Insurance Issues Archives

Dealing with Health Insurance Liens

With the onset of Spring, motorcycles are back on the road in Kentucky. In fact, Kentucky has over 100,000 motorcycles registered. It is estimated that nationwide over 80,000 motorcycle wrecks occur a year. So how does the injured motorcyclist get his or her medical bills paid when Kentucky law only requires that a driver carry at least $25,000 per person in insurance coverage? It is for this reason that motorcycle accidents pose a bigger challenge than the average personal injury claim. This is especially true when you consider the impact of health insurance liens.

Before the motorcycle wreck ever occurs, the smart motorcyclist understands that there is no guarantee under Kentucky law that a driver or a vehicle is truly insured and/or that the at-fault driver has enough insurance coverage to cover the medical bills for the injured motorcyclist. As a result, as soon as that motorcycle hits your driveway, I recommend that you have at least $100,000 per person of uninsured motorist and $100,000 per person of underinsured motorist coverage on your motorcycle insurance policy.

With the way automobile insurance policies are written and because most have exclusions about motorcycles, you cannot rely on your automobile insurance to protect you while riding your motorcycle.

The gist of uninsured motorist coverage and underinsured motorist coverage is that if the at-fault driver does not have insurance coverage or does not have enough insurance coverage to cover the whole value of your personal injury claim, we can use your motorcycle insurance and they will act like they insure the at-fault driver up to however much insurance you purchased.

On this issue, I want to make a point that might be easily overlooked. Your insurance company is going to fight your personal injury claim just as if they insured the at-fault driver. This is not a get rich quick scheme. Rather, the purchase of uninsured and underinsured motorist insurance makes sure that you are protected in the worst -case scenario ( i.e. the at-fault driver had no insurance or your damages far exceed his insurance coverage).

I have dealt with several cases over the years wherein people lost part of a leg from a motorcycle wreck or had multiple surgeries. This legal advice is trying to make sure your savings plan and the financial planning for your household stay on track even though you were injured in a motorcycle accident that was not your fault.

HEALTH INSURANCE LIENS

So, let’s jump ahead and assume the motorcycle wreck has occurred. In that situation, what are your options for getting your medical expenses paid. The first and probably best option is to use your health insurance to pay your medical expenses. Nowadays, health insurance carriers assert what is known as a subrogation claim against your personal injury settlement. The simplest definition of such a claim is that the health insurance carrier will pay your medical bills stemming from a car or motorcycle wreck but if you recover money from the at-fault driver, the health insurance carrier has the right to recover the money they paid out towards your medical bills from your personal injury settlement. They assert this right by using “health insurance liens.”

PROBLEM WITH HEALTH INSURANCE LIENS

The problem with these health insurance liens is that they invade a personal injury settlement, thereby reducing your net settlement. Health plans claim that they have superior rights to everyone, including the injured victim. (This is why choosing a good personal injury lawyer is so important. A good personal injury lawyer maximizes the amounts he can recover for his client with his right hand while reducing the deductions from the personal injury settlement with his left-hand.)

Nevertheless, the positive aspect of health insurance is that the health insurance carrier has contracts with hospitals and doctors that can reduce your medical bills. For example, I just dealt with a case last week wherein Anthem paid a hospital $2,800 to satisfy a $16,500 bill. Anthem has a right to recover the $2,800 they spent, not the full value of the medical bill. In effect, the reduction provided by health insurance contracts allow you, the injured motorcyclist, to stretch a dollar bill to cover more of the incurred expenses from a motorcycle wreck.

The above-described Anthem illustration also points out one of the ways in which Kentucky law is unfair to motorcyclists. Kentucky is what is called a no-fault state. The simplest description of Kentucky’s no-fault laws is that the insurance company for the vehicle you occupy automatically covers your medical bills and lost wages, up to a $10,000 limit.

For example, if you’re standing still at a red light and hit in the rear-end by a drunk driver, your own car insurance is going to be the no-fault carrier, even though you did nothing to cause this car wreck, and once you are done treating, that no-fault carrier will go against the insurance company for the drunk driver to recover the medical expenses paid on your behalf.

