The healthy would help subsidize others in need. And, the healthy would have predictable prepaid health insurance themselves when they need it.
Healthcare in America is in trouble. The fairest approach is to invest in public health insurance for all. This will lead to more predictable and consistent personal injury settlements, verdicts, and judgments. It will also give us all a better quality of life. And, isn’t that what America is all about?