Negotiating medical bills after a settlement is a common practice in personal injury cases. If the treatment was paid for by an insurance company or with a lien, the party who already paid the bills may have subrogation rights (or the right to be reimbursed out of the settlement proceeds).
However, the underlying bills may not be accurate or reasonable. Negotiating the bills can often get them reduced to pennies on the dollar, thus increasing the amount of money you walk away with.
If you have a personal injury attorney, your attorney will often negotiate the medical bills on your behalf. An experienced attorney knows how to get bills and liens substantially reduced and sometimes written off completely.
How are my medical bills paid after an accident?
If you get hurt because of someone else’s negligence, you will need medical attention. The costs of that medical care begin to accrue immediately – well before you have filed an insurance claim or lawsuit against the at-fault party’s insurer. These expenses are often initially covered by:
- your health insurance,
- add-on policies for your auto insurance coverage,
- workers’ compensation coverage, or
- medical liens.
When you do file an insurance claim or lawsuit, you can recover compensation for your losses. This compensation usually includes the costs of your medical treatment. However, if you were allowed to recover compensation for all of your medical bills, without compensating the parties who paid for it, you this could result in a windfall.
You would have benefited from medical care that was initially paid for by your insurance company or with a medical lien. You would have then recovered compensation for the bills that you did not pay out of your own pocket.
To keep you from receiving a windfall, insurance companies and healthcare providers have subrogation rights. Subrogation lets them take back what they have spent on your medical care from your personal injury settlement.
What is a medical lien?
A medical lien is a payment agreement with your healthcare provider. Rather than paying for your medical care when it is provided, you agree to pay for it out of a subsequent personal injury settlement or verdict. It basically allows you to receive medical treatment on credit.
Medical liens are most common if you get hurt because someone else was negligent and:
- you do not have health insurance or personal injury protection (PIP) coverage or other “no-fault” auto insurance, like “Med Pay” insurance,
- you cannot afford the copayments or deductible under your insurance policy, or
- you cannot afford to pay any other medical debts that have accrued while you waited for the responsible party to pay for them.
These liens are important because they allow you to receive medical care. You can receive it, even if you do not have the insurance coverage or the funding for it. However, you will have to reimburse your healthcare providers from your settlement.
Do I pay back insurance companies from my personal injury settlement?
Yes, if your medical care was covered by insurance or paid for with a medical lien, you will typically have to pay reimbursement. That reimbursement will come from your personal injury settlement or verdict.
How can I negotiate with the health insurance company?
When you recover compensation in your personal injury case, insurers who covered your medical care have subrogation rights. They will demand reimbursement for the medical bills they covered during your recovery. The amount of those medical bills, however, is not always fair, accurate, or reasonable. It is often in your interests to closely scrutinize the bills for which they are demanding reimbursement. You should consider negotiating them if they are:
- medically unnecessary,
- unrelated to your accident,
- improperly billed, or
- too high.
Their subrogation rights may also be limited by the “Made Whole Doctrine.”
Opening a dialogue about these issues can protect your settlement amount.
Medically unnecessary care
It is not uncommon for insurance companies to inflate their reimbursement demand with charges for care that you did not need. This allows them to recover more than they should be entitled to receive. Closely reviewing your medical records can uncover procedures and treatments that did not help in your recovery.
Care unrelated to your accident
Insurance companies invoking their subrogation rights may demand reimbursement for all of your medical bills during your recovery period. This will cover all of the care that you received in order to recover from the accident. However, it can also include routine or other preventative care. These are expenses that are unrelated to the accident. The insurer does not have subrogation rights to these expenses, but they may try to recover it, anyway.
In some cases, the medical care that is described in the bill is not what you actually received. Healthcare providers can do this accidentally. They can also do this to inflate the bills that they charge to patients and their insurance providers. Some of the most common ways for healthcare providers to incorrectly bill you for medical care are by:
- upcoding, which uses a billing code for a medical procedure that is similar but more expensive than what you received,
- duplicate billing, where the same procedure is billed multiple times, and
- unbundling, where a series of procedures that are normally done together at a discounted price are billed individually without the discount.
If one or more of these techniques appears in your medical bills, the subrogation demand will be too high. By pointing out these billing errors, you can protect your settlement award.
Too high for the care you received
In some cases, the medical bills are exorbitantly high for the care that you received. It can help to negotiate these bills in order to pay a price that is reasonable for your care.
This is especially common if you are uninsured. Medical providers generally price medical care and procedures using the “chargemaster” rate. They then offer insurance companies negotiated rates or steep discounts against that rate for their policyholders. If the injured person is uninsured, though, they do not get that discounted rate. Instead, they are billed the chargemaster price. This is often several times higher than what insured patients would have to pay for identical care.
In these cases, it is often in your interest to negotiate the price of the medical care you received. You may be able to reduce the rate to what would have been charged if you had
- medical insurance,
- Medicaid, or
Some states legally require healthcare providers to charge patients a reasonable and regular rate.1 Under California law, hospitals have to negotiate reasonable payment plans and discounts with uninsured or low-income victims.2
What medical expenses can I recover in a car accident or personal injury case?
If you have been hurt in a car accident or another type of personal injury case, you are entitled to compensation for your medical expenses. This includes the cost of all of the medical care that is necessary to treat the injuries associated with the accident. It includes your:
- ambulance fee,
- emergency room care,
- diagnostic tests, like a CT scan, x-rays, or MRI tests,
- blood work,
- surgical procedures,
- hospital stay,
- pain medication and treatment,
- follow-up care,
- prosthetics, if necessary,
- occupational therapy,
- physical therapy, and
- psychological therapist sessions, if you suffered mental or emotional distress from the accident, such as posttraumatic stress disorder (PTSD).
An experienced personal injury attorney from a reputable law firm can help accident victims recover this compensation. By establishing an attorney-client relationship with a personal injury lawyer, you can file an accident claim against the at-fault driver and his or her insurance carrier. This can initiate a negotiation that ends with a settlement offer. An accident attorney can demand an amount of money that will cover your outstanding medical bills and pay off any lien holders. If a fair auto accident settlement amount is not offered, your lawyer can file a personal injury claim. This personal injury lawsuit can demand compensation for your medical costs up to the policy limits of the at-fault driver’s car insurance coverage. If that is still not enough, your lawyer can seek out other sources of compensation. This can ensure that you are fully compensated.
- See Texas Property Code 55.004.
- California Health and Safety Code section 127400 through 127446 HSC.