We often talk about the great outcomes of personal injury cases, but the reality is that there are times when the available insurance and settlement recovery don’t cover all the bills.
Let me first explain how this can happen, because you might assume that when someone is negligent and injures you, that person has to pay all your damages. This is only partially correct...
If you can prove someone acted negligently and that as a result of that negligence you suffered damages, then that person is legally liable for your damages, which can include medical bills, lost earnings, pain and suffering, and more. In other words, the key language is “legally liable”, which is not the same thing as damages that you will collect on.
Here is why “legally liable” differs from “how much you can collect.”
Outside of very rare circumstances, how much of your damages you can recover will be based upon the availability and sufficiency of insurance. Yes, it is true, you can sue someone and there are means for trying to collect a judgment ordered against someone, but it is very difficult (closer to almost impossible if you are seeking damages from an individual) to ever collect on that judgment because each state has laws that restrict what assets you can go after to satisfy a debt. For example, you can’t go after someone’s home or auto to pay a debt they owe you.
Thus, how much you may recover in a personal injury claim will be largely impacted by insurance. Specifically, by 1) the availability of insurance and 2) the sufficiency of insurance.
Every insurance policy provides coverage up to certain limits, referred to as the policy limits. A policy limit is the maximum amount an insurer must pay for a claim that the insurance policy covers. The policy limit is based on the amount of coverage the insured paid for, and as you likely already know, the higher the policy limits, the more expensive the insurance.
Here is a helpful, brief article explaining insurance policy limits in case you would like more of an explanation.
Some people make the mistake of believing that just because someone has insurance, that insurance will pay for all your damages. That is incorrect. The insurance will pay for a claim the policy covers, but only up to the policy limits.
Let me give an example:
- Driver A runs a stop sign and crashes into Driver B causing Driver B serious injuries and over $75,000 in medical bills.
- Driver A apologizes and assures Driver B he has insurance. Driver B is relieved and believes all his damages will be covered.
- Driver B submits his claim to Driver A’s insurance, who tells him they will pay him $25,000.
- Driver B is outraged and argues his damages are worth way more than that.
- Driver A’s insurer says Driver A only purchased the minimum state policy limits of $25,000 so that is all the money they have to pay, even though his damages are worth much more than $25,000.
This is by far the most common scenario in which someone finds themselves with a settlement that doesn’t pay all the medical bills, much less other damages like lost earnings and pain and suffering.
People in this situation often want to argue with the insurer (or even their own attorney) to point out all their damages and how it is not fair. And that is true, but you must remember that the problem is not the amount of damages – the problem is the amount of insurance. Whether you have $25,001 in damages or $3 million in damages, the most that insurer has to pay is $25,000.
To further add to this frustration, you are not entitled to know the policy limits of the other driver unless 1) you file a lawsuit and get that information through discovery or 2) you are told when the insurer offers the policy limits to you. In other words, the amount of limits can often come as a surprise (more like blindside) since you can’t find that information out just by asking. You are normally left wondering how much coverage they have and must then adjust if you find out their policy limits won’t be enough to cover you.
The question then, is what you do if you find yourself in this unenviable position. Don’t panic, because there are some strategies you can use to try to improve your outcome.
Use Your Health Insurance to Pay Your Medical Bills
If you have health insurance, Medicaid, or Medicare you should use it to pay your medical bills. Insurance companies often have contract rates that will pay a lower amount than what was billed to you. That alone will help significantly. You might be tempted to argue that you shouldn’t have to use your health insurance for their negligence, but in the end, it will be to your benefit to use your health insurance. Watch my video here for a more in-depth explanation
While you do still have to reimburse your health insurance for what they paid out, there is favorable case law in most states, including New Mexico, called the made-whole doctrine that allows you to negotiate down what you have to pay back to your health insurance if the person that hit you didn’t have enough insurance to cover your damages. You don’t need to understand the mechanics of that, just remember, it is to your benefit to always use your health insurance to pay your medical bills.
This is by far the best way to avoid owing money to medical providers if your settlement isn’t enough to cover your medical bills.
