So you have health insurance and you would assume that after your car crash the hospitals treating you would simply take your information like they would any other time and bill your health insurance, right? Wrong. Overwhelmingly, hospitals are not billing health insurance for the care received by people injured in car accidents. Instead, hospitals are recording hospital liens so they can get paid a higher rate from the proceeds of any eventual settlement with the at-fault insurance company. You might ask yourself, why wouldn’t a hospital want to get paid from health insurance? The reason that hospitals try to avoid health insurance is that health insurance companies have re-pricing agreements with hospitals. This is why you may notice a huge bill from a hospital for an ER visit where the health insurance only paid a fraction of the total bill. This is re-pricing at work.
Hospitals work intensively to negotiate these agreements with insurance companies. Their motivation is to shore up contracts with large scale revenue streams. A hospital landing a new health insurance company as a provider assures that patients with that particular insurance provider will frequent the hospital and bring more money to the hospital. However, years ago, some hospitals in Colorado realized that in certain cases, they can recover a higher percentage of their original bill by pursuing patient’s individually and not submitting their bill to the patient’s health insurance. This allows the hospital to gain the advantage associated with reaching these agreements with health insurance, but also allows them to “feather their nest” by cherry picking when not to submit their billing to health insurance companies. Specifically, some hospitals do not submit their billing to health insurance when they learn that the patient stands to recover money from an at-fault person’s liability insurance company. Motor vehicle crash claims are fertile ground for this specific conduct.
Why should a patient care whether the hospital gets paid from health insurance or through the negligent driver’s insurance? Insurance is insurance, right? WRONG!
The answer is that very often, money that gets paid to hospitals from an at-fault party’s insurance is taken right out of the hands of the patient. While health insurance is in place to pay these bills at a lower rate, often with little or no obligation on the part of the patient to ever pay back those charges, auto insurance will simply pay the injured person. If there is a hospital lien recorded, then they are required to include the hospital’s name on the settlement check. That allows the hospital to make an unfair demand for a greater percentage of recovery of their medical charges (much more than health insurance would pay them) with the threat of holding up the final settlement if they don’t get their way. If the patient wants to get anything, they often have to succumb to the demands of the hospital. To that end, the hospital gets paid more while the injured person gets less. This is a win for the hospital and a big loss for the patients. So, now that we understand that some hospitals are doing this and we understand their economic motivation, the next question is whether it is legal for them to do that or not.
Is it legal? Up until May 29, 2015 no laws prevented the hospital from cherry picking between using the patient’s health insurance or recording a lien and encumbering a settlement. However, Governor Hickenlooper signed Senate Bill 15-265 on Friday, May 29, 2015. Senate Bill 15-265 resulted in changes to language found in C.R.S. § 38-27-101 which now requires that hospitals must bill the insurance of injured people in the same way that they bill insurance of non-injured people. Additionally, once the hospital initially files the lien and is later told about the existence of health insurance, their obligation is to act in good faith to submit billing to the proper health insurance company and get paid in that regard. And, the laws also provide that if a hospital chooses not to bill available health insurance or ignores information provided to them subsequently after they record a lien, the injured person can bring an action against the hospital in district court where they can recover two times the amount the hospital is seeking in a lien. For the first time, patients in Colorado have a right to demand that a hospital bill their health insurance and not cherry pick between health insurance and recording a lien.
At Anderson, Hemmat & McQuinn we feel that knowledge is power. Knowing your rights is key to understanding your available arsenal of responses to any issue that arises. Many of our personal injury clients do not realize, before they meet with us, that their health insurance should be the primary payer of the medical care they received as a result of a motor vehicle collision injuries. They are often surprised to find out how their ultimate recovery in a personal injury claim can be profoundly affected by how their medical bills have been paid. Please don’t let yourself be surprised. Call 303-782-9999 to speak with one of our experienced personal injury attorneys today for free. We are happy to help you understand the rights you have and how to obtain a better recovery in your case.