This article is the first in a series on subjects you should know about regarding personal injury and wrongful death trials. This particular article is to help explain how medical bills are handled in a civil jury trial for personal injuries.
How medical expenses are handled in a personal injury case can be confusing.
When a person is injured as a result of the acts of another person and receives medical treatment to care for that injury, there is a difference from the total of medical expense incurred versus the medical expenses which can been recovered in a court case. When the doctor who treats you for your personal injuries, submits the bill to your health insurance for reimbursement, that insurance company usually pays the doctor at a “contract rate” and you usually pay a co-pay.
For example, if the doctors charges $200 in total for the visit, your health insurance pays 30% and you pay a $10 co-pay, the doctor gets paid $70 for that visit. This is the total from you and the insurance company. This reduction from the normal fee is the “contract rate” and is an agreed upon amount between the insurance companies and the physicians in their network.
For that doctor visit, the total charge might be seen as $200 as that is what might appear on the first line of your bill. However, in a personal injury case you are only allowed to recover the $70 from the jury.
The reason for this is that the only expense to you is $70, not the full $200. You are not allowed to recover the 70% discount between the normal rate and the “contract rate” the insurance company gets under their contract with the doctor ($140 discount in our example).
Some people might say, “Why is the injured plaintiff allowed to recover the part that was paid by the health insurance?” It may not seem fair as that amount was not paid by the plaintiff out of their pocket. What most people are not aware of is that the insurance company virtually always has a contractual right of reimbursement against the injured plaintiff if that plaintiff makes a recovery.
So, using the same example, if the $70 actually incurred after the discount is recovered from the injury case, they receive the $60 or 30% of the doctor’s charge plus the $10 they paid out of their own pocket. The injured is then contractually obligated to pay back the amount the health insurance paid to that physician. So, in actuality, the injured person will only receive the $10 co-pay that originally came out of their pocket. The rest goes back to the insurance company.
Juries need to know that when there is a verdict to compensate an injured person and there is a portion of that verdict specifically set aside for medical expenses, most of that money goes to other people. That money goes to pay back doctors and health insurance companies. Only a small part goes to pay back the injured person for what they paid out of their pocket.
It is important to clear up any misconceptions about verdicts and jury trials so that people in the community realize there is rarely a windfall to the injured person when the jury follows the law and applies it to the evidence.