Hospital Puts Lien On Accident Victim’s Insurance Settlement

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 19, 2018

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Car accidents involving serious injuries more often than not also involve serious dollars. Insurance settlements, car accident lawsuits and any number of other tangential costs can drive the total dollar amount attributable to a serious car accident into the millions. One of the largest portions of the total dollar amount is often attributable to medical bills. Emergency services, ambulances, surgeries, extended hospital stays, follow-up care—these things are expensive, and while many car accident victims have health insurance that cover their expenses, hospitals don’t always recoup as much of their cost as they’d like. Saint Luke’s Health System, based in the Kansas City area, ran afoul of the courts when it began declining insurance payouts in favor of placing liens on the potential proceeds from car accident settlements and car accident lawsuits.

Patient Class Action Lawsuit Against St. Luke’s

St. Luke’s, in a bid to avoid pre-negotiated payments from insurance companies, declined to bill the health insurance of 930 former patients and instead sought reimbursement—and a much higher rate—from a patient’s car accident settlement. Three former patients filed a class action suit in Jackson County, MO that resulted in a $3.5 million payout (not including attorney fees) and a promise from St. Luke’s never to engage in such dubious practices ever again.

Liens On Accident Settlements Yield Higher Compensation for Hospitals

Hospitals such as St. Luke’s, which are part of larger health systems comprised of several facilities, have pre-negotiated rates with insurance companies. Their billing rates to those insurance companies are generally capped. Car accident lawsuits routinely result in settlements in the high six figures or even millions. St. Luke’s sought to boost revenues by declining to accept the insurance of accident victims (and the pre-negotiated rates their insurance companies would pay) in favor of placing liens on any potential proceeds procured through a car accident lawsuit. The problem, however, is that car accident settlement funds are intended to compensate the victims—not create a revenue bump for a hospital providing care.

St. Luke’s May Not Seek Compensation From Settlement

Judge Joel Fahnenstock approved a settlement agreement that saw St. Luke’s providing financial compensation to class members as well as injunctive relief preventing St. Luke’s from engaging in similar behavior in the future. St. Luke’s is believed to be the first hospital enjoined from such billing practices, but the practice is widespread throughout the country and with the success of the St. Luke’s suit, further class actions are sure to follow in other jurisdictions.

Car accident victims are often faced with a tough road to recovery. Car accident settlements are designed to relieve some or all of the financial burden associated with injuries and property damage sustained in a car accident. In Jackson County, Missouri—and likely soon in other areas—the court has now taken steps to ensure that car accident victims, not hospitals, are receiving their due.

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