How to avoid Insurance and Hospital Liens on your Personal Injury Case
Often people who are involved in catastrophic injuries from car accidents find themselves in the difficult situation where there just is not enough insurance money to even pay the medical bills. Even when the liability is clear people do not see the need to hire an attorney in these situations.
How and Why to Beat a Hospital LienThis first situation involves cases where the liability limits on an automobile are going to be paid because the severity of the injury s so far outweighed by the policy limit available. The situation a hospital incurs a lien on the settlement by filing a notice with the insurance company and the patient. The effect of this lien is that the money comes first to pay the hospital bill before any damages of the patients are paid. Since most people in intensive care Incur Medical expenses at the rate of $25,000 per day, the medical expenses will often drown out any policy limits available from an opposing party even as high as $100-$500,000. Hospitals have a huge incentive to put a lien on a personal injury case at the highest possible rates that a hospital can charge (think $200 for an aspirin or $100 for a pillow). The alternative is to submit the bills to the patient’s Medicaid or Medicare Insurance where the bill will be reduced by as much as 60% or more. So the hospital takes the position that Medicare and Medicaid are payers of last resort if the patient has no other insurance available. In this case, they consider the automobile insurance of the person who hit you to be the “other insurance“. They can avoid filing the claim with Medicare or Medicaid For up to a year following the accident in order to lean the tort injury case and get payment at the highest levels.
The advantage the patient has is that they do not file a hospital lien for about 30 days following the accident. These 30 days are critical even though the patient may be physically unable to do anything about their personal injury claim while they are recovering. Hiring an attorney at this stage, even the day of the accident if possible, becomes the most critical move. By doing this, the patient is getting two advantages. Number one. Any amounts that are payable for the hospital lien have to be paid out of the settlement after paying the attorneys fees first. So the hospital has access to even less of your settlement money. This allows your settlement money to go towards the hiring of an attorney instead of to pay the hospitals highest billing rates known to man. 2. It also allows the attorney to swoop in while you are recovering and arrange a settlement for the policy limit with the opposing driver after doing appropriate asset checks on the person who hit you, and verifying any other coverage that might be available while you are still in the hospital convalescing. If the attorney is confident that there is no other coverage or assets, he can arrange a settlement for the policy limits within days following your accident. The case is settled, Releases are signed, and the money is distributed before the hospital even knows that a automobile accident claim exists. Once the hospital has missed out on the opportunity to file a lien, they are forced to submit your bills to Medicaid and Medicare as they should have done in the beginning. This tactic requires a professional and swift attorney who will work on settlement of the case and nothing else for several days in a row until the case is settled and money disbursed.
The Particulars of Beating the Hospital LienThe attorneys at Macfarlane LegalWorks specialize in this maneuver saving the maximum amount of the settlement for the client. Of course, the payment of Medicare or Medicaid on a personal injury settlement does trigger the obligation to repay Medicaid or Medicare. However, there are rules in place that substantially reduce these repayments to account for your Attorneys fees and, in the case of Medicaid, there is even a large reduction when the insurance money is inadequate to pay your tort Claim. (If you are only recovering 10% of your claim you can prevent Medicaid from asserting more than 10% of what they paid...then you get to reduce their payback for attorney fees as well!)
The critical part of these strategies is getting an attorney on board as soon as possible. The goal is to get the case settled and paid while you are still in the hospital. Most people assume they can deal with the Insurance issues after the patient recovers since the patient is often dealing with a serious injury and change in their life and an added disability they have never had before. However, this requires speed, savvy and knowledge of how to get the Auto Insurance for the car that hit you and the car you were riding/driving to work with the attorney. Waiting until the patient leaves the hospital not only adds additional medical bills that have to be paid out of the settlement, but also allows time for the hospital to refer the case for filing of a lien. They are very good at this and have a separate company that does nothing but review cases that were caused by auto accidents and getting the lien filed which takes less than ten minutes once they have identified your case as a potential recovery where the insurance from the car will produce much higher paid bills than collecting from Medicaid, Medicare, or from a patient who does not have employment or assets to pay the bill.
