It is important that you know how to protect a settlement from your health insurance company. You may think the settlement is all yours but think again. Many hospitals have started to claim part of the victim’s settlement so that they can collect on the victim’s medical bills. This article will explain how you can protect your settlement.
Here’s how the health insurance system works. You buy a policy from a health insurance provider. The provider has contracts with different hospitals. Under these contracts, the health insurance provider will pay the hospital a fixed charge for the different services. The terms of the policy will indicate that you have to pay a certain amount to the hospital for any service you may avail from the hospital. For example, if the hospital generally charges $180 for an x-ray, under the contract with the hospital, the provider will agree to pay $75 and under the policy you will be required to pay $75. So the hospital gets a total of $150 but the actual x-ray charge is $180. No one pays the remaining $30. The hospital will attempt to claim this amount from any settlement you may receive. While this example deals with only $30, in case of an accident, the cost could be much more and so the amount that the hospital may seek to claim from your insurance settlement could be significant. While this practice referred to as balance billing has been declared illegal in some states, hospitals tend to ignore the law in an attempt to improve their balance sheet.
How The Claim is Made
Here’s an example of how a hospital can make a claim on your settlement. Tom Harris was injured in an accident and was taken to theGreatHospital. Tom has a medical insurance policy from High Time Insurance Company. At the time of admission, Tom informs that hospital about his insurance policy and that he was injured in an accident. Generally, hospitals have the right to file a lien on any accident settlement which a patient may receive after the patient has been discharged from the hospital after receiving medial care. The lien must be filed within a fixed time which generally ranges between 10 to 30 days. The hospital need not obtain the patient’s permission to file the lien. TheGreatHospitalfiles a lien against any settlement that Tom may receive.
Tom’s accident claim was settled for $20,000. Tom’s medical bills ran up to $13,000 but with the insurance, it is just $10,000. High Time Insurance Company paid the Great Hospital $7000 out of the total $10,000 while Tom was to pay the remaining. However, rather than just collecting $3,000 through the lien they had against Tom; the Great Hospital collected $6,000 ($3,000 from the remaining hospital bill and another $3,000 for the difference from the actual hospital charge and the discounted amount due to insurance). Hospitals will try to recover the difference from the insurance discounted amount and the actual hospital charges so that they will not incur any loss, they have already broken the law by doing this.
Initially many patients ended up paying the hospitals but as the awareness spread, many started suing the hospitals. Courts inTexasandWisconsinhave passed big judgments against the hospitals. A landmarkTexascase is that of Satsky v.United States. The court held that once the hospital has received the entire payment from the patient’s insurance company, the hospital cannot recover any more money. Since the insurance company has paid the hospital bill in full, there is no debt remaining and in the absence of a debt secured by a lien, the lien cannot attach. In Dorr v.SacredHeartHospital, aWisconsincourt held that this practice is nothing but a poly by the hospital to collect as much money as it possibly could.
InMaryland, the Attorney General has specially warned hospitals that the practice of balance billing is against the law. Similarly, warnings have been made by the insurance commissioners in Florida and Arkansas. The public health regulations inMichiganspecifically prohibit this practice.
Your Health Insurance Company
Depending on the terms of your health insurance policy, your health insurance provider may have a right to a part of your accident settlement. Generally, the insurance provider can recover the entire amount it paid for your medical expenses. This is known as subrogation. Subrogation is the legal substitution of one person or thing in place of another. By the process of subrogation, the insurance company tries to prove the liability of the third party and collect from this party the amount of damages paid to the assured. The insurance company is entitled to an assignment of any rights of recovery the insured may possess against any party for loss or damage, to the extent that payment is made by the company.