Helpful tip: Use your health insurance to pay the medical bills right away. Don’t wait until the end of your case and then attempt to have them paid. Some health insurers have deadlines for when bills must be submitted for payment and if you wait too long you could be denied for untimely submission.
Negotiate with Medical Providers
If using health insurance is not an option for you, consider negotiating directly with medical providers. Many offer self-pay discounts that can reduce the bills by as much as 50%. Most medical providers are willing to be reasonable, but it will greatly help your chances if you are honest and show a desire to work with them to make sure they get paid. It can also be helpful to communicate the circumstances that led to the unpaid bill. Here’s what you shouldn’t do - ignore the bills and hope they are just written off.
There are many strategies that may be useful, but I found this Comprehensive Guide to Managing Medical Expenses After a Car Accident put out by an orthopedic physician group (AICA Orthopedics) to be helpful on this topic and many others relating to medical bills after an accident.
That guide includes a section specifically on negotiating with medical providers.
Sometimes medical bills that go unpaid for a while get turned over to collection agencies, so be aware that there is usually room to negotiate with those collection services as well.
Whether you are working with a medical provider directly or with a collection agency, you can also consider offering a payment plan to pay off your bill over time. This takes some of the financial pressure off you and helps the provider start to recover some of the amount owed.
Look to Your Own Auto Policy – Uninsured/Underinsured Motorists, Med Pay, PIP
If your injuries are a result of an auto accident, you should also look at your own auto policy to see whether some of your coverage could help. Here are the coverages that would provide the most help if you are in the situation of insufficient insurance as a result of an auto accident.
- Uninsured/Underinsured Motorists (UM/UIM) Coverage – provides coverage to you if someone injures you and they don’t have enough insurance to cover your damages. This coverage is your best bet for helping in the situation of insufficient insurance. I made a short video explaining the importance of carrying UM/UIM coverage which you can watch here.
- Medical Payments (Med Pay) – This helps pay your medical bills if you’re injured in a car accident, regardless of who is at fault. It is optional coverage.
- Personal Injury Protection (PIP) – This is similar to med pay but it offers even more coverage because it will not only pay for your medical care, but it will cover your lost wages, and other related expenses.
If you would like more information on the benefits and unique aspects of each of these areas of insurance, you may want to check out this article that provides more in-depth explanations and helpful comparisons.
Look for Additional Policies from the Other Driver
It is not uncommon for some insured drivers to carry multiple insurance policies. For example, some might have auto insurance with different carriers such as State Farm or Allstate depending on the vehicles they have. Additionally, some may carry an umbrella policy that might be an option.
You can find out if they have other policies through a lawsuit, but that may not appeal to you just to find out if they have more coverage.
Alternatively, one helpful way of ensuring they don’t have additional insurance coverage is by obtaining an affidavit from the negligent driver through their insurance. If their insurer is offering their policy limits, you could ask the insurer to have their insured provide an affidavit swearing no other insurance coverage. This attorney blog does a good job of explaining that there is no additional insurance affidavit and even provides an example of one.
Evaluate Other Claims
As part of evaluating your personal injury claim, you should consider all contributing factors to an accident. For example, was there a contributing factor beyond just the negligence of the other driver? If there were other motorists involved, consider whether they had any comparative fault. Additionally, consider whether the conditions of the roadway played a role, or maybe even the signage. These are tougher claims to prove but as part of your evaluation of your claim, you want to consider all contributing factors.
Our Personal Injury Attorneys Are Here to Help
As economic conditions continue to prove challenging for many families, we have seen an increase in the number of uninsured and underinsured drivers as families are forced to cut expenses. As a result, the risk of being hit by an uninsured or underinsured motorist has increased which places all motorists at increased chances of finding yourself in the situation of having a settlement fail to cover your medical bills.
You can and should consider each of the steps outlined above. The great majority of the time, these steps will ensure you are not left with medical bills to pay even if your settlement is less than your medical bills.
Our dedicated personal injury team here at The Injury and Disability Law Center is here to help you if you have any questions or would like help after an accident. Schedule your free initial consultation today by calling our office at 575-300-4000, starting a chat, or filling out our online form.
If you want even more information, feel free to check out my free book, Car Accident Cases Made Simple(r), where I discuss this topic and more.
