In previous blogs, we have discussed the various tactics insurance companies use to short-change honest Arizona citizens of their rightful personal injury compensation. Ultimately, the insurance adjuster’s primary objective is to convince the injury victim that the inadequate settlement offer is a fair result for their particular claim. A few examples of these tactics include shifting percentages of fault to the injury victim or generally downplaying the nature and severity of the injuries. Another more subtle trick insurance companies utilize is basing their valuation on the health insurance benefits you received for your treatment. This allows them to reduce the overall medical charges and devalue the injury claim as a whole. Torgenson Law is here to tell you that these schemes are entirely improper under Arizona’s collateral source rule.
To better comprehend Arizona’s collateral source rule, it is useful to have an idea of how a third-party insurance companies use an injury victim’s health insurance against them.
For example, let us say that you are injured in a motor vehicle crash that was caused by someone else. The crash forced you to undergo medical treatment, and your total medical expenses were $40,000.00. Fortunately, you have good health insurance that has contracted with your medical providers to pay less than the full amount of your bills. Specifically, your health insurance only has to pay $20,000.00 in total.
Now, one way or another the negligent driver’s liability insurance company has learned the amount that your health plan paid for your treatment. So, the insurance company sends you an offer of $30,000.00 and explains that $20,000.00 is for your medical bills and the other $10,000.00 is for your physical and emotional pain and suffering.
When you point out that your total medical expenses alone were $40,000.00, the adjuster merely states that the offer is more than fair considering your medical bills were actually only $20,000.00 because that is all your health insurance had to pay. You consider the offer further and believe that $30,000.00 will make a huge difference for you and your family, so you happily accept the offer.
As injury lawyers, we are sorry to tell you that you fell for the insurance company’s ploy. Not only did you undersell your claim and save the insurance company thousands of dollars, but also you will likely owe money to your medical providers and even your own health plan. The third-party insurance company failed to disclose a few major details. Knowing that a third-party insurance company might be offering to settle your personal injury claim, your doctors and other medical providers will likely file healthcare provider liens on your settlement proceeds to recover the difference between their total charges ($40,000) and what your health insurance paid ($20,000). Similarly, your health plan will probably also require you to pay them back for the benefits they provided during your recovery ($20,000). After all, the only reason you incurred medical expenses was because someone else caused your injuries, and that person (or their insurance) should be responsible for paying your bills. So, your medical providers and health insurance think that it is only fair that the settlement be used to cover their costs and services. Sadly, the adjuster’s trick and your inexperience with handling a personal injury claim would ultimately leave you with nothing, as your “$30,000 settlement” will quickly disappear into the hands of your health plan and medical providers.
Fortunately, Arizona law provides certain protections for injury victims to help them avoid falling into the trap detailed in the above example. This doctrine is known as the collateral source rule. For the purposes of personal injury law, a “collateral source” is simply benefits or compensation from someone other than the liable third-party. The most obvious example would be health insurance, which pays for your medical treatment while you negotiate your personal injury settlement with the liable party.
The rule itself specifies, “total or partial compensation for an injury which the injured party receives from a collateral source wholly independent of the wrongdoer does not operate to reduce the damages recoverable from the wrongdoer.” See Hall v. Olague, 119 Ariz. 73, 73, 579 P.2d 577, 577 (App. 1978). In other words, the liable party may not use the health insurance benefits you received as a credit against his or her own liability. The purpose of this rule is to prevent the liable party from benefiting simply because the injury victim has good health insurance.
As long as your treatment is necessary and the charges are reasonable, you are entitled to the total billed amount as part of your personal injury compensation. Do not let an insurance adjuster tell you otherwise.
If you have suffered a personal injury, do not let insurance companies bully or trick you into accepting less than you deserve. Instead, call Torgenson Law at (602) 726-0747 if you need an experienced personal injury attorney who can protect your rights and aggressively battle on your behalf for just compensation.