How and Why to Beat the Health Insurance LienIt is much harder to write a simple guide for beating health insurance liens because all health insurance is not alike. The rules are different for Medicare, Medicaid, private health insurance, employer provided health insurance even if you pay part of the premium, and employer provided health insurance which is not through an insurance company but self funded by the company itself like Walmart, Delta airlines, Unionized jobs, or other large corporation that self funds. It is even difficult at first glance to know for sure which category your health insurance is in. Often clients tell me it is regular insurance provided by the employer because they have dealt with Select Health, Blue Cross Blue Shield or other insurance company. On further investigation, we find out that these insurance companies have been hired to administer a plan that is self funded by the company which changes entirely how you deal with the lien as an attorney.
Suffice it to say that the key element in almost every health insurance case except Medicare and Medicaid is that the lien continues to grow as you continue to incur bills...every single day you remain in the hospital adds at least another $10,000 to your lien that must be paid back to the health insurance. If you are in intensive care, we usually estimate $25,000 per day, especially if you are undergoing expensive surgeries or other procedures. Now for the KEY STEP...get the case settled with the auto insurance for the car that hit you and your own insurance as soon as possible. My personal record is 2 days after the accident. In the case of eventual death of a patient, the case must be settled before the funeral if possible. This, of course, requires the help of a lawyer since the client is often unable physically to handle these matters as they are also making health decisions. Just any attorney will not do either. The fees of the attorney are usually on a contingency fee. This means they are not paid until your case settles and their fee is a percentage of the the total settlement. So if they settle for the policy limits, the fee is the same whether the attorney works hard to beat the liens or waits until you are out of the hospital. Attorneys do not report to clients that they could have settled sooner but just did not get around to it. They just un-apologetically inform the client that unfortunately the lien of their health insurance used up all of their settlement so that the attorney and the health insurance company take the settlement and the client ends up with nothing. Clients do not know enough to understand that a trained and swift attorney can move in quickly and settle the case, thus cutting off how much the health insurance can take of the settlement. In some cases, if the money is dispersed and gone, the United States Supreme Court has ruled that the health insurance company has missed their opportunity to take the settlement and no longer has ANY right to do so despite a contract that states otherwise. This rule is thanks to the rules of Equity applied by the courts which health insureres never tell you about.
The Particulars of Beating a Hospital LienOnce a health insurance company knows the bills they are receiving are the result of an accident, they have an entire department who immediately investigates the accident to find out which auto insurance companies are involved in the claim. They gather the name and claim number of the car that caused the injury, and the insurance of the car you were riding in that would likely be providing underinsured motorist coverage after the other car insurance has paid out its limits of coverage. Once they have this information, they are only days away from sending certified letters to the insurance companies asserting their lien on any settlement or other funds owed by the Auto Insurance Company to the patient. Once the Auto Insurance Companies have been placed on notice, they are bound by law to pay any funds they owe for the accident FIRST to the health insurer even if it means you never see a dime of the settlement. So you can see the importance of moving quickly to keep the settlement proceeds free of any health insurance liens.
It may not be possible to avoid the health insurance lien entirely due to the variety of different laws that cannot be delineated here. But the critical point here to remember is that "He who controls the money has the greatest leverage." Insurance companies are extremely reasonable once they know they do not have you over a barrel, and having a valid lien served on the Auto Insurance Carrier is definitely the best way for your health insurer to have you over a barrel. Once a case has been settled and distributed, as a lawyer, I often make an offer to the health insurer that is far below the amounts they have paid, and I follow it up with the statement that since we have already distributed the funds, the United States Supreme Court has already ruled that they have no further rights to the money and have no recourse against their plan member. It is just too late for them at that point.
You will notice that this strategy, again, has as its vital KEY, the hiring of a lawyer immediately after the accident. When I say immediately, I am saying the same day as the accident. Every day another $25,000 is billed by the hospital and paid by the health insurer, is another $25,000 out of your settlement. People who ask me, "Is it OK if we come meet with you next week?" I tell them they can if they want as it will not affect the amount of fees I recover to represent them, but if they know they will lose $25,000 per day, what items on their schedule do they believe are more important that $25,000 per day? Why are you hiring me as an attorney to maximize the settlement amount, but throwing away $25,000 per day as fistfuls of cash. I have yet to meet a client that thinks that is a good idea for them.
However, hiring any attorney will not do. If the attorney does not even understand the importance of dropping everything they are doing and driving straight to the hospital and getting records, signatures and photos, do not even bother with them. They are just going to pooch the case with liens and take a huge fee for it without even telling you what they have just done to you.