There are many reasons why it is important to have a lawyer when dealing with a car accident injury claim or lawsuit. The many reasons are discussed here. Additionally, you need a lawyer to navigate through the many liens or claims that may be asserted by companies against your settlement or judgment money. The following are common claims by 3rd parties wanting money from your settlement:
- Hospital and Doctor Bills not Submitted through Health Insurance
- Health Insurance Companies wanting to be paid back
- Medical Payments Coverage from an Auto Insurance Policy
- Medicare or Medicaid
- Workers' Compensation Liens
1. Hospital and Doctor Bills not Submitted through Health Insurance:
If a hospital or doctor refused to submit their bill through your health insurance there is probably a "claimed lien" on your recovery by the hospital or doctor wanting to be paid back in full for their bill. We advise all of our clients to demand the hospital or doctor submit the bills through their health insurance coverage and to go to a different provider if they refuse to do so. Hospitals do this because they want a higher reimbursement rate at the expense of your settlement share. So you must insist that bills are submitted through health insurance and do not agree or sign anything to the contrary. However, if you do not have health insurance you have no choice but to be treated with a lien against your recovery or pay out of pocket costs.
In both Missouri and Illinois there are limits to the amount of the lien the healthcare provider can claim. For a discussion on the Missouri law see, "Can Your Health Insurer Demand Payback for Medical Expenses?"
In Illinois the law is called the "Healthcare Services Lien Act" as essentially states that the total amount of liens from doctors and hospitals cannot eat up more than 40% of your recovery, after attorney fees and costs. EXAMPLE: Case settles for $100,000 but you have medical liens for $50,000. After attorney fees of 1/3 and costs of a few thousand dollars, let's say your recovery is $65,000. the most the healthcare providers can take as part of their lien (assuming they have a valid lien in the first place) is 40% of the $65,000, or $26,000, leaving you with $49,000 in this hypothetical.
The above numbers are assuming a valid lien has been made and the bills are reasonable and necessary. There are many other ways to deal with the liens, however, under Illinois law the above is the maximum amount they can take. Experienced car accident lawyers know how to get the liens often reduced even more through other means. Another example on why having a lawyer maximizes your recovery after a car accident.
2. Health Insurance Companies wanting to be paid back:
Your health insurance paid for all your treatment, so you have to pay them back from your settlement? That depends, do you have coverage through work? if so it is likely an ERISA protected plan. See "Dealing with ERISA Liens When Settling Personal Injury Cases". For ERISA plan treatment in Illinois injury cases see: "Illinois ERISA Plan's Right of Recovery from Your Personal Injury Settlement".
If you have individual coverage, then in Missouri they cannot take any of your settlement money. It would be called "subrogation", and in Missouri that is not enforceable in car accident cases.
In Illinois, however, subrogation by a health insurance company is allowed. Their amount recoverable from your settlement is reduced by the proportionate share of attorney fees. Therefore, if the subrogation claim is for $10,000 and your paid 25% in attorney fees, the subrogation claim is also reduced by 25%, this is referred to as the "Common Fund Doctrine". Additionally, if you are held partially at fault for the accident, lets say 25% at fault, then the subrogation amount is also reduced by that amount as well.
3. Medical Payments Coverage from an Auto Insurance Policy:
Sometimes you may have "Med Pay" coverage under your auto policy which will pay for some of your medical bills, regardless if the accident was your fault or another driver's fault. Just like subrogation with individual health insurance discussed above, in Missouri the med pay insurance company has no right to med pay reimbursement, but in Illinois they do.
4. Medicare or Medicaid:
If you are a Medicare or Medicaid beneficiary and they paid for medical treatment related to a car accident, then the government has a "super-lien" against your recovery. A super-lien is an automatic lien, they do not have to notify you, your attorney, or the insurance company. Therefore, if the insurance company settles and writes you a settlement check without making sure there is not a Medicare or Medicaid lien on the case then they are responsible for the lien amount. Most auto insurance companies will not write any injury settlement check until we get written confirmation from both Medicare and Medicaid that there is not a potential lien on the recovery.
Again, a very critical reason to have a good injury lawyer handle your car accident case. For more details on Medicare and Medicaid liens see: "Medicare recovery against Personal Injury Awards".
5. Workers' Compensation Lien:
If you were hurt in a car accident while on the job then you probably had a work comp claim and a 3rd party claim against the at fault driver. The workers' compensation coverage will pay out faster, cover medical bills, and a percentage of lost wages. These work comp payments are typically made early on and help avoid financial distress.
When the case against the at-fault driver is resolved, you have to pay back the work comp insurer for benefits paid. In the long run the victim still come out ahead and the payment is reduced by what is known as the " The Ruediger Formula" because the lien reduction formula was laid out in the case of Ruediger v. Kallmeyer Brothers Services, 501 SW2d 56 (Mo. 1973).
The Ruediger Formula applied with an example of $300,000 settlements and $90,000 in work comp benefits paid.
So $90,000 / $300,000 equals a ratio of 0.3 meaning that the work comp insurer can recover up to 30% of your recovery AFTER deduction for attorney fees and costs.
So if the 3rd party case attorney fees and costs totaled $110,000 then the work comp carrier and recover up to 0.3 of $290,000, or $87,000.00
