Can a Medical Provider Bill You After Accepting Insurance Payment in a Personal Injury Matter?
Sometimes, when a medical provider learns there is a third-party at fault for an injury, they bill an injured party's insurance and then seek to recover the "balance" from the injured person's recovery. In fact, sometimes they even try to collect twice (which is fraud, and well-beyond the scope of this article), but can they even attempt to collect the "balance" of the bill after accepting insurance payment?
This is a hotly debated area of the law (mostly because medical providers have teams of attorneys devoted to collecting such "balance bills"), but as a general matter the answer is "no." Of course, there are some common exceptions to this general rule, and each case must be looked at individually by a qualified professional, but lets talk about the general rule.
First, if you have health insurance, that means you have a contract with a health insurance company. That health insurance company, in turn, has contracts with various medical providers to accept pre-negotiated rates for various covered services. Typically these contracts provide that accepting payment from the health insurance company constitutes "payment in full" and that, except for co-payments, the insured patient is not responsible for any other charges. Under these circumstances, courts hold that injured patients are third-party beneficiaries to the health insurer-medical provider contracts and, therefore, prohibit "balance billing" based on the terms of that contract. Nahom v. Scottsdale Mem. Hosp., 180 Ariz. 548, 885 P.2d 1113 (App. 1994).
Second, Arizona law broadly prohibits "balance billing" where a person is "enrolled" with a health insurer, even where the insurer fails to pay. ARS 20-1072provides that, even "if the [health insurance] organization fails to pay for covered health care services as set forth in the enrollee's evidence of coverage or contract[,] the enrollee is not liable to the provider or hospital for any amounts owed by the organization and the provider or hospital shall not bill or otherwise attempt to collect from the enrollee the amount owed by the organization." A medical provider violating this law may be assessed a penalty of up to "three times the amount of the provider or hospital charges at issue" by the Department of Insurance.
What exceptions commonly arise?
It is impossible to address all exceptions, but the most common exception asserted by medical providers in the personal injury context is under another Arizona statute known as the Healthcare Provider Lien statute. This statute permits a healthcare provider to assert a lien against a third-party recovery for the "customary charges." ARS 33-931, et seq. Although such liens are only enforceable against the tortfeasor and not the injured person, Blankenbaker v. Jonovich, 205 Ariz. 383, 71 P.3d 910 (2003), typical settlement agreements remove this barrier as a practical matter because the injured person agrees to the hold the tortfeasor "harmless" for any such liens. Moreover, assuming the lien attaches to the recovery, as a matter of law, the same concern arises where a judgment is obtained.
Since the medical provider is not pursuing the "enrollee," but is pursuing the tortfeasor or recovery itself, many medical providers argue such tactics are not prohibited by ARS 20-1072.