I wrote this article to inform uninsured individuals who have been injured in a motor vehicle accident of their rights when they are dealing with medical finance companies. If you are uninsured and in need of medical care, there are several private programs that will direct you to qualified physicians and therapists. To receive treatment, you will sign what is called a “medical lien agreement.” Under this agreement, medical care is provided without any money paid by you up front and in exchange, at the time of settlement or jury verdict, the medical lien company will seek reimbursement from your settlement proceeds for the treatment provided.
These medical finance companies provide an avenue of care for uninsured people who might otherwise go without much needed medical treatment. However, these "treat now-pay later" agreements can be pricey because these companies are assuming a risk that the case might not result in settlement and charge huge mark-ups on the medical service that they provide. For example, an outpatient knee surgery, which normally may cost $5,000, may end up costing you $40,000. Consequently, sometimes the personal injury settlements that our clients receive might not be large enough to cover all of their medical bills. This article discusses the rights of injured victims and the solutions and techniques that we utilize when the bills exceed the money available.
A) MEDICAL CHARGES MUST BE REASONABLE
When the medical finance bills become due, it is important that injured victims understand that the bills can be reduced through negotiation with the medical finance company. If the finance company is unwilling to negotiate or if the parties are unable to agree on an amount, the amount that will be paid will be determined by a court. So, ask yourself, if the finance company has to seek a court order requiring the payment of their bills, what do they have to prove? The simple answer is that they have to convince a judge that their medical charges are reasonable regardless of any one-sided agreement that you signed with them to receive treatment. The law requires the finance companies to prove that what you were charged for your medical care is reasonable as compared to what another patient might pay for similar services.
From what I have observed, the reasonableness of the rates that medical finance companies charge for medical services is always vulnerable to attack. On the other hand, the higher costs charged by the finance company come with the territory because these medical finance companies allow you to see doctors right away without you having to pay any costs up front while they agree to wait months or years to get paid. For this business structure to make sense there must be some kind of incentive for the finance company. After all, this business model would not be viable if finance companies can only expect to receive the “going rate” two to three years after they provided you with the resources necessary to see the doctor right away.
Nevertheless, when we take medical finance companies to court over their billing, we know that they regularly have problems proving that their charges for medical care are reasonable. Now that you know that you, the patient, are in a superior bargaining position with medical finance companies, the question now becomes, what do you or your attorney do to get them to take less?
B) 3 STEP APPROACH:
The remainder of this article discusses the 3 step approach that we use in our office to get medical finance companies to reduce their bills. This approach works both when dealing with medical finance companies or doctors.
STEP 1: THE LETTER:
The first step that we take to reduce our client’s medical finance bills is to send a letter to the finance company to begin the negotiation process. In our view, written communication through a letter is a necessity for negotiating and reducing medical bills with the finance company because telephone calls or emails are meaningless. This letter must be sent to the person in charge of collection for the finance company and it should be sent by certified mail or in a way that you can prove that it was received. Certified mail, although costly, is usually adequate and it makes the letter appear more important. I prefer to fax the letter because the medical finance receives it quickly and I have a confirmation sheet proving that they received the letter.
When I write these companies to tell them that their prices are too high, I nearly always begin the letter by explaining that my client has every intention of paying the reasonable value for the treatment that they received. Again--let me be clear--these companies deserve to be paid the reasonable value of their services. But the prospect of getting money NOW can provide an additional incentive for these companies to agree to accept far less than their gross charges.
I always try to be specific in my concerns about the prices being charged for the treatment. For example, I point out that they invoiced my client for physical therapy at a rate of $350 per visit. Then I tell them that we are aware that other therapists in the area charge health insurance companies around $150 per visit. Also, these therapists that charge significantly less often expect to receive less than this amount.
