I am working on a client’s health insurance lien this morning. Health Insurance companies are VERY smart. They have figured out a way to have you pay premiums and then if you are hurt pay them back from the proceeds of an injury settlement. I’m not suggesting this isn’t helpful, but it is crafty. This post discusses health insurance liens as they relate to personal injury and car crash cases.
Lets say you are rear ended and find your way into the hospital. Your health insurance company will pay a portion of the hospital bill and then assert a lien for the remainder. It works like this: Hospital retail bill $10,000.00. Your health insurance pays $2,000.00 to close the bill with the hospital. The health insurance company than asserts a $2,000.00 lien with your personal injury lawyer for repayment.
Must Involve An At Fault Party
It is important to note this scenario doesn’t happen if there is no money coming from a third party. If you smash your car into a tree there is no settlement and thus no money for your health insurance company to pursue.
Negotiating A Health Insurance Lien
I often have clients frustrated they are having to pay back a lien. First important thing to note is some liens are negotiable. The Health Insurance Company gets “free” lawyering from your personal injury lawyer and is thus inclined to reduce the amount owed. Sometimes this is a statutory requirement. Other less helpful Health Insurance companies have it written into the contract that they do not negotiate.
Are Health Insurance Liens Helpful On An Injury Case?
Liens are helpful from a personal injury lawyer’s perspective. The law in Kentucky does not punish people for being smart enough to get health insurance. In other states the law quasi-punishes you and only allows you to claim the amount of the lien as opposed to the total bill. This is important because insurance companies factor your medical expenses into the settlement negotiations they make. Only allowing the lien amount leads to more litigation and a burdening of the court system in my opinion. Injury Lawyers are less inclined to settle and more inclined to swing at the at fault insurance company because the offers are lower when only the lien is considered.
The Jury Will Not Hear About Health Insurance
It is also important to note a jury will never hear anything about your lien amount or the fact there is insurance in Kentucky. The system has developed to prevent jurors from knowing State Farm or Allstate is on the other side of the equation. The thinking is that the jury would be potentially punish an insurance company more than they would an individual. It is my take that jurors are smart and they know insurance is on the other side of the cases I try.
Here is how a car crash jury trial works: https://louisville-injury-lawyer.com/what-happens-in-a-car-crash-jury-trial-in-jefferson-county-kentucky/
Will My Lawyer Negotiate For Me Or Farm Out The Work
Some law firms farm out their health insurance lien work. A cottage industry has evolved where lien negotiation companies contact me asking me to send them liens for reduction. They then take a fee on what they get reduced. The problem there is the client pays for that. I prefer not to pay others to do my work at the expense of the client. There are exceptions to this, but I’m not going over them in this post.
Pay Back The Health Insurance Lien Or Get Sued
But what if you don’t want to pay back a health insurance lien. When you negotiate with the insurance company paying a settlement they will mandate that the Plaintiff pay back the liens. They will mandate that failure to pay back the liens means the Plaintiff agrees to pay all of their legal fees IF they get sued by the health insurance carrier. It is a mess. Long and short is you won’t get a settlement if you don’t pay back the health insurance lien. Everyone including you gets sued if your lawyer does not pay back the lien.
Here is a link to how health insurance works in Kentucky: https://insurance.ky.gov/PPC/Documents/healthfactsheet071317.pdf
I’m happy to answer any follow up questions at bdettman@dettmanlawgroup.com
