You have just been in an accident, suffering injuries, and now you have a stack of medical bills. The settlement is finally about to come in, but you are unsure how all those medical bills are going to get paid. Do they get paid from the settlement? Will your insurance cover the bills? Can you collect your full settlement without paying off those bills first?
All great questions and we are about to answer them all for you.
As far as your settlement is concerned, your medical bills are one of the largest contributing factors in the formula attorneys use to figure out a settlement number. In addition to the current bills that must be paid, they also consider any future bills, including things like medicine and therapy, as well as the severity of the injury regarding the multiplier that will be used for pain and suffering.
In terms of paying the bills, this will largely depend on how much of the medical bills are outstanding that have not been covered by insurance companies (both yours and the defendant).
Most auto insurance plans will have something called PIP coverage, or personal injury protection. Every state has a different requirement as to how much coverage is mandated as a minimum. For the sake of argument, let’s assume you have a $1,000 deductible with $20,000 in PIP coverage at 80 percent. This would mean the insurance carrier would cover 80 percent of the money after your $1,000 deductible, or $15,200. That would leave you with an outstanding debt of $4,800. If the trail stopped here, the $4,800 would come off the top of the settlement and be paid before any funds being distributed to you or your attorney.
In addition to PIP coverage, you can purchase alternative medical plans, such as AFLAC, to cover whatever the PIP coverage does not pay for. Finally, your personal insurance may also be used for these bills, dependent upon your coverage.
Now, just because these bills are paid via any of these outlets does not mean they are not still factored into the lawsuit. That payment has nothing at all to do with the number that is presented in a settlement. However, if your insurance or the defendant’s insurance companies do not pay for these bills, your attorney will more than likely work out a temporary arrangement with the doctors, hospitals, and/or insurance companies to make payment once the case is settled.
In such a scenario, you will more than likely be required to sign a “Letter of Protection” for the medical provider. This ensures the provider that once a settlement is made, all bills will be paid. This is, in essence, putting a lien on the settlement whereby, prior to any settlement or commission payments being disbursed, the medical provider will receive their payment.
What If I Received Treatment with No Letter of Protection or Lien?
If this is the case, you have an opportunity to possibly clear more money from the settlement. If there is no lien against the settlement, you are still required to pay the bills, but you and/or your attorney may be able to negotiate a better rate. This is especially true when insurance rates are not originally quoted. Most hospitals and doctors have a published rate but also a rate that is far lower they accept from insurance companies. If you have a personal injury attorney, he or she will be very familiar with these rates and negotiate on your behalf to have these bills lowered to a more acceptable amount.
What If My Settlement is Less Than My Medical Bills?
This is a rare situation, but it can happen. For instance, the business or person you are suing goes out of business or is bankrupt. You could also wind up in a situation where, in a personal injury case against an individual, that person does not have insurance. In cases such as this, your attorney can negotiate on your behalf to get a pro-rata agreement. If the medical providers are unwilling to take a pro-rata agreement, you can then petition the court for Equitable Distribution. In many cases, the judge will rule in favor of this petition, which would divide up the settlement among the providers so they all get a relative share. While the providers will not get full payment, they will get something and you will be free of the debt.
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