Kentucky law goes on to say that in exchange for this right to recover these no-fault benefits, the injured victim gives up the right to recover the first $10,000 of medical expenses and lost wages and it becomes the right of the no-fault carrier. If you don’t believe me, look up K.R.S. 304.39-060. This is the statute that transfers those rights to the no-fault carrier. Personal injury lawyers refer to this as the abolition of tort liability.

DON’T LOSE $10,000 OF COVERAGE

The problem for motorcyclist operators is that Kentucky law acts like your motorcycle was uninsured and because of the aforementioned “abolition of tort liability”, does not allow you, a motorcycle operator, to recover the first $10,000 of his medical bills or lost wages.

K.R.S. 304.39-040 states that a motorcycle operator or passenger is not entitled to recover no-fault benefits unless option no-fault coverage was purchased. Since no-fault coverage on a motorcycle tends to be rather expensive, most motorcycle owners don’t purchase no-fault coverage. As a result, KRS 304.39-060, the statute about the abolition of tort liability, still applies and the motorcycle operator cannot recover the first $10,000 of his medical expenses from the at-fault driver even though he did nothing to cause the motorcycle accident. In contrast, while a motorcycle passenger is not entitled to no-fault coverage, he or she can recover the first $10,000 of their medical expenses from the at-fault driver because KRS 304.39-060(2)(c) carves out an exception for the motorcycle passenger.

AVOIDING THE PENALTY

For the motorcyclist, to get around this “abolition of tort liability penalty” has to either purchase the optional no-fault coverage for his motorcycle or use his health insurance to pay his medical expenses. On the positive side, this abolition of tort liability is controlled by the total charge of the medical expense, not the reduced rate paid by the health insurance. In the Anthem example above, the motorcyclist could recover $6,500 of the emergency room bill (i.e. $16,500 less the $10,000 that could have been paid under no-fault insurance) even though Anthem satisfied that charge for $2,800.

One final point on this issue and how Kentucky law penalizes motorcycle operators. The Kentucky Motor Vehicle Reparations Act sets out the law in regard to no-fault benefits. The Kentucky Legislature recently amended KRS 304.39-241 to allow no-fault benefits to be directed towards a health plan’s subrogation claim. Insurance companies rely on this as another way to ensure payment of their health insurance liens.

To use the Anthem illustration again that arose from a car accident, I reserved the majority of my client’s no-fault benefits and directed the no-fault carrier to satisfy Anthem’s subrogation claim by paying them part of my client’s no-fault benefits; and in doing so, I stretched a dollar bill to put more money in my client’s pocket.

If the hospital for this car wreck had submitted that $16,500 emergency room charge to the no-fault carrier, they would have recovered $10,000 from my client’s no-fault carrier and my client would still have owed them another $6,500. Instead, Anthem reduced that charge to $2,800 making it so that the hospital was not owed any money, the health insurance lien was satisfied out of the no-fault benefits and my client had $7,200 remaining ($10,000 of no-fault benefits less the $2,800 paid to the health plan) in no-fault coverage to go towards her other medical expenses. The obvious point being that since a motorcycle operator is not entitled to no-fault coverage unless that have purchased optional no-fault benefits, a motorcycle operator cannot use KRS 304.39-241 to satisfy a health insurance subrogation claim.

What does all this mean for a motorcycle rider involved in a serious accident in Kentucky? Have at least $100,000 per person of uninsured and underinsure motorist coverage on your motorcycle insurance and make sure you and your passengers both have health insurance to cover your medical expenses, including health insurance liens. With these tools, there is a good chance we can make sure you are not left holding the bag for a bunch of medical expenses that were caused by a negligent driver.

Does a Slam Dunk Case Need an Attorney?

Someone posted a great question on a message-board I belong to. Essentially, the person felt that they had a slam dunk case against their own uninsured motorist coverage. For this reason, they questioned whether they should keep their personal injury attorney or fire him and save the contingency fee. I loved the question because it brings up so many areas of the law wherein misconceptions are rampant.

In the legal field, a slam dunk case is rare and not what you want.

Last year I had a slam dunk case wherein my client, a pedestrian, was hit by a car driven by a teenager who was texting at the time. My client was hospitalized for a significant amount of time so his medical expenses in the first 30 days following the car wreck were more than twice the insurance coverage on the teenager. So yes, that was a slam dunk in the sense that the insurance company did not think twice before paying offering their policy limits. Why? An insurance company can be held liable for more than the coverage purchased by their insured only in rare circumstances.

