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Payment Of Your Medical Bills By Your Insurance Is Not Free

In this article we explain how payment of your medical bills typically works in a personal injury claim, and discuss the concept of reimbursable med-pay.

How does med pay work in a personal injury claim?

So you were injured in an automobile accident that was not your fault. You suffered injuries to your neck and back, and some cuts and abrasions as well. You were taken by ambulance to the hospital from the scene of the accident, and continued with medical care and physical therapy as prescribed by your doctors. You hired an experienced attorney right away, who helped you find the right medical care and represented your interests, negotiating with the insurance companies and making sure that you received the compensation you deserve. During the course of your claim, some of your medical bills may have been paid by the med-pay portion of your auto insurance policy, your private health insurance, Medicare, or Medi-Cal.

These insurance companies have contracts with the hospital to pay a certain amount for a particular service, otherwise known as a “negotiated rate.” This rate is typically much less than the amount that the hospital would charge a private party (you) for the services, called the “billed amount.”

So the question becomes, if your insurance has already paid for medical services, must you pay them back for what they paid?

Whether you have private health insurance or Medi-Cal, the answer is YES, they are entitled to reimbursement.

Reimbursement to auto insurance or private health insurance companies

If you look over the terms of your contract for your health insurance or car policy, you will almost always find a clause that discusses reimbursable medical pay. Essentially, whatever the insurance company paid (negotiated rate) to the medical provider, they are entitled to reimbursement from any settlement, judgment, or award that you receive from the defendant or their insurance company. Your insurance will be entitled to put what is called a “lien” on the compensation that you receive for your injuries. They will be the first to be paid before you pay for legal services and receive the remainder of your funds. To see the exact terms of reimbursement for your policy, look over your insurance contract.

Reimbursement to Medi-Cal 

Similar to private health insurance companies, government-provided insurance such as Medi-Cal is also entitled to reimbursement. Unlike the terms of a contract with your private insurance, this right to reimbursment is actually prescribed by law. Section 14124.791(a) of California’s Welfare and Institutions Code states:

“Subject to the director’s prior right of recovery, a provider who has rendered services to a beneficiary because of an injury for which a third party is liable and who has received payment under the Medi-Cal program shall be entitled to file a lien for all fees for services provided to the beneficiary against any judgment, award, or settlement obtained by the beneficiary or the director against that third party.”

So both private health insurance and Medi-Cal are entitled to reimbursement from your settlement amount for what they have paid.

Negotiating with private insurance or Medi-Cal

Sometimes, however, the amount of the insurance company’s lien is a large percentage of your compensation, and would not leave you with enough for the pain and suffering you have endured as a result of the injury. Is there anything you can do to lower the amount owed to these insurance companies?  The answer is yes.

Don’t expect an immediate payout of your settlement by your attorneys where there is an insurance or government lien

It will often take weeks or months for your attorney to receive the final lien amount owed to your insurance for medical payments made by them.  Your attorney is legally obligated to pay the lien amount from the settlement proceeds. Failure to reimburse the insurance company will lead to the attorney being personally responsible to pay the lien from his fees.  So be patient during the lien negotiation process. It is to your advantage.

Final thoughts

If you have been fully compensated for your injuries as the result of the accident, chances are that you have had an experienced personal injury attorney on your side to walk you through what can be a very complicated and frustrating process. Your attorney will often be able to speak to these insurance companies, and use their legal knowledge and experience to negotiate a lower lien amount, leaving you more money for what you have had to endure as a result of the accident.

For over 30 years The Law Offices of Vann H. Slatter have helped those injured in auto collisions, slip-and-falls, dog bites and all types of personal injury situations. We are experienced in negotiating with insurance companies and Medi-Cal to lower the amount of reimbursable medical payments, and will fight to get you the compensation you deserve. Call today for your free consultation at (310) 444-3010 or toll-free at   (888) 293-0404.