Do Medical Bills Come Out of a Car Accident Settlement?

Medical providers and insurance providers may receive a portion of a car accident settlement if either entity paid for medical treatment after a crash. These entities may help pay for or pause medical bills before a settlement is reached, and will expect reimbursement once there is a verdict.

If you’ve recently suffered a personal injury in an auto accident, it is likely that some type of insurance policy helped pay for initial medical bills, such as a trip to the emergency room or a visit with your doctor. Once you receive a settlement for your claim, the company that paid for your medical care will anticipate repayment for the money they’ve spent.

The purpose of a settlement is not to enrich you; it is to reimburse you for costs that were out of your control, like medical expenses due to an accident injury. If a third party paid for your medical expenses so you wouldn’t need to pay out of pocket, you cannot use the reimbursement of those costs to pad your pockets. Read on to learn how medical bills are paid after a settlement.

How Car Accident Settlements are Divided

Car accident settlements are divided between each party that provided financial assistance during a case. For instance, if health insurance paid for injury treatment before a case settled, they are paid back that amount from the settlement. Settlements are typically split between insurance providers, medical providers, and auto accident attorneys before the accident victim receives their final portion.

1. Accident Victim Reimbursement

Car accident victims are often eligible for several types of compensation called accident damages. There are two types of damages, economic (special) damages and non-economic (general) damages.

  • Economic damages are expenses that are tied to a particular dollar amount, such as lost wages. Accident victims are reimbursed for all economic damages, except for those already paid by another entity, such as vehicle repair costs paid by auto insurance coverage.
  • General damages are expenses that are not tied to an actual monetary amount, such as pain and suffering. General damages are meant to help make an injured person whole again.

2. Attorney’s Fees and Legal Costs

Personal injury attorneys and car accident attorneys work on a contingency fee, which means their payment is contingent on a successful settlement or verdict. If you hire an attorney who successfully argues your case, their fees and costs will be taken from the total settlement. Costs associated with moving the case along, such as the filing fee paid to initiate a lawsuit, are tracked throughout the case and also taken from the settlement amount.

3. Auto Insurance Reimbursement

Kentucky is a “choice no-fault” state, which means Kentucky drivers are required to carry Personal Injury Protection (PIP) coverage by default, and file accident claims through their own insurance first. Those who utilize PIP coverage or similar optional coverage, such as Medical Payments (MedPay), will not have to reimburse the auto insurance company for immediate medical bills.

However, Kentucky drivers who opt out of PIP coverage or do not have MedPay coverage may discover that their initial medical bills still go through auto insurance. If the auto insurance company paid for medical costs caused by an at-fault driver, it will expect reimbursement from the settlement.

4. Health Insurance and Medical Providers

Health insurance seems like the first choice for medical bills, but your personal health coverage will only kick in once other forms of coverage (such as PIP coverage) have been exhausted. If you use your personal health insurance to cover injuries caused by an at-fault party, the insurance company will expect reimbursement for all medical expenses once you receive a settlement.

Private providers and government-based providers, like Medicare and Medicaid, will also expect reimbursement for all medical costs after a settlement. If you are uninsured and health insurance does not pay for any medical treatment before a settlement offer is made, reimbursement will go directly toward the medical provider who initiated treatment.

How Medical Bills Are Paid After a Settlement

A calculator beside a stethoscope.

In Kentucky, immediate medical bills are often paid through the accident victim’s PIP coverage up to the policy limits, typically $10,000. Once PIP coverage is exhausted, most medical bills will run through the victim’s personal health insurance. At this point, an accident victim can file a personal injury case against the at-fault driver. The accident must cause more than $1,000 in medical expenses, a broken bone, or permanent injury or disfigurement to file a lawsuit.

The victim’s health insurance company and medical providers may issue a medical lien against the lawsuit, to enforce their right to repayment for related medical bills. This process avoids a claimant receiving double payment for their medical expenses, once by their insurance provider and again in the form of a settlement. Liens ensure the entity that provides or pays for medical care is reimbursed.

The lien will enter subrogation (the period when the lien holder expects repayment) once a settlement is announced. Any lien amount will immediately be deducted from the settlement check to repay any outstanding medical bills and the victim’s health insurance company. The claimant will keep compensation for any deductibles and copay they paid during treatment.

What if My Healthcare Provider is Overcharging?

Medical providers can overcharge for medical costs related to car accident injury treatment. Overcharging is often the result of balance billing, or when a healthcare provider bills a patient for the difference between the cost of medical care and the amount the patient’s health insurance provider paid. Balance billing is illegal in most personal injury claims — here’s why.

Balance billing occurs after a victim has paid their deductible, copayment, or coinsurance. The victim’s health insurance policy has also paid everything it is contracted to pay towards the medical bill, but there is still a balance remaining. The amount that insurance providers pay is almost always less than the actual price, and the medical provider may expect the victim to pay the difference.

Balance billing is illegal in most cases, so it’s important you speak with an attorney if you believe you are being overcharged for medical expenses in your personal injury claim. If your healthcare provider or hospital has a contract with your health insurance provider (even Medicaid or Medicare), you should not be billed more than that contract allows.

Negotiating the Cost of Your Medical Bills

Accident victims have the right to negotiate the cost of medical bills without the process impacting the total settlement amount the victim is owed. In most personal injury lawsuits, medical expenses are negotiated after a settlement has been decided to ensure that the victim receives enough compensation to reimburse the appropriate parties.

Once a settlement has been announced, a personal injury lawyer can review all medical expenses for evidence of balance billing or other types of overcharges. A lawyer can also review the components of the victim’s insurance coverage and contract with the medical provider to ensure all listed medical costs are accurate and in good faith.

A personal injury attorney can also negotiate the terms of repayment with the victim’s insurance provider. For example, if a medical provider bills an insurance provider $500 for an x-ray, but the insurance provider only pays $300, an attorney can negotiate a further reduction once the insurance provider enters subrogation for repayment.

Protecting Your Personal Injury Settlement with David Bryant Law

If you are awarded a personal injury settlement, medical expenses, legal costs, and other accident-related fees will be deducted from your accident settlement. As the accident victim, you will be entitled to keep the remainder of the payout for damages like pain and suffering and lost wages. A car accident lawyer can help protect your portion of the settlement to ensure you can be made whole again.

No accident victim deserves debt due to a car crash that was limited or no fault of their own. A trusted law firm will work tirelessly alongside accident victims to ensure that all parties who deserve compensation receive it, including the victim. If you were injured in a car accident and are fearful of what will happen with your reimbursement, contact David Bryant Law for a free consultation today.

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David G. Bryant is certified to practice in all state courts in Kentucky, and federal courts in the Eastern and Western districts of Kentucky, Southern District of New York, Southern District of West Virginia, Northern District of Ohio, Middle District of Tennessee, and Western District of Pennsylvania. He is licensed to practice before the United States Supreme Court and the Sixth Circuit Court of Appeals.