Saturday, January 7, 2012

How will medical bills be paid out of the lawsuits?

I found a really interesting article on insurance reimbursement out of law suit settlements  by  Max Kennerly of the the Beasly firm.  Mr Kennerly is a litigator in that firm in the Philadelphia office.  The full article can be found here:   http://www.litigationandtrial.com/2012/01/articles/attorney/consumer-protection/hip-recall-lawsuit-subrogation/#comments.

I will provide some excerpts from that article but first a brief background and why I found his article interesting.

Background discussion.

The question he poses has always been an interesting one to me:  If you are submitting your Depuy claims to your insurance company and they are first paying out on your behalf to the provider, that which is  due less your deductibles and co pays, how is the insurance company going to get paid back?  Or, if you are on Medicaid or Medicare, how will the govt get paid back if they are paying out the claims on your behalf?

It has been my experience that Depuy/Broadspire reimburse things in three ways  (albeit, they prefer to reimburse the remaining balance after the insurance company made their payment to the provider):

(1) Submit a bill from a provider to my insurance company and they pay the provider a negotiated rate.  IF I DO NOT CALL ON EACH AND EVERY DEPUY BILL, THE INSURANCE COMPANY THEN SENDS ME A STATEMENT TELLING ME IF THERE IS ANY MONEY DUE.  I then send Broadspire Depuy the remaining bill and they pay it only the remaining balance.

(2) Submit a Bill to the insurance company and they pay the provider a negotiated rate and then I tell the insurance company to send the  ENTIRE Bill to Broadspire Depuy for payment to the provider under the negotiated rate.

(3) Sometimes, in certain situations,  I send a provider Bill directly to Broadspire/Depuy and they just pay it.  No insurance company is involved.

Frankly, I find all of this very confusing as I have said in prior posts.  If you are following the process for number 1 above, yes, the question arises as to how the insurance company gets their money back.  In the remaining two scenarios, there is no balance due to the insurance company.  Mr. Kennerly is commenting on only that situation.  Below are the excerpted quotes re the first  payment process.

"Subrogation, Where Much Of The Hip Implant Settlement Money Will Go"
(Subrogation in its most common usage refers to circumstances in which an insurance company tries to recoup expenses for a claim it paid out when another party should have been responsible for paying at least a portion of that claim.)
......

Take Mr. Dougherty, the 55-year-old referenced by the New York Times’ article. He’s too young for Medicare, so I assume he has some degree of private insurance. (Really, it doesn’t matter, because Medicaid and Medicare follow similar practices.) The article describes just under a half-million-dollars in medical bills he’s racked up as a result of his defective hip implant, and I’m betting the actual costs of revision surgeries, hospital recovery, rehabilitation, prescription pain killers, follow-up treatment / monitoring, and all the rest are much higher, potentially more than a million dollars.

As the article notes, Mr. Dougherty intends to file a lawsuit against Johnson & Johnson, the parent company of manufacturer of his hip (presumably one of the ASR or Pinnacle hips), DePuy Orthopedics. So here’s the big question: how will his medical bills be paid out of the lawsuit?

Every private health insurance plan I know of, as well as Medicaid and Medicare, includes a “right of subrogation” that allows the insurer (or the Centers for Medicare & Medicaid Services, or “CMS”)) to recover any payments it made to cover the medical care of an insured or beneficiary if that person recovers money from someone else to compensate them for those same injuries. For complicated reasons outside the scope of this post (the “collateral source rule”), a personal injury plaintiff can generally show a jury the full price of the medical treatment they received or will need in the future as a result of the defendant’s negligence, even if the plaintiff isn’t going to pay all of that out-of-pocket because an insurer or CMS will pick it up. On the flip side, however, the insurer or CMS imposes a “lien” on the judgment so that, if the plaintiff recovers compensation through a verdict or settlement, they then have to pay back the insurer or CMS for the treatment they received.

If Mr. Dougherty pursues his case all the way through trial and appeal and wins a judgment that includes the full value of his medical care, then the subrogation issue is usually simple: Mr. Dougherty has to pay back to his insurer whatever medical bills the jury thought were caused by the defendant’s negligence, minus whatever Mr. Dougherty paid out of pocket.

But few cases are resolved that way, and the majority of DePuy recall cases will likely end in some sort of settlement or another. At that point, things get really complicated, and the courts still haven’t figured out how to value subrogation claims in the context of a settlement. If someone with a defective hip receives $500,000 in medical care paid for by their insurer, files a suit against Johnson & Johnson asking for compensation for the medical care and $500,000 in lost wages and pain and suffering, and then settles their case for $750,000, how much should the insurer get?"

