Protecting Personal Injury Settlements from Medical “Liens”

So, you’ve been injured in a car crash that was the other driver’s fault. You received medical treatment at the emergency room, and you followed up with an orthopedic doctor who recommended physical therapy for several weeks due to the injuries you suffered in the accident. You have health insurance, so you are not worried about the medical bills. Even so, you begin to receive medical bills from the hospital and doctors who are not billing your health insurance. You are worried about the unpaid bills affecting your credit. So what should you do? Pay the medical bills out of pocket? Set up a payment plan? Ask the hospital to bill your health insurance? Send the medical bills to the insurance company for the at fault driver?

The issue of how to handle medical bills arising from injuries received in an accident can be complicated. Many people who are injured in an auto accident are surprised to learn that the auto insurance for the at-fault driver is under no obligation to pay ongoing medical bills. In fact, it never happens. While the auto liability insurance company will likely make a settlement offer at some point, it will be in the form of a one-time lump sum payment, usually after your medical treatment is completed. Once the auto insurance pays the settlement, they are generally fully released from any further duty to pay.

To make matters worse, the hospital will often refuse to file your medical bills with your health insurance – which generally only pays them a fraction of their bill. Instead, the hospital may claim a “lien” on your injury settlement and attempt to collect 100% of its bill from your personal injury settlement. This means your bills may remain unpaid for many months. Even worse, the hospital may take most of your injury settlement for payment of the hospital’s medical bill – even though you had valid health insurance.

Here at Hall & Collins Injury Law, we take every legal precaution to make sure this does not happen to you. We will send all the necessary legal notices for the hospital to file your medical bills with your health insurance, and to preserve your right to dispute the charges if the hospital fails to do so.

After your health insurance pays your medical bills, your own health insurance company may make a subrogation claim against your settlement proceeds. We will continue to fight to protect your settlement from any subrogation claims or “liens” from your health insurance company. Generally, we can protect most, if not all, of your settlement proceeds, but you will need an experienced injury attorney to navigate these waters. We routinely request the health insurance plan documents to review and confirm what type of insurance is paying your bill. Whether the insurance company is legally entitled to any reimbursement can depend on the following factors:

  • whether the insurance plan is a federal employee plan
  • whether the insurance plan is a qualified ERISA plan (“Employee Retirement Income Security Act”)
  • if it is an ERISA plan, whether it is a self-funded plan or an insurance backed plan
  • if it is a non-ERISA plan, then it is likely subject to state law and will receive little to no reimbursement, depending on the facts of the case

A competent injury lawyer will hunt down the plan documents plus get the Plan Administrator to produce the plan’s tax document (Form 5500) to verify what type of plan paid your bills. If you are insured by Medicaid/Medicare, the governmental program will also have to be paid back out of the settlement, but a much reduced rate that your injury lawyer should negotiate way down.

If the health insurance plan is a private insurance carrier, said plan has a subrogation interest that it can assert against your personal injury claim (not you personally). However, the insurance company will have to prove you were made whole by the personal injury settlement, which is almost impossible to do if the settlement documents are drafted in the appropriate manner. A skilled injury attorney can protect you on the back-end of the claim by drafting the appropriate settlement documents and severely limiting, and many times eliminating, any amounts you have to reimburse out of your settlement.

Call the experienced injury lawyers at Hall & Collins Injury Law are waiting to help you! Just call 706-351-6055 to speak with an injury lawyer for your 100% FREE case consultation.

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