One of those circumstances, that’s pretty clear cut in nature, is when the insurance company exposes their insured to a Judgment in excess of the insurance coverage when they had a reasonable chance to settle the claim within the policy limits.

So how does a good personal injury lawyer earn their attorney’s fee in such a slam dunk case? First, they look for other insurance coverage. I did not handle the case but I consulted on a case involving a wrongful death wherein it appeared another teenage driver was insured for only $25,000 but ultimately, a seven figure insurance policy was discovered through another parent’s insurance policy. So in that case, another liability policy was discovered because the injury attorney was diligent and did not rush to settle his client’s personal injury claim.

Never Rush to Settle Your Slam Dunk Case

To put it simply, insurance coverage, depending upon the kind of insurance, can exist because someone else also owns the car, someone was in the scope of employment when the wreck occurred or because someone is a resident relative living in that household. A good personal injury lawyer does his best to track down all the different layers of insurance coverage that could apply and compensate his injured client; whether it be an additional liability policy or a policy of underinsured motorist coverage.

Also, an injured party needs to understand that they are held to the same legal requirements, whether they have an attorney or represent themselves, and ignorance of the law is not a valid defense. So if you rush to settle your claim and once you sign a bodily injury release, your claim is done.

As I tell all my clients, it does not matter how severe your injury was or when it was discovered, you sign that release your personal injury claim is resolved completely.

Strict Rules Apply for Underinsured Motorist Claims

Further, the requirements of pursuing an underinsured motorist claim, against your own company, are laid out in the statutes and must be followed to the letter. I am referring to the fact that the law sets up a required, legal procedure that must be followed wherein your own automobile insurance company must receive proper notice, according to the strict requirements of the statute, anytime you wish to accept a policy limits offer from an at-fault party. If you don’t follow the procedure, your claim for underinsured motorist coverage could be barred.

Attorneys Are Experienced Negotiators

Lastly, what good does it do you if a lawyer recovers $100,000 for you but with health insurance liens, attorney’s fees and costs eat up the majority of your personal injury settlement; obviously, the answer is none!

A good injury lawyer tries to maximize a client’s personal injury settlement with his right hand while lowering the deductions from that settlement with his left hand.

On the “slam dunk case” described above, I was able to negotiate a waiver of the health insurance lien. A health insurance lien is basically wherein your health insurance carrier says they have the right to recover from your injury settlement the medical expenses they paid on your behalf; because you recovered those medical expenses from another source, usually the at-fault party.

However, even if I had not been able to obtain a complete waiver of the health insurance lien, I needed to do my best to lower the amount the health insurance would accept and reduce any other liens/charges that might reduce my client’s net recovery. And yes, lowering an attorney’s fee is one way that can occur as well. In that case, I did that. Why? Because the client has used me before, given my name out to family members and even did a review for me on Google.

My point is you should have a mutually beneficial relationship with your injury lawyer and not be just one of a multitude of cases that they are handling in multiple states.

Worst-Case Scenario Car Wreck

It is not surprising that personal injury lawyers have a less than perfect reputation. Every time you turn a television on, you see television commercials promising “big checks” or ”making the other guy pay.” However, those ridiculous slogans are not really what personal injury law is all about.

The legal system only allows you to recover money for the damages you have suffered because of someone else’s negligence. If you think about it, a truly fair system would require that the at-fault driver help you get your car fixed, pay the cost of replacing your vehicle and not just what it was worth and assist you in getting to your doctor’s appointments.

However, if personal injury law required those things, the system would be very similar to the laws governing divorce and family law. There would be a lot of fighting among strangers over who did what, why an appointment was reasonable or not and a lot of excuses as to why somebody failed to do what the Court ordered them to do.

Protect Yourself From A Flawed, Legal System

You have to plan for the absolute worst-case scenario and purchase, on your own car insurance, the coverage you need to handle a car wreck.

Assume for instance your vehicle was hit by an unemployed, drunk driver that resulted in you being hospitalized from a car wreck. The drunk driver had no insurance, was driving another person’s vehicle that was also uninsured. Finally, you don’t have health insurance to pay your medical expenses. This sounds pretty bleak.

