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Auto Insurance Claims/Should the auto insurance pay only the copayment or total medical bill?


Hi Doctor Settlement! Some medical bills are only the copayment receipts because the health insurance has already paid the rest of the money. When submitting the medical receipts with the at fault car insurance, should the insurance pay only the copayments or total medical bills?

If the insurance should pay the total medical bills, how to demand  the at fault car insurance to pay the total medical bills, pay the no fault driver directly or inform of the health insurance to collect the money from the auto insurance?

Dear Ray,

Thank you kindly for giving me the opportunity to help you.  The legal principle required to prevail on your side is called the “Collateral Source Rule”.

Your issue sounds simple, but it is one of the most complex to resolve b/c the law varies by state, AND as a practical matter application of the principle involved sometimes varies between a court trial versus a negotiated settlement.  So to give you a fantastic legal doctrine: “IT DEPENDS!”  Don’t you just love it when things are so crystal clear, Ray?

Because this is a complicated issue, I am going to do two things:
(1) I simplify my response to start with my taking the position that the tortfeasor should pay the ENTIRE MEDICAL BILL, not just the discounted amount paid by your insurance.
(2) I will give you a lot of my time in case you want to make the argument in your demand letter for the tortfeasor to pay the full amount.

Ready, then—here we go!

#1. My short answer—take a firm position that they must pay the actual amount billed.
Let’s make up these facts.  You incur medical bills totaling $8,000.  But your insurer arranges for a discount and pays only $5,000.  How much does the tortfeasor pay?

You and I want them to pay the full $10,000.  You purchased that insurance, or it came to you via your employer in lieu of more cash in wages—so either way, you put out for this right.  WHY should the tortfeasor have a windfall simply b/c they happened to injure someone who was prudent and bought insurance?  Use that argument, Ray.

It is not like you are getting double paid since your insurer will likely make a subrogation claim for the amount you paid.  Sorry, Ray, but you might have to take a quick lesson on subrogation at www.SettlementCentral.Com insurance adjuster information website.  Here is a great link on the Introduction to Subrogation—Forced Payback to YOUR OWN Insurer From Your Personal Injury Award

So, having taken a peek at that page, you now have knowledge that you cannot be accused by the adjuster of getting double paid since you will (probably—but not for certain) have a subrogation claim from your own insurer to be repaid what they put out: the $5,000.  Does this make sense, Ray?

What you are asking about is called the "Collateral Source Rule" (CSR).  It is hundreds of years in common law standing, but under attack as state legislatures increasingly come under the influence of the money given them by the insurance industry.  Hence, one will have to inquire of your state insurance commissioner or search for "Collateral Source Rule" and your state to see if it is alive in your state.  You can find your state insurance commissioner at SettlementCentral.Com insurance claims help site on this link:

What the CSR means is that any benefits received by an injured party from a source which is entirely COLLATERAL to a tortfeasor will NOT serve to reduce the damages otherwise recoverable from that tortfeasor.  Wiki introduction

Here is the explanation of why we get to bill for the full amount of the medical bill in most states, including Tennessee.  It is called the Collateral Source Rule.  John Day is a leading Tennessee trial attorney.  Even though this may not be your state, he does a good job of explaining.

The Bottom Line:
“An injured party's right to recover his or her "reasonable and necessary expenses" must be viewed in connection with the collateral source rule:

Normally, of course, in an action for damages in tort, the fact that the plaintiff has received payments from a collateral source, other than the defendant, is not admissible in evidence and does not reduce or mitigate the defendant's liability."

Note, Ray, that many states do make an exception for medical malpractice cases in the interest of overriding societal goals.  But that is not your case.  

Hence, put in the full amount of the bill, and let the adjuster fight to reduce it.  You asked how it is done—how you make the argument and how the payment is made.  Here is the five step process.

FIRST, do not be in such a rush that you submit the net bills to the adjuster.  Call and get a copy of the ORIGINAL BILLED AMOUNT that shows NO PAYMENTS and NO DISCOUNTS.  Your doctor’s office will have to reprint the original bills, unless your insurer has copies.

SECOND, include the full amount in your demand letter.

THIRD, be prepared IN ADVANCE to argue this point in writing to the adjuster.  Take some of my ideas above and argue for it.

FOURTH, the tortfeasor issues the check for the full amount to the plaintiff in a lawsuit and the plaintiff agrees to pay the doctors and holds the tortfeasor harmless from any claim by the doctors.  The problem with a self-represented claimant is that the tortfeasor’s insurer cannot trust a layman to pay the bills.  Hence, I would argue that the full amount will be either paid to you or paid to the doctors and to you, JOINTLY.  Then you get the doctor’s office to endorse the check over to you since they have been paid in full by your insurer. Make sense?

FIFTH, you will face off versus your own insurer in trying to knock down some of their subrogation claim.  That is a different topic, but you can get an idea from the page I gave you above.

If you can get even a few hundred bucks over the amount of your subrogation, then that is a victory.  

That is really all you need to know, Ray.  But for extra credit, I will present some additional background in case you get into it with the adjuster.  You will know more than he does about the CSR!

