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By Paul Bigley
In recent years we have seen a tremendous increase in “double-dipping,” and in many cases even “triple-dipping,” with regard to the payment of medical expenses incurred as a result of personal injuries.
In a typical situation, an individual is involved in a negligence-free automobile accident. He has his own automobile insurance policy – including medical benefits coverage – and a group health carrier. Additionally, there is the likelihood of a third-party tort claim against the responsible party and the third party’s carrier. The stage has now been set for medical bills to be paid more than once. It ‘has also been set for insurance carriers to be manipulated at great cost to them, their policyholders and ultimately the insured public.
The medical treatment begins. All too often, the treatment documented is excessive and is frequently intended to create or enhance a tort claim, rather. than to cure a legitimate injury.
Chiropractic treatments with extensive physical therapy charges, repeated x-ray charges and the costs of technologically advanced diagnostic tools such as MRI’s and Cat Scans can create a substantial medical bill in a very short time. If the carriers to whom claim forms are submitted are not careful, one $4,000 bill can easily turn into $12,000 in payouts.
What can an insurance company do to protect itself? The best protection is to provide proper training and education for the adjusting staff, coupled with solid claims practices which ensure adequate notice and communication to the insured. For example, if the policy requires the insured to reimburse the carrier whenever there is a third-party recovery, either via settlement or judgment, it will eliminate many problems on the far end if that information is clearly brought to the insured’s attention on the front end. Early written notification to the insured, and/or the insured’s attorney, if he has one, at the outset is imperative.
Carriers can make benefits available to an insured only after he has signed a statement indicating -that he knows reimbursement must be made if there is a third-party recovery.
Reimbursement provisions within automobile liability policies and, health coverage contracts have consistently been held enforceable. However, courts have rejected the approach taken by some carriers in which an insured is asked to assign his rights of recovery against the third-party to the insurer. Such a requirement would constitute an improper assignment of a personal right of action, which is barred by law.
Additional steps can help prevent an insured from later claiming he was unaware benefits were paid because his attorney requested the benefits and perhaps improperly distributed the proceeds. Likewise, attorneys who are retained after an insured has requested benefits will sometimes complain that a doctor was paid directly. The attorney may say this makes it impossible for him to negotiate down the doctor’s lien when the third-party recovery is less than what he had hoped for. Since it is the insured’s benefits that are being paid, regardless of the medical claim forms which include the standard assignment of benefits directly to the carrier, checks can be made payable to both the insured and the doctor. Similarly, if there is an attorney involved, benefits can be paid in the name of the insured and the attorney – or the insured and the doctor.
Even when an insured or his attorney has specifically authorized payment directly to the doctor, and in the doctor’s name only, we would suggest that the insured and/or his attorney be provided with a statement of benefits each time additional benefits are paid. Receipt of a statement will help avoid any possible argument that they were unaware of subsequent benefits being paid, particularly when treatment is for an extended period of time. Additionally, checks directed to the attorney should include the appropriate cover letter. The attorney will be forced to assume the responsibility for distributing those funds. Accordingly, he will have greater accountability if the monies are not reimbursed or are improperly distributed.
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Paul Bigley is an attorney with the firm of Gilbert, Kelly, Crowley & Jennett in Los Angeles.
© 1995 John Cooke Fraud Report