Think about the true effects of this worst-case scenario. The person that hit you has no insurance to pay for the damages they caused. If you get any money out of them at all, it is likely to be small amounts generated over prolonged litigation. Further, you did not have health insurance so doctors, hospitals and chiropractors are hesitant to treat you because they don’t know if you will be able to pay your medical bills.

The common misconception about personal injury law is that the other guy will be responsible for paying my medical bills and as illustrated above. This idea is 110% wrong.

Further, when a car wreck happens, it is like a photograph was taken. You can’t remove anything from that photograph and you can’t put anything in it. If you don’t have the right coverage on your own automobile insurance before the car wreck occurs, you are out of luck!

So What Could You Do?

On your own car or motorcycle insurance, without any regard to what insurance the other driver may or may not have, carry at least $100,000 per person of uninsured motorist coverage, $100,000 of underinsured motorist coverage and $30,000 of no-fault or med-pay coverage.

This legal advice applies from the first day you drive a motor vehicle. Further, even though motor vehicle law differs by states, it really does apply no matter which state your vehicle may be licensed in. Ask your local insurance agent whether they agree with my advice but I would guess 90% of them will.

So yes, tell every member of your family and your extended family, wherever they may live, about this advice in regard to car insurance and/or any motor vehicle they may own, including motorcycles.

But It’s Too Expensive

While I understand that car insurance is costly, I refuse to lower my uninsured and underinsured motorist coverage in an effort to save on my car insurance premiums. My 17 year-old daughter just got added to my insurance policy and it added about $2,200 a year to the cost of my insurance. Nevertheless, I want to know that if the worst-case scenario should ever occur, I have the means of obtaining medical treatment for my family and recovering my out of pocket expenses for permanent treatment for medical conditions that I thought would never occur.

While I understand that you may think the worst-case scenario won’t happen to you, remember that my law practice is a small, boutique firm that encounters uninsured and underinsured motorists on a daily basis.

Consider The Statistics

According to the Insurance Institute for Highway Safety, about 11.5% of Kentucky motorists and 16.7% of Indiana motorists are driving around uninsured at any given time.

Also, while Kentucky and Indiana require a motor vehicle to carry at least $25,000 per person of liability coverage, some states, Florida for example, require as little as $10,000 of liability coverage per person. Either way, how can $10,000 or $25,000 cover medical bills of $30,000 from a surgery caused by the negligence of another driver much less your lost wages, co-pays or insurance deductibles?

If you ever read one of my previous blogs, you might say that you have heard this advice from me before and it would be true. However, right now, I am dealing with:

3 cases wherein the at-fault drivers were completely uninsured
2 cases wherein I am searching for underinsured motorist coverage because the client’s Emergency Room treatment alone exceeded $25,000
1 case wherein an unexpected surgery occurred and luckily underinsured motorist coverage was on my client’s policy
1 case wherein the client did not recover the full value of her claim because the at-fault driver injured multiple people and there was not any underinsured motorist coverage to pursue.

My point being the worst-case scenario happens every day in both Indiana and Kentucky and saving a couple hundred bucks on car insurance now, can cost you thousands later on.

