After being injured in a motor vehicle collision, you may receive a letter from your health insurer telling you that it looks like you were injured in
an accident. At first, you may think, “How nice.” But if you read further, you will see, THEY WANT YOUR MONEY! Even worse, they are entitled to it
by law, at least some of it.
The letter will generally tell you that the type of treatment you received is generally consistent with an injury that could have been caused by the negligence
of someone else. It will ask you to fill out a form and return it to them. Generally, the form will ask how your injury occurred, it will request the
liability insurance information for the person that caused your injury, and it will ask whether you have an attorney. The insurer is looking to exercise
its right of subrogation: its right to stand in your shoes and collect back the money it paid for your health care. This may surprise
Luckily, the insurer’s subrogation right takes the form of a lien on any money you recover, and is not a debt that you must pay out of
your own pocket. A lien is a property interest that the insurance company has in your legal case either created by law, or by your health insurance
contract. If you don’t pursue your case, you never have to pay them back.
The lien upsets many injured people, but it is really not as bad as it seems. The reaction I hear the most from clients is, “Why do I have to pay them?”
or “What have I been paying for all these years?” On some occasions, clients have not believed me when I have explained the lien to them. But it is
true. The public policy behind the lien is that you have health insurance to protect you, but it is not the health insurer’s fault you were injured.
It would be unfair to the health insurer if you collected money for your injuries, which includes payment of medical bills, and then did not have to
reimburse them. The term is double dipping. But really, if you use your health insurance, for the most part, you are going to wind up ahead, even if
you have to pay them back.
Let’s start with the basics of health insurance and its involvement in your personal injury claim. First, you should always use your insurance, don’t let
the fear of a lien prevent you from using the benefits that you and your employer have paid for. Although it may seem unfair, if you look at the math,
it’s really okay. For example, if you examine a one of my client’s bills, you will see a scenario where a client went to her doctor three times and
went to about ten physical therapy sessions. The bills total about just over $3,000. Ignoring other insurance such as PIP (personal injury protection)
and ignoring any other treatment (hospital, MRI, etc.), if she did not use her insurance, she would have to pay the medical providers back the full
$3,000 at the end of her case, win or lose. Sure, I may be able to negotiate the bill down, but legally, she owes the full $3,000. Now look at the
same treatment with health insurance. The providers billed $3,000, but because she had health insurance, the contracted rate is lower, and the insurer
might pay $1,800. Then, under Maryland law, when the case settles and the time comes to pay the lien, we only have to pay back $1,200. In our demand
to the at-fault driver’s insurer, we are permitted to demand the full $3,000, that is paid (along with lost wages and pain and suffering), but we only
pay $1,200 back to the insurer, that nets $1,800. We are permitted to claim the larger amount due to the Collateral Source Rule. This rule states that
since the client paid for the health insurance, she gets the benefit. In other words: Why should the injured person pay thousands of dollars a year
for insurance that in reality benefits the at-fault party? Health insurance makes a huge difference in the amount of money a client receives at the
end of the case.
One issue may arise when the health insurance policy is controlled by federal law as opposed to Maryland law. These policies (for example, ERISA insurance
policies) are not controlled by state law, and the insurer may not be required to reduce the lien. Whether they must reduce is contract specific. The
attorney must look at the subrogation language to see what her client’s rights are. In addition, she must also check the policy’s legal status to see
if it is truly the type of policy that can refuse to reduce.
If you are injured in a motor vehicle collision, or suffer any type of bodily injury, you should almost always use your health insurance. Don’t worry about
the liens, relax, take care of yourself, get better, and let your attorney worry about it.
By Craig I. Meyers, Esq.