Health Insurance and Auto Accidents

July 18, 2012

Pill and Rx pad.pngIn Maryland auto accident claims, the victim of a negligent driver is entitled to recover the cost of all reasonably related medical expenses. For example, if a driver runs a red light and hits another vehicle, the emergency room visit for the other vehicle's occupants should be paid by the negligent driver's insurance company.

Sometimes, however, the injured person's medical care is paid for by health insurance, or by personal injury protection (PIP) insurance. Maryland has a law called the collateral source rule, which says that the negligent driver cannot benefit from other payments made to the victim.

Under the collateral source rule, even if a victim's medical bills are paid by insurance, the negligent driver must pay the value of those bills directly to the victim. In some cases (notably, PIP), the victim gets to keep the money. This is something like a double-recovery in some cases. However, it helps many smaller accident victims by making them whole, when the attorneys' fees are factored in.

In other cases, however, the victim must pay back the insurance company. This is especially true where medical expenses were paid by medical assistance (Medicaid) or Medicare. But, it also typically holds true when private health insurance pays medical expenses. The contract between an insured and a private health insurer usually contains a provision that that requires a victim/insured to reimburse the health insurance company for payments made that were required because of the negligence of another.

The way that health insurance companies find out if the accident was caused by negligence is usually to send out a form to the insured, asking about the circumstances surrounding the injury. They send these forms out automatically when they find out about certain types of injuries that are typically caused by accidents--whiplash, back injuries, etc....

If there is an obligation to pay the private health insurance company back, the victim's lawyers can usually negotiate the amount owed down. One good argument is that the health insurance company would not have received any reimbursement at all, had the victim not hired a lawyer and paid his one-third to 40% in attorneys' fees. The argument we make is that the health insurer should have to pay the same fee by reducing the amount they are paid back. This gets more money into the victim's pocket.

If you have questions about paying back a medical provider after an accident, contact our firm at 443.850.4426, or send us an online message.

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