The Kentucky Uninsured Driver Loophole

There’s a legal requirement, per Kentucky law, that your car must have insurance coverage. Anyone who has read one of my blogs or has visited my website, www.AttorneyDesmond.com, has probably heard me preach about having at least $100,000 per of uninsured motorist coverage on both their automobile insurance and their motorcycle insurance. Nevertheless, it appears there’s a Kentucky uninsured driver loophole.
My blogs tell true stories of how a person injured in a car wreck in Kentucky, through no fault of their own and caused entirely by someone else’s negligence, ultimately discovered that the at-fault driver failed to have his or her vehicle properly insured. Consequently, my injured clients have to rely on their own automobile or motorcycle insurance to cover their medical bills and their claim for pain and suffering.
One of my most recent blogs dealt with the issue of suing an uninsured driver for my client’s pain and suffering and whether the potential recovery justified the cost of litigation. Several readers of that post raised the issue of how is it someone can be uninsured and still be on the road? Since personal injury law usually addresses the after-effect of someone not having their vehicle properly insured, I had to research some of the Kentucky Revised Statutes to find the answers. Unfortunately, from the information I am gathering, it appears that Kentucky law is totally inadequate to address the issue. I believe this creates a Kentucky uninsured driver loophole.
Most of the motor vehicle law for Kentucky is contained in what is known as the Kentucky Motor Vehicle Reparations Act. This Act can pretty much be found in Section 304.39 et. seq. of the Kentucky Revised Statutes. KRS 304.39-080 (5) of the Kentucky Motor Vehicle Reparations Act states that if you own or operate a vehicle registered in Kentucky, you must have at least the minimum amount of liability insurance which is set out in KRS 304.39-110; which is an insurance policy with a single limit of $60,000 or limits of $25,000 per person, $50,000 per accident and $10,000 in property damage.
If you fail to have your vehicle insured, the registration for your vehicle will be revoked, see KRS 304.39-080(5) and KRS 304.39-090, pursuant to KRS 186A.040 and you will be subject to the criminal penalties laid out in KRS 304.39-060.
So, when we are pulled over by a police officer, that officer will has a computer system in his vehicle, known as a Mobile Data Terminal (“MDT”), which is linked to a database referred to as AVIS, Automated Vehicle Information System. This database maintains title, registration, and insurance information for all vehicles, boats and trailers registered in Kentucky.
When an insurance company cancels or does not renew an automobile insurance policy, it is required to provide the Kentucky Department of Vehicle Regulation with the VIN number of the vehicle. If that VIN number does not appear in AVIS for two consecutive months, the Department has to send the insured a statement that they have to show proof of insurance within 30 days or the registration of the vehicle will be revoked. See KRS 186A.040.

This is the part the concerns me; the only proactive step taken by the State of Kentucky when it is informed that a vehicle is not properly insured, according to the AVIS system, is to revoke the registration of that vehicle!

The County Attorney is not even informed of this revocation of the registration unless that registration has been revoked 3 times within a 12 month period. See KRS 186A.040(4)(b). When State Representative Ron Crimm attempted to amend this statute, through HB 337 in 2010, so that the County Attorney would prosecute the first time the vehicle’s registration was revoked. The bill was shot down in part because the Kentucky County Attorney’s Association opined that there would be hundreds of more prosecutions thereby resulting in a significant financial burden to County Attorneys and local jails for the housing of inmates.

Risks of the Kentucky Uninsured Driver Loophole

So logically, according to the current status of Kentucky Motor Vehicle law, I can stop paying my for my car insurance and not until 90 days later, (two months of no insurance showing on my vehicle through AVIS and 30 days notice required by KRS 186A.040), will the registration for my vehicle be revoked. Thereafter, unless I am pulled over and issued a citation, I won’t be subject to criminal prosecution for no insurance so I can renew my license plate just before it expires and effectively save money by not having to pay for car insurance for approximately 9 months. To me, this is a dangerous Kentucky uninsured driver loophole.

Please understand that I am in no way advocating that someone operate a motor vehicle without car insurance.

If you do so, you can be subject to multiple claims from other driver’s for your negligence and even if you were not at fault for the car wreck, you cannot recover the first $10,000 of your medical expenses and lost wages. See KRS 304.39.060. However, I am shocked at what appears to be a big hole in criminal law in regard to Kentucky drivers who fail to carry the proper insurance. Again, as I have said hundreds of times before, there is nothing in Kentucky law that guarantees the at-fault driver truly has liability insurance to cover the damages he causes through in a car wreck.
I am not a politician and nor do I have any desire to be. In fact, out of all my blogs, this one has tended to violate one of my own rules and been overly complicated, by citing statutes, rather than simply addressing the needs of the typical Kentucky driver. However, I thought it was important that you, the consumer, could fact check my sources.
Very simply, the safety of you and your family, while operating a vehicle on Kentucky roadways, needs to be your primary concern. Even if the Kentucky Legislature amended the law so that an uninsured driver would be prosecuted sooner, there is still no guarantee in the law that he could be fully responsible for the injuries and damages he might inflict through his negligence.
My legal advice is remains the same. Rather than which personal injury lawyer you choose or which insurance is company is “best”, make sure each and every motorcycle or car insurance policy you have has at least $100,000 per person of uninsured and underinsured motorist coverage.
Through the analysis described above, there is no guarantee that the other driver truly has car insurance and even if he does, it can be as little as $25,000 per person. Therefore, you need to protect yourself before the car wreck by putting on your own automobile insurance policy the types of insurance you may need should you be involved in a serious car wreck. Don’t be a victim of this Kentucky uninsured driver loophole.