OK, Ray, you wanted some BEEF to put in your argument to the adjuster (IF she challenges your demand for the full $10,000).  HERE, below, is something I cribbed from an online resource, but lost the link—anyway, you can likewise crib some of this language to support your argument in favor of the CSR.  Here is what I found somewhere online:

Defendants often bemoan the collateral source rule as creating a windfall or double recovery for the plaintiff.

So why does it exist?  Five reasons:

#1. DETER negligent conduct.
Our tort law applies the collateral source rule as part of a policy seeking to ‘deter negligent conduct by placing the full cost of the wrongful conduct on the tortfeasor.’ The tortfeasor who is legally responsible for causing injury is not relieved of his obligation to the victim simply because the victim had the foresight to arrange, or good fortune to receive, benefits from a collateral source for injuries and expenses. In an early case applying the collateral source rule to wages this court stated:

#2. NOT FAIR if tortfeasor benefits from your insurance.
We see no reason why one whose acts have caused injury to another should reap the entire benefit that comes from the payment of wages made by an employer, either as a gratuity to a faithful employee or because such payments are required by contract. Such payments do not change the nature of the injury which the employee sustains through the wrongful acts of the tortfeasor. If either is to profit by the payments made by the employer, it should be the person who has been injured, not the one whose wrongful acts caused the injury. The extent of the liability of the wrongdoer is dependent upon the extent of the injuries inflicted by his wrongful act, not upon the question whether the employee receives wages during disability from his employer.” Ellsworth v. Schelbrock, 2000 WI 63, ¶ 7, 235 Wis. 2d 678, 684-85, 611 N.W.2d 764, 767, (internal citations omitted).

#3. The CSR creates a uniform measure of damages in all cases.  Damages do not fluctuate depending upon what various first party insurers pay toward the medical costs.  In our example, maybe in your case your insurer paid the $5,000—but in another case, another first party insurer paid $6,000—and a third paid only $4,000.  The CSR makes for uniformity b/c under it, ALL three tortfeasors would pay the full $10,000.

#4. If there is to be any double recovery, the rule benefits the plaintiff rather than the tortfeasor as a matter of equity.  

#5. CSR prevents loss associated with paying insurance premiums by insured plaintiff.  In other words, if there were no CSR, your insurance costs paid out would not benefit you at all.  

That is about it, Ray.  I trust that my extra time here has produced some information that has been of value to you, and thus I would respectfully request that you take the time to locate the FEEDBACK FORM on this site and leave some feedback for me.

Best Wishes,

Dr. Settlement, J.D. (Juris Doctor)

Post Script----Last topic is not necessary for you to read, but I will give it to you in case you are interested.

Here is the politics of the CSR, since it is under attack each year.  I would just SKIP this part, Ray, unless you want to know why the CSR turned out the way it did in your state.  

Inherent in the CSR is a basic conflict between two principles of the law: first is to limit the compensation to the victim to the amount necessary to make him whole; and second it to avoid giving a windfall to the tortfeasor.  

It is true that the victim who has purchased insurance may have a recovery of more that he "should", but he paid for this right, didn't he?  Plus, those pushing abolition of the CSR under "tort reform" rarely mention that the victim who does receive insurance benefits almost always has to pay some part of that money back to his insurer because of subrogation rights.

The battleground is now nation-wide, and each year assaults are made, but voters never have the information on a hidden fight like this, so there is little adverse impact against politicians who are on the take from the insurance industry (which are overwhelmingly from one political party nationwide—which I will leave you to guess at—should not take you too long to figure out which party is in bed with the insurance industry).  

I have been treasurer for two races, and believe me, money flows from the insurance industry with no or little disclosure in the press.  And lobbyists also contribute.  Of course, trial attorneys also contribute, but their dollars are after-tax dollars, given from their own pockets.  But the insurance dollars are subsidized by us, the taxpayers, since they get to deduct the costs of the "Appreciation Night for Representative Ray Niceguy"—a nice haul from various lobbyists of taxpayer-funded "appreciation"!

Some miscellaneous reading on the politics—SKIP THIS unless you have an interest in how our laws are made.
Tennessee Tort Reform — Collateral Source Rule Necessary

TEXASS Governor Rick Perry at work

Kansas is as "red" as they come; hence the insurance industry has no problem getting effort after effort to kill the collateral source rule.  

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Doctor Settlement


27 years of front line plaintiff`s trial lawyer experience in PERSONAL INJURY INSURANCE CLAIMS. Along with other attorneys and insurance adjusters, we have created a website to help injured people settle their own personal injury claims. With the help from feedback from hundreds of satisfied members, has become THE AUTHORITY for Internet personal injury insurance claim settlements. I am humbled and honored if people can benefit from my experience and current volunteer work in helping injured people. I hope I can explain things in a manner that is useful for the questioner. If not, do not hesitate to e-mail me and I will take a second shot at it! Best Wishes for your physical and financial recovery.


Life Experience: 27 years of front line plaintiff's trial lawyer experience

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Education/Credentials: J.D. (Juris Doctor) 1977

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