Anyone who has had a visit in recent years to a hospital emergency room after a traumatic event — a traffic collision, slip-and-fall injury, dog bite — will likely have received a stack of forms from the hospital and from their health insurance company asking for details about the incident. Was another person responsible for the injury? Do you have an attorney representing you? Did you have any other applicable insurance for medical expenses, such as medical payments coverage on an auto insurance policy? Are you pursuing any claims against other people for these injuries? Health insurance in personal injury claims has become a very complicated situation.
The hospital and the health insurance company aren’t doing this out of idle curiosity. They’re doing it because they want money out of any settlement or verdict relating to the injury incident. In the “old days” — 30 or 40 years ago — a person might get checked out in an emergency room after a car crash, the hospital would generate a bill that would go to the patient’s health insurance company, the health insurer would pay the hospital the reduced rate they’d previously agreed upon for these services, the hospital would waive or write off the difference, and the patient would never hear from the hospital billing department or health insurer again. If the injured person received a settlement from the auto insurer for the person who caused the accident, it was rare that the health insurance company or any medical provider who had accepted health insurance payments would ever show up asking for a piece of that settlement.
But times have changed. These days, it is inevitable that the health insurer will ask to be reimbursed for their payments out of any personal injury claim settlement. And the difference between bill and insurance payment that the hospital used to waive or write off? Well, not any more. Many hospitals will try to “balance bill” the patient for these amounts, especially if they are aware of any liability insurance being available to the patient for a potential settlement. Although the law in California says that such “balance billing” is often prohibited, health insurers and hospitals have become clever enough to re-write their contracts to get around this prohibition.