Watch this Brief Video for more Information about Uninsured and Under-Insured Motorist Coverage

Filing a Lawsuit Against an Uninsured Driver

I filed a lawsuit against what appears to be an uninsured driver this weekend. The Jefferson County Clerk has set it up so I can file a Complaint, the document that starts a lawsuit electronically from my computer. However, the filing fee for a lawsuit tends to cost me about $198 for each lawsuit filed with the Jefferson Circuit Court. The question is did I waste my money filing a lawsuit against an uninsured driver?

According to the Insurance Information Institute, about 11.5% of Kentucky motorists were, in violation of Kentucky, driving without insurance on their automobile. For Indiana, the rate was closer to 16.7%. https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists. So when a car accident or a motorcycle wreck occurs, one of the first questions a personal injury attorney has to deal with is whether the at-fault driver, or the vehicle they were operating, was insured.

The easiest way to find insurance coverage on an at-fault driver is hope that the police report has the proper insurance company listed. If that does not work, I will typically run the license plate of the at-fault vehicle with the Jefferson County Clerk. The Clerk can provide me with the insurance company and policy number the last time that vehicle was registered.

As a last resort, I will send the driver and owner of the at-fault vehicle a letter asking for their insurance information and threatening to file a lawsuit if they do not cooperate. The problem is filing a lawsuit against an uninsured driver may not be worth the time and expense involved.

Recall that a Judgment is really just a piece of paper that says someone owes you money. So, in essence, a Judgment against someone can be worthless if they have no assets to collect it against or if they can bankrupt that Judgment by filing Bankruptcy proceedings. So for the personal injury suits I filed, it could be that we won’t even recover the filing fee much less the value of the client’s personal injury claim. Granted, in Kentucky, K.R.S. 187.410 allows me to revoke someone’s driving privileges if the unpaid Judgment relates stems from a car wreck. However, if the at-fault driver files Bankruptcy, the suspension, and my client’s Judgment, is dissolved.

Nevertheless, I believe this instance justified a personal injury lawsuit. My injured client had an initial Emergency Room bill in excess of $19,000 and he may not have had uninsured motorist coverage either. As a result, unless I can find insurance coverage on the at-fault driver, my client really has no source to recover his pain and suffering claim from.

However, in this instance, my first goal is not to recover the value of his personal injury but rather, to keep my client from owing a large amount of medical expenses for a car wreck that was not his fault.; to do that, I’m going against the odds and hoping that filing a lawsuit against an uninsured driver will discover insurance coverage not readily apparent.

So what’s my fallback position(s) for everything? If all else fails, I will have to use health insurance to pay the medical bills. My client appears to be qualified for Medicaid after the car wreck occurred. While Medicaid will have a right to recover whatever medical expenses they pay out through what is known as subrogation claim or a right of reimbursement, they can only recover the amount that is actually paid to satisfy the $19,000 medical expense. My hope is that the amount Medicaid seeks to recover will be about one-third of the $19,000 expense. This way, I can reserve my client’s no-fault coverage of $10,000 and use that no-fault, a.k.a. as PIP coverage, to satisfy Medicaid’s subrogation claim.

Yes, in this worst-case scenario, regardless of the personal injury lawsuit, the client can not recover any more towards the value of his personal injury because the at-fault drive was uninsured and he did not purchase uninsured motorist coverage before the car wreck. However, in Kentucky, 99% of the time you are entitled to no-fault benefits of at least $10,000 as long as the car wreck happened in Kentucky and you were not driving a vehicle you owned that was uninsured.

As a result, this no-fault coverage may be the only insurance coverage that exists for this car wreck. Consequently, we have to stretch that $10,000 in no-fault coverage in every way possible so that the client, while uncompensated for his personal injury claim, will not owe medical bills for a car wreck that he did not cause.

At the end of the day, filing a lawsuit against an uninsured driver at least provides valuable information to determine my client’s best options.

Category: Insurance Issues