The Accident Victim and the Un-Cashable $50,000 Check

After I had opened the doors of my law practice, one of my first clients came to see me, just a little too late. Her problem was this. She had settled her accident case on her own, without consulting me, or any other attorney. She hadn’t done that badly either. She was holding in her hand a check for $50,000. The only problem was the check didn’t have just her name on it. It also was endorsed to Blue Cross Blue Shield, her health insurance company. And the bank would not let her cash it, unless she got someone from Blue Cross Blue Shield to sign it too. And she couldn’t get that done.

What had happened? What do you do?

The Question: Who Pays Your Medical Bills After An Accident?

Unfortunately, she had settled her case without understanding all the different legal claims that can arise on a settlement, claims that are not intuitive, but that need to be wrapped up before you can cash that check.

And that raises this question: Who actually pays your bills after an accident?

It’s As Much A Question of “Who” As “When”

The first thing to understand is that your medical bills are indeed part of your claim against the driver that caused the accident. They are an element of your damages — along with lost wages and pain and suffering. So the answer of “who” pays is relatively simple. It’s the other driver. What’s more complicated, actually, is the question of “when” those bills get paid. 

Unless you live in a state with a special — and rare — “no-fault” system, the other guy’s insurance does not “pay-as-you-go.” It’s not like when you get a doctor bill, you submit it to the other guy’s car insurance company and they pay for it. No. Instead, your own health insurance covers your bills “as-you-go.” And only at the end of the case, when your doctor has told you that you can end treatment, and that you are as good as you are going to get, can you submit your bills to the other guy’s car insurance and get “reimbursed” for your medical bills.

And that’s where my client went wrong. As she treated, she accumulated medical bills. These bills were then submitted to her health carrier, and that submission created a claim by her health carrier on her settlement. Blue Cross Blue Shield was on the $50,000 check because they had paid the bills. Otherwise, it would be a case of my client being paid twice for the dollar amount of her medical treatment. First, Blue Cross Blue Shield paid her bills. And then the other driver’s car insurance paid her money for those very same bills. That’s why the health insurer must be repaid; so that there is no double recovery.

It’s Could Be Worse — You Could Have No Health Insurance At All!

Sure, it sounds bad. And it was a disappointment that we had to pay her health carrier from the settlement. But it could be worse. It is worse, for example, when you don’t have any health insurance at all, and you are in an accident. First, having health insurance provides you with a great advantage in the form of the “contractual adjustment.” The insurance companies have great leverage with the medical market to reduce bills considerably. So you are rarely paying back to the health carrier the full amount that you received from submitting the bill to the other driver’s car insurance. It is less, due to the write-off, called the contractual adjustment.  But if you don’t have health insurance, those medical claims are not reduced at all! You pay dollar-for-dollar!

Secondly, if you don’t have health insurance, it is hard — if not impossible — to document your claim and you get caught in a terrible whipsaw.  Having health insurance provides you with the documentation you need to validate your claim. Insurance companies love documentation! They won’t pay out on your claim until they see the medical records and the medical bills. But if you don’t have health insurance, you can’t get treatment; and without treatment, you can’t get medical records and bills; and without that documentation, you will never recover on your claim to its true value. It puts you in a real whipsaw: You can’t recover $ until you treat; but without health insurance, you can’t treat until you recover!

Conclusion: Get Health Coverage!

So the final tip here is to get some kind of health coverage in place for three reasons: First, it is not a pay-as-you-go system, so someone needs to pay those bills while you are waiting for your case to settle. Secondly, there is the advantage of the great contractual adjustment that reduces the amount you have to pay back after an accident. And finally, avoid the whipsaw of not being able to treat until you recover . . . but not being able to recover until you treat!