One of the issues that often come up in a Virginia injury case is what to do about the medical bills. Some people mistakenly believe that since they were in a car accident, the insurance company of the person who caused the wreck will immediately pay the medical bills. This is simply not the case. The case cannot and should not be settled until the medical treatment is through. In the meantime, you want your medical bills paid by any health insurance or other insurance that you have that will pay for those bills.
If your health insurance is written under Virginia law, then you should not have to reimburse the health insurance company when you settle your personal injury case with the automobile insurance company. Virginia has an “anti-subrogation” statute that does not allow health insurance companies to subrogate against personal injury settlements, even when part of the settlement includes a claim for medical bills.
You will make a double recovery for the medical bills. First, your health insurance company will pay the bills and then the automobile insurance company will compensate you for your medical bills if your injury claim is successful. The reason you get a windfall, if it can be called that, is that you pay for your health insurance – in premiums or as part of your compensation package – and you should receive the benefit of that insurance and not the automobile insurance for the person that caused the accident.
This is coverage that you would carry on your car? Sometimes the initial reaction from my clients is “why are we using my insurance?” The answer is because you pay a premium for it and you should use it if it’s available. If you are not going to use it, take if off your policy and quit paying a premium for it. Medical expense coverage is usually in the amount of $1,000, $2,000, or $5,000, but it can be more.
You should still have all of your bills sent to your health insurance carrier before you use your medical expense coverage. Some medical providers will try to push you to bill this insurance first. You should not agree to this and should only have them bill your health insurance. The reason the providers push is because they are trying to get paid the full amount of their bill and not the amount that your health insurance carrier or Medicare will reimburse them. You pay for your health insurance premium and you should use it.
Medical Expense Coverage can be a windfall because your bills are paid by health insurance if you have it. Then the bills are claimed against the liability company. Then if you have medical expense coverage, the bills are covered for a third time. At first glance, this may seem like a windfall, but what has happened is that you are just insured in two different ways and then a third insurance company is also responsible to you. You are paying premiums for two of the coverages.
If you have Medicare, you want your medical bills to be paid by Medicare. You need to be careful because some medical providers will claim that since you were in a car accident, they will bill the car insurance company. You should have them bill Medicare. The provider is simply looking to get paid more than the Medicare reimbursement for the treatment. While there is some argument that Medicare is a secondary payer, you will not likely be paid by the car insurance company for months or even years, so the provides cannot expect to receive payment promptly and should therefore bill Medicare.
Medicare is entitled to be reimbursed for what they pay for your medical treatment if or when you settle your car accident claim. Although they can do this, there are two reasons that using Medicare helps you make a better recovery for your injuries. First, Medicare’s lien will be for the amount of the medical bill that Medicare paid. Second, Medicare will reduce the lien by the percentage of your attorney’s fee and the costs involved in the case.
Example: if you go to the doctor and the bill is $100, Medicare may pay $30 to the provider, which the provider accepts as payment in full. If your case had no cost or attorney fee of 1/3, then the final Medicare lien for the bill should be $20, even though the claim for medical bills from the liability insurance company is for the full $100.
Medicaid works differently than Medicare. Medicaid is handled through the Department of Medical Assistance, an agency of the Commonwealth of Virginia. You should still have your medical bills from your Virginia car accident sent to Medicaid for payment. If you reach a settlement with the liability insurance company, then you will need to reimburse Medicaid. Unfortunately, Medicaid does not reduce for attorney’s fees or cost. Medicaid will reduce their lien in certain circumstances but it can be difficult, as you may have to go to the Virginia Attorney General’s office to get approval for a loan reduction.
The Employment Retirement Income Security Act (ERISA) is a federal law that, among other things, allows employers who self-fund health insurance plans to subrogate the money back if someone recovers from a liability insurance company for personal injuries. These policies can cause some issues for your personal injury case. Unfortunately, the way the policies are written allows the health insurance fund to get back its money even before you get paid. These policies do not have to reduce by the percentage of attorney’s fees and cost, so essentially you are paying them to get back 100% of what they paid out. They take no risk in the case and put up no money for the cost, yet they can claim 100% of their money back.
This can be a particular problem when there is not enough insurance coverage. For example, if there is only $50,000 in automobile liability insurance coverage and the amount that the ERISA health insurance company paid for medical bills is $30,000, the amount you could recover would be next to nothing. The attorney’s fee is 1/3 or $16,666.66, leaving $33,333.33. If the cost of the case is more than that, then you would make no recovery unless the ERISA health insurance plan will agree to a reduction. Sometimes these companies are stubborn. If they will not agree to a reduction in their lien in these situations, I suggest to the client that they should just walk away from the case.
If you have private health insurance, you want to have your bills sent to that health insurance for payment. Your goal is to get the bills paid so medical providers will not be calling you for the full amount of the bills and they will not try to send the bills to collections agencies. You will have to pay your co-pays and deductibles, but you want to make sure the bills are paid. After you have recovered from the injuries, a claim will be made for all of your medical bills.
If your health insurance company pays your medical bills, you may or may not have to reimburse them for the payments they made when you settle your personal injury case. Whether or not you have to repay the health insurance company depends on your policy. When a health insurance tries to reclaim money they paid out from a personal injury settlement, it is called “subrogation.”
