Health insurance and your medical bills from a car accident

Those among us fortunate enough to have health insurance, but unfortunate in being injured in a car accident, may wonder what happens to their medical bills. Put another way: can you recover money for medical bills paid by health insurance in a settlement with the other driver’s automobile insurer? The answer is yes, with a few buts.

In 2003 the Texas legislature enacted House Bill 4 (HB4) which included sweeping tort reform that had significant effects on personal injury law, particularly medical malpractice. Enacted when HB4 was passed was Texas Civil Practice & Remedies Code Section 41.0105 (CPRC 41.0105), which has become known as the “paid versus incurred” statute. The exact wording of the statute is as follows:

§ 41.0105. EVIDENCE RELATING TO AMOUNT OF ECONOMIC DAMAGES. In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.

Here is a simple example to show how this statute has changed the recovery of money damages for medical bills in Texas when the injured person has health insurance. Let’s say you are rear-ended in a car accident and have a $10,000 hospital bill as a result. Your have health insurance with, let’s say, Blue Cross Blue Shield, and after a $200 co-pay your health insurance pays the hospital $4,800 and the remaining $5,000 of the bill is written off as a “provider discount” to BCBS.

Prior to HB4 and CPRC 41.0105, if you made a claim under the other driver’s automobile insurance for your medical bills, the other driver’s insurance would reimburse you $10,000 which is the full amount of your hospital bill. Put another way, the automobile insurer of the at-fault driver would not get the benefit of your private health insurance. When the law operated this way the $5,000 “upside” would go to you, the injured person: the most you would have to reimburse your health insurer would be the $4,800 BCBS paid the hospital and you would get to keep the $5,000 difference.

Here’s how that changed after HB4 and CPRC 41.0105: the most you can recover from the other driver’s automobile insurance is $5,000 which is the $200 co-pay you paid and the $4,800 paid by BCBS. The automobile insurance company for the at-fault driver gets the benefit of the $5,000 provider discount (or “write-off”) the hospital extended to BCBS.

The overwhelming majority of plaintiffs’ personal injury attorneys think CPRC 41.0105 is being applied in an unfair way and the statute should be changed or repealed. Health insurance is not free. In our example, the driver who rear-ended you did not help you pay your health insurance premiums yet his automobile insurer is getting the benefit of the write-down of the hospital bill which is only being given because of your health insurance.

Something else to consider is that while you can recover money from the at-fault driver’s auto insurer for medical bills paid by your health insurance, your health insurance company may want their money back. This is a process known as subrogation, and most health insurance contracts have subrogation language that says in essence that if they pay your medical bills due to an accident, and you get a recovery from the person who caused the car accident (or their insurer), then your health insurance company is entitled to be reimbursed out of the settlement proceeds. Usually health insurers (or entities acting on their behalf, such as Benefits Recoveries, Inc. or Rawlings Company) will send the injured person a questionnaire shortly after an accident asking if you were injured due to another person’s fault, and if so, to provide that person’s insurance information (claim number, etc).  The health insurer wants that information so they can notify the at-fault driver’s automobile insurer that the health insurer has a subrogation interest (or “lien”) that needs to be paid out of the injury settlement.

There are many other considerations that go beyond the scope of this basic introduction to recovery of medical bills paid by health insurance in a car accident, including negotiating health insurance company liens and presentation of evidence of medical bills at trial that were paid by health insurance. Having an experienced personal injury attorney who recognizes and understands these issues can be a valuable asset and make a significant difference to how much money the injured person puts in their pocket at the end of an auto accident injury claim. Call the Houston personal injury attorneys at Smith & Hassler if you have been injured in a car accident and have questions about your medical bills paid by health insurance.