Apparently, according to Mr. Kennerly's article, the Law firm representing the patient hires a lien resolution company to negotiate the insurance settlement.  I found that really interesting.  My question is why wouldn't you as a patient use method two or three which I mention above where there is no balance carried by the insurance company? 

Why would I want to wait until some litigation is settled to deal with this if the claims can be subjugated now directly to Depuy/Broadspire?

Does anyone know the answer to this question?

2 comments:

  1. Hey Connie,

    Thanks for the link and the thoughtful commentary. A couple thoughts:

    First, a big caveat: though I am a lawyer, none of this is legal advice. Every patient's scenario is different and every one has different factors that affect what they pay, what their insurer pays, etc. I urge everyone reading to contact their lawyer and talk to them. If you don't have a lawyer, there are plenty of hip recall lawyers who do consultations for free and represent clients on a contingent fee.

    Second, I feel compelled to point out that most plaintiffs' lawyers are deeply suspicious of the Broadspire set up, and worry that it's being used to trick patients into missing the statute of limitations on their claims and to manipulate treating doctors and records. Broadspire also doesn't even try to compensate patients for lost wages or pain & suffering; they compensate for medical treatment they believe to be due to the failing hip, but that's all.

    Third, there's also a scenario, which I'd call (0), in which a patient receives treatment but Broadspire/DePuy refuses to reimburse the patient for anything, including out-of-pocket costs. In those instances, it's roughly the same as (1): the insurer pays for the treatment, and, if the patient sues and wins a settlement or judgment, the insurer claims a 'subrogation' right to whatever part of the settlement or judgment was meant to compensate for that medical expensive.

    Fourth, once a patient has chosen to involve Broadspire, the differences between (1), (2) and (3) are mostly negligible to the patient, because the patient doesn't pay anything out of pocket anyway. If a patient's using Broadspire, and Broadspire agrees to pay, then (2) or (3) will indeed bypass any issues with the insurer down the line. Although I can see some situations in which a patient would indeed prefer (0) or (1) for complicated legal reasons relating to the value of their claim, by and large (2) and (3) are easier routes for patients who never intend to file a lawsuit. Subrogation becomes more of an issue in situations where a patient has (0) or (1).

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  2. Thank you for your reply. The good thing about this blog is we can all agree to disagree and that is just fine.

    I like to take the position that most patients in situations like this have done thier homework. With the pelethora of ads on TV re the depuy hip recall by the plaintiff lawyer, I think you would have to be living in a cave to not know that you have a right to sue Depuy. If you know that, it would be the exception and not the rule that a patient would be unaware of the time lines in which you must file.

    Plaintiff lawyers tend to raise this point (raising the expiration date to file a claim) often in coversations. I do beleive that plaintiff laywers often raise this issue in order to get patients to sign a contract. I myself have been presented with this " sign now or you will loose your rights" speal when there is a year plus remaining to make a claim. Patients are smarter than Laywers think they are.

    I see no link between the employment of an independent claims agent and some underhanded scheme to confuse patients about their right to take legal action. I see no cause and effect here. I see no link betweeen one and the other.



    I disagree with your point that options 2 and 3 are easier routes if you don't intend to file a suit. I don't think it matters whether you intend to file a suit or not. A good business rule is always, get your money now regardless of your representation.

    I do agree that there are cases where Broadspire might refuse to pay. I know they recieve claims for non ASR related issues. If the hip is not in recall, I would not reimburse it either. I am not defending Depuy Broadspire I just don't know the facts of the cases they deny. No one has posted enough details of their refusal to reach any conclusion.

    There was a fellow who posted on the blog a few days ago who had a really interesting case claiming that Depuy would not reimburse becuase the insurance company refused to provide him with appropriate meidcal care. I would have to hear the facts on that one. The insurance company was Wellcare and I know they are well supported by orthodpedic surgeons so I am not sure what the deal is with that. I guess my point is, one must understand the facts as to why Broadspire/Depuy rejectected the claim. If a patient has a case for innapropriate rejection of coverage or reiumbursement, there are plenty of plaintiff lawyers who might be interested in taking that case on for no up front costs.

    My 2 cents for what it's worth. I enjoyed your commentary and thanks for answering my questions.



    Regards,



    Connie

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