Frequently Asked Questions - Do I have to pay my Medical Bills from my Settlement?
Yes, you should pay your medical bills from your settlement. However there are many different circumstances regarding your medical bills to be paid out of your settlement.
First, when negotiating a settlement amount with the insurance company, your medical bills were factored in as part of the negotiated settlement amount. Your medical bills are part of the “special damages” of your claim. Special damages are compensation for your medical bills and lost wages.
If you are in an auto accident, your own auto insurance pays a part of your medical bills which is called your PIP coverage (personal injury protection). Most people carry what is required by Florida law - $10,000 in PIP coverage. This means that your insurance carrier will pay 80% of your medical bills up to $10,000. If choose to have a deductible of $1000 on your PIP coverage – you will be responsible for the first $1,000 in medical bills. You will also be responsible for the 20% that PIP did not pay and anything over the $10,000 paid out by PIP coverage. It is important to remember that you must seek medical treatment within 14 days from the day of your accident. If you do not seek medical treatment within 14 days you will not receive any PIP benefits for any medical treatment after the 14th day. Also, a medical doctor must determine that you had an Emergency Medical Condition (EMC) in order for you to qualify for the full $10,000 of your PIP benefits. If you do not have a doctor say you have an “Emergency Medical Condition” you will only be entitled to $2,500 in PIP benefits for your medical bills.
There is also additional coverage you can buy on your auto policy that is called Med-Pay. Med-pay can be bought in various amounts of $5,000 and up. Med-pay will cover the 20% that PIP did not pay and will pay medical bills after PIP is exhausted up to the med-pay limit. For example, if you have a policy of $10,000 PIP, no deductible, and $5,000 in med pay, your auto insurance will pay 100% of the medical bills up to $15,000. However, you should know that most of the insurance carriers will assert a lien against your settlement for the med-pay that they have paid out on your behalf.
With serious injuries you also might have used your health insurance. Your health insurance will also assert a lien against any settlement proceeds.
However, Florida law requires that if you have an attorney for your claim the amount that must be repaid for the health insurance lien or the med-pay lien will be reduced based on the percentage of the attorney’s fee and their costs. For example, if you settled your case before a lawsuit was filed the attorney fee would be 33 1/3%, so at minimum, your med-pay lien or health insurance lien will be reduced by 33 1/3%. If a lawsuit was filed and an answer to the Complaint was filed, the attorney fee will be 40% and the lien would be reduced by 40%. Sometimes the costs on your case are not enough to increase the percentage amount.
Also, if your PIP coverage is exhausted and you still need treatment or need to see a specialist, such as an orthopedic surgeon or a neurosurgeon, your attorney may be willing to sign what is called a “Letter of Protection” for you to continue treatment. A letter of protection is a guarantee to the medical provider from the attorney that the medical provider’s bill will be paid out of your settlement.
If you have a slip and fall case, and you have health insurance most likely you will have to use your health insurance for your emergency room visit and any other treatment may have to be under a “Letter of Protection”. Some health insurance policies will not cover medical bills if it is related to someone else’s negligence. If your health insurance does cover your medical bills, your health insurance company will assert a lien as discussed above and your attorney will have to pay the lien out of your settlement.
If you are treated under a Letter of Protection, there is a hospital lien, health insurance lien, or med-pay lien, your attorney will pay these out of your settlement. However, your attorney will negotiate the reduction of these bills in order to put more money in your pocket.
If there are no liens for any of your medical bills it is still advisable for your attorney to try to negotiate these bills for a reduced amount and pay them out of the settlement. The last thing you and your attorney want is to still be getting phone calls from debt collectors for these bills after the case has been closed.
In some unfortunate cases, there is limited insurance coverage and the outstanding medical bills exceeds the settlement amount. In those cases, your attorney will contact all the medical providers and request that each take a pro-rata share of the settlement as a full and final payment. However, some medical providers are not willing to voluntarily accept the pro-rata share, which is usually pennies on the dollar. Your attorney will then file a Petition for Equitable Distribution. The Petition will include the circumstances of the personal injury claim, the settlement amount, and list all the outstanding medical bills and the pro-rata share for each medical provider. Once all the medical providers are served a copy of the Petition for Equitable Distribution, they have 20 days to file an Answer to the Petition with the Court. Ultimately a hearing will be scheduled, and a Judge will decide on how the funds are to be disbursed. In most cases, the Judge will enter an Order approving the Pro-Rata share to each provider. A Petition for Equitable Distribution is very rare and is a last resort for your attorney to get the medical bills resolved so that the medical providers do not sue you or your attorney for their balance.