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Things Adjusters Say: Health Insurance Already Paid Our Bill

This article is part of a series on insurance company's justifications for paying you less than you deserve. Click here for more ridiculous things insurance adjusters say to pay you less than you deserve. Whether through malice or ignorance insurance adjusters often refer to questionable logic and non-existent laws to award you as little money as possible. A personal injury attorney can ensure that you receive full compensation. The consultation is free. 

Adjusters say the strangest things: Health Insurance Paid the Medical Bills

The insurance company is trying to pay you as little money as possible, regardless of how injured you are or how much harm you have suffered. One of the insurance industry’s favorite ways to pay you less is to refuse to cover your medical expenses because you have health insurance. Not only is this argument illogical, it is also inadmissible as evidence in court. But that doesn’t stop insurance companies from trying to use it to short change you.

Let’s take a hypothetical client, Ms. Jones. Ms. Jones was injured in a car wreck. Her medical bills are $10,000, but her health insurance paid $9,500, leaving $500 which Ms. Jones paid out of pocket. The insurance company will argue that Ms. Jones should receive $500, since that is the amount of money she had to spend out of pocket.

Can the defendant pay me less because I have health insurance?

No. The legal doctrine preventing this is called the “Collateral Source Doctrine,” and it states that it is irrelevant whether or not the victim of a tort received compensation from a source other than the defendant. Or, as I find it easiest to explain to my clients: You do not get to benefit from insurance you did not pay for.

Let’s go back to Ms. Jones. Ms. Jones paid her health insurance premium every month, not the defendant. Why, then, should the defendant benefit from insurance he never paid for? He shouldn’t, and that is why Georgia has the collateral source doctrine.

Does the collateral source doctrine only apply to insurance?

The collateral source doctrine applies to any compensation the victim received from a source that is not the defendant or the defendant’s insurance company.

This includes any type of insurance such as medical payment coverage, short or long term disability, worker’s compensation, collision or comprehensive insurance on your car, and health insurance.

The collateral source doctrine also applies to acts of kindness. If Ms. Jones did not have health insurance and her church collected $10,000 to pay her medical bills the defendant could not use that fact to refuse to pay Ms. Jones’ medical bills. If Ms. Jones’ son fixed her car for free because he loves his mother the defendant could not then refuse to pay for the repair of Ms. Jones’ car.

The defendant, whose negligence caused the injury, does not get to benefit from insurance he did not pay for or from the kindness and generosity of others. No matter what the insurance industry says.

Isn’t that double dipping, getting paid for the same thing twice?

No, it is in the public good for people to be charitable and generous to one another, especially in a time of need. If a defendant could offset the harm he caused by relying on the generosity of others it may discourage charitable giving in the first place.  

As for insurance, Ms. Jones paid her insurance premium every month, not the defendant. Furthermore, depending upon the type of insurance she has she may have to pay higher rates in the future. Ms. Jones may also be legally obligated to pay back, in part or in full, the benefits her own insurance company paid out on her behalf. If Ms. Jones believes the lies the defendant’s insurance company tells her she could end up in what I call the subrogation trap.

What is the subrogation trap?

The subrogation trap is a situation in which a person fails to collect their full medical damages on the basis that their own insurance paid for those damages, but then becomes obligated to repay their own insurance company.

Back to Ms. Jones, she incurred $10,000 in medical expenses, her health insurance company paid $9,500 of those expenses, and she paid $500 out of pocket. The defendant’s insurance company told her they would only pay her $500 for her out of pocket costs and Ms. Jones accepted that amount. Unfortunately for Ms. Jones, her health insurance company has a right of subrogation, that is, a right to be reimbursed for medical expenses that they paid out.

The case has settled. Ms. Jones received $500 in medical damages, $3,000 in pain and suffering, and $1,000 in lost wages, for a total settlement of $4,500 (clearly, she did not have a lawyer). Unfortunately, her health insurance company has a right to be repaid $9,500 and is looking to Ms. Jones to pay that amount. Ms. Jones is now caught in the subrogation trap.

Do you want to guess what will happen when Ms. Jones calls the defendant’s insurance company? If they even pick up the phone they will make an empty apology, tell her there is nothing they can do, and offer a canned platitude. Not every insurance company has a right to subrogation, but the subrogation trap is a very real fear.

DON'T Be taken advantage of.

An attorney can help ensure that you are not taken advantage of by unscrupulous insurance adjusters looking to line their employer's pockets at the expense of your injuries. Click here for a free consultation.