The amount billed for surgical procedures is likewise often inflated. Often, people who have knee or shoulder surgical scopes have their procedures in an out-patient surgical center. From my extensive experience, I know that these procedures are invoiced to insurance companies in the range of $4,000 to $5,000. Also, I know that the insurance companies only pay doctors between $1,800 to $3,000 for these procedures. Conversely, medical finance companies will often submit invoices to my clients charging them $15,000 or more for these same procedures. I simply inform these companies that I know the "going rate" for the services and that their charges far exceed that amount.
The three other things I nearly always communicate to the finance companies in my letters are: (1) I tell the finance company the amount of money that my client received from his or her settlement. Including this amount in the letter helps the finance company understand why my client needs them to reduce their bill because they are told how much we have in total to pay them and the other medical providers that have liens on my client’s settlement;
(2) I provide the finance company with the monetary amount or figure that my client would be willing to pay. Simply complaining about a bill will get you nowhere. You have to make the finance company understand that you are willing to pay them, just not as much as they want; (3) I always give the finance company a deadline to accept the figure. The collection people to whom we send these letters have to get approval from their supervisors before they can authorize any reduction, so I usually give them ten days to accept my offer.
In our 3 step approach to reducing our clients’ medical bills, a majority of the disputes with the finance companies are resolved by writing a letter and negotiating amicably with the finance companies. However, if that doesn't work, the next step is to retain a physician to review the billing. Hiring a physician to review the finance company’s bills demonstrates that you are very serious about disputing their charges.
STEP 2: RETAIN A PHYSICIAN TO REVIEW BILLING--SEND SECOND LETTER:
As I stated earlier, sending a letter to the finance company detailing the reasons why my client needs their bill reduced often leads to a favorable compromise for my client. However, on occasion, I retain a medical doctor to review the billing that is in dispute. The physician then writes a report that discusses the medical services that my client received and the reasonable value of those services. Of course, hiring anyone costs money, and physicians charge a few hundred or even a thousand dollars for these kinds of reports. However, these reports are usually worth every penny because they can reduce the bill that you owe to a medical finance company by thousands or even tens of thousands of dollars.
Hiring an expert to determine the reasonable value of the medical care that my clients received usually results in a favorable resolution for my clients. It shows the finance company that you are serious about disputing their charges. It also shows the finance company that if this matter has to be decided by a judge, we already have our expert ready to go. Overwhelmingly, cases that don't resolve with a letter get resolved after submitting our expert’s report and a subsequent second letter to the finance company.
However, there are cases where some finance companies continue to refuse to reduce their bills even after we have sent them a letter and provided them with an independent doctor’s report showing that their billing is unreasonable. In those rare cases, we turn to step 3.
STEP 3: INTERPLEADER:
99% or more of the fights with finance companies resolve either with one letter or after we retain an independent doctor to write us a report. However, there are occasions where resolution can only be reached by interpleading the money with the court.
“Interpleader” is a strange legal word which basically means "let's let the judge decide." Interpleader works well for my clients because when we seek a judge’s intervention, we already have an independent doctor who has provided us with her opinion that the finance company’s bills are unreasonable. Plus, once the case is before the court, we can demand that the finance company produce, as part of discovery, checks and invoices to show what they ACTUALLY paid the clinics that treated my client. Invariably, those prices will be substantially less than what they are now asking for in return from my client.
In my experience, the interpleader hearing is nearly always a quick and pleasant experience for my clients. Generally, judges like people much more than companies. Also, inflated invoices from the finance company coupled with us bringing in a live independent doctor with a much more reasonable opinion of the true value of the charges usually results in my clients winning and receiving a verdict in their favor.
At Anderson, Hemmat & McQuinn, we fight to get the most money for our clients, either through a settlement or jury verdict. Still, sometimes the bills are overly inflated or there just is not enough money to go around. In those cases, we will continue to negotiate with medical finance companies to reduce our clients’ bills so that the client gets to keep as much of their settlement as possible. This willingness to fight for you even after you have settled your case is what sets us apart. Call us today if you have been seriously injured and are worried that a medical lien company will take all of your settlement money.