Most private health insurance companies (as well as state and federal benefits, like medical assistance and Medicare) have an agreement with their insureds: We’ll pay medical costs related to your Maryland auto accident, but if you get paid in a lawsuit or settlement, then you have to pay us back. This is called subrogation.
It makes sense, and here’s why. Maryland has what’s known as the collateral source rule. This is a rule about evidence. It says that if I receive the value of services or goods to compensate me for an accident, I can still recoup the value of the services or goods from the negligent driver. The Maryland Civil Pattern Jury Instructions state the collateral source rule as it is usually read at trial:
In arriving at the amount of damages to be awarded for past and future medical expenses and past loss of earnings, you may not reduce the amount of your award because you believe or infer that the plaintiff has received or will receive reimbursement for or payment of proven medical expenses or lost earnings from persons or entities other than the defendant, such as, for example, sick leave paid by the plaintiff’s employer or medical expenses paid by plaintiff’s health insurer.
Here are some examples:
- Example One: Maryland car accident. I go to the hospital, and incur $2,500 in medical bills. My health insurance company, pursuant to their agreement with the hospital, pays $2,000, and the hospital writes of the remainder pursuant to their agreement with my health insurance company. I file a lawsuit against the negligent driver, I am allowed to claim the full $2,500 in medical expenses. The negligent driver cannot tell the jury that I did not actually spend $2,500 in medical expenses.
- Example Two: Maryland car accident. I go to the hospital, and incur $2,500 in medical bills. Because I timely paid my premiums, my automobile insurance policy pays the hospital $2,500 through my Personal Injury Protection (PIP) insurance. That brings my medical expenses down to zero. At trial, I can still ask for the full value of those medical expenses, and the jury may award me $2,500 for my medical expenses, even though I did not make any out-of-pocket payments.
- Example Three: Maryland car accident. I need a leg surgery, valued at $15,000. My brother happens to be orthopedic doctor. He does the surgery for free. At trial, I can still ask for the full value of the medical expenses, and the jury may award me $15,000 for the surgery, even though it did not cost me a penny.
Not all states have the collateral source rule, but it is a good idea for the following reasons:
- Windfall: the negligent driver should not “win the lottery” and avoid paying for the results of his negligent simply because my medical treatment is somehow taken care of. As between the negligent driver and me, the negligent driver should bear the burden of paying for medical expenses caused by the accident.
- Insurance Premiums: If my medical care is paid for by PIP or by my health insurance, it is not really free to me. I pay a premium to carry that insurance, and the negligent driver should have to pay for the medical care.
- Attorneys’ Fees: In the American style of lawsuits, each party usually pays his or her own attorneys’ fees. This means that in most civil cases like auto accidents, if the injured person gets paid back 100% the value of his claim (medical bills that he had to pay, lost wages, etc…), he is not really “made whole.” That is because he probably had to pay a lawyer to recover what was owed to him. He probably paid his lawyer between one-third and 40% of the settlement or verdict. Because of the collateral source, the victim is a little closer to being made whole-the victim gets paid for some amounts that he may not have actually made payments for.
Many automobile insurance companies take advantage of victims who have not hired an attorney-they won’t tell victims about the collateral source rule (truthfully, some insurance adjusters don’t even know about the rule), and will try to convince victims that they can only recover for their out-of-pocket medical expenses, like co-pays and maybe deductibles. Victims who settle for those amounts are not getting the full value of their claims.
Back to health insurance: because most health insurance companies require victims (who get money in a settlement or verdict) to pay them back for medical expenses, it is fair for the victims to be able to recover the value of those medical expenses from the negligent driver.
One good reason to hire an attorney for an auto accident case is that the attorney will usually be able to negotiate with your health insurance company. The goal is to twofold: (1) to make sure that the insurance company’s lien doesn’t include medical treatment that was unrelated to the accident; and (2) to reduce the insurance company’s lien by at least one-third. The reduction in the lien also makes sense-the victim had to pay an attorney to get his money; it doesn’t make sense for the health insurance company to get his money without the same “cost.”
If you have questions about how much you must pay your health insurance company after a Maryland, Virginia or D.C. automobile accident, call a car accident attorney at Goldberg Finnegan at (888) 213-8140, or contact us online for a free consultation. Our injury lawyers have many years of experience handling car accident claims, and we can help to protect you from the insurance companies and other interests that may contact you shortly after your collision.