“I just want to make sure that my bills from the accident are paid.”
I hear this phrase in the majority of meetings with new clients, although most don’t really care how they get paid, or by whom. Under the surface there are a myriad of competing factors that can affect a client’s bottom line.
First, it is important to understand the basic premise behind health insurance.
A health insurance company, like any insurance company, is in the business of assessing risk. They do this by analyzing how likely it is that an individual (or group) will need care, and how much that care will cost.
This helps the insurance company set the amount of the premium. That risk is spread out among all of those insured. Some people will need the insurance company to pay out more than it takes in, others will need less.
Why a health insurance company asserts a lien in a personal injury case
This system is often confusing and upsetting to many injured people. Time and time again I hear, “Why does the insurance company get paid back? That is insurance that I paid for, now when I want to collect it they get it all paid back?”
A lien is just a fancy way to say IOU: “You pay now, and I’ll pay you back later.”
For example, if an insured walks down the street, trips on their own feet and breaks their leg, the health insurance company will pay. The insurance company will have no lien, and will simply absorb the costs.
On the other hand, if someone hits the insured with their car and breaks their leg: (1) the insurance company will pay, (2) they will look to the responsible party to pay them back. The way they do this is through asserting a lien. A personal injury claim is considered to be an asset. Like any other asset, a lien can be filed against it.
The same analysis holds true with PIP – Personal Injury Protection. This no-fault insurance (also called Med-Pay) is designed to pay medical bills, and in some instances lost wages, resulting from injuries sustained in an auto accident.
If the injured person seeks medical treatment that is related to the accident, the PIP carrier will pay for it. The PIP carrier will then try to get repaid by the person or company who caused the injury, either directly or by utilizing the plaintiff’s attorney hired to go after the at-fault party.
Finally, any doctor or health care provider can also assert a lien for treatment that they have provided.
Many hospitals automatically hand patients lien documents along with their discharge paperwork when they are released from the hospital. Like PIP or health insurance company liens, these liens represent a debt that they want to collect for the medical services they have provided.
How a lawyer can help
There are ways to maximize the amount of money that ends up in an injured person’s pocket after all is said and done.
The goal of any good plaintiff’s attorney is to put the entire episode to bed for the client, pay off all of the bills, and put the most amount of money in the client’s pocket as possible.
Lien negotiation can play an important role in that process. For example, virtually every major health insurance company has “sweetheart” deals with major hospitals and medical providers. What this means is that when a patient comes in to the ER, if they have no insurance they are charged full price. If they have health insurance, the health insurance company will have negotiated a lower price for their insured.
The result: a person with health insurance will be billed less for the exact same services. Thus the repayment is less, and the injured client pockets more money. For that reason it is often much more advantageous for injured people to run all of their bills through insurance (either PIP or health insurance) rather than paying out-of-pocket.
Further, once a plaintiff’s attorney is involved in a case, that attorney is responsible for chasing down the at-fault party and their auto insurance to pay for the damage.
In return for this service, the injured client agrees, via contingency agreement, to pay the attorney a percentage of the money they bring in. Much of this money obtained by the plaintiff’s attorney goes to pay back either the injured person’s health insurer or the medical providers directly (liens) – they are getting a great service by not having to chase down the money themselves.
This forms the basis for most of the lien negotiation. It is generally understood that health insurance companies, and providers, will agree to cut their bills by 1/3 (the same percentage the plaintiff’s attorney is taking) in exchange for the plaintiff’s attorney fetching their money for them.
Again, this can have a big impact on the amount of money that an injured person ultimately puts in their pocket.
Finally, there are situations where the amount of bills far exceeds the amount of available insurance.
First, in these situations under Oregon law, the PIP carrier must waive their lien and agree to take $0.
Second, most health insurance companies and direct providers will agree to take drastic cuts to satisfy their outstanding bills. Many times there is a simple deal where the available incoming funds are split: one-third of the total recovery to the injured person, one-third to the plaintiff’s lawyer, and one-third to the medical providers.
While not perfect, everyone gets something: the injured party’s bills are wiped away, and the page can be turned on a painful chapter in an injured person’s life.