A recent article in an insurance industry periodical asks why hospitals charge auto insurers more than health insurers. The article then concludes hospitals use their market power against commercial insurers. Hospital charges are unfair. Hospitals regularly take advantage of people following automobile accidents. However, the insurance article asks the wrong question and reaches the wrong conclusion.
What is the correct question? The article should ask “why do patients with auto insurance claims pay more.” The real focus should be on the actual patients. After all, the patients ultimately bear the real cost of health care. And, patients seeking treatment following an automobile accident often pay more. The injured patient loses in two different ways. First, the patient probably paid health insurance premiums with the expectation of health coverage. Yet, their health insurance goes unused following a car accident or other personal injury. Second, the inflated medical charges not covered by your health insurance — These inflated charges were ultimately paid from the settlement money you needed to cover all your damages.
What is the correct conclusion? The article WRONGLY concludes the higher charges are the result of hospital market power. The article ends by quoting a professor at Johns Hopkins — “If market forces fail to generate a reasonable price for these patients, policymakers should step in to address this market failure.” I’m sure hospitals do use their market power to extract the highest reimbursement possible. However, we are NOT in this predicament solely because of true economic market power. At least not in Alabama. No, we are largely in this position because hospitals have already worked our actual policymakers to pass a law allowing them to place liens on medical care rather than simply bill health insurance. Policymakers have enacted special legislation giving hospitals the authority to interject themselves into liability cases for maximum payment. Let this special use of government legislative power sink in for a moment. Hospitals enjoy a lien privilege not held by others. It’s not called market forces or market failure when you use the political system to gain an unfair advantage. I call it an abuse of government that further harms people.
In Alabama, hospitals can assert a lien against the proceeds of any settlement or judgment from an accident. This statutory hospital privilege exists even where the patient has good health coverage that should pay. The Alabama Legislature enacted a statute giving hospitals this special right. The statute is Alabama Code Section 35-11-370. Think about it — You get hurt in a car wreck. You go to the emergency room. When you get there, you hand them your health insurance card. Yet, they start asking you tons of questions about “fault” or other coverage. Why does it matter in the emergency room as to who caused the wreck? Your back is hurting regardless of fault. Why does other automobile coverage matter if you have health insurance? Well, now you know. The hospital is seeking to make you pay more by collecting a higher amount for your injuries. You are going to pay a huge cost for that MRI just because you were in a wreck. Our legislature gave hospitals that right.
Hospital liens can create huge issues in car crash cases. What if the available automobile coverage is small? Currently, Alabama law only requires drivers to keep minimum liability coverage of $25,000. If the hospital bills you at an inflated rate (higher than Blue Cross, Medicare, or others would pay) and asserts a lien for full payment against your injury case, the cost against your settlement could be huge.
Alabama law gives hospitals a huge hammer to collect the maximum amount possible from your settlement. Your rights are limited. To add more injury and insult, many of the lawyers advertising on billboards and television for personal injury cases do absolutely nothing to help their clients keep their settlement money in this situation. And, that is also unjust.
Don’t get me wrong. I’m not arguing hospital liens should always be prohibited. Sometimes, people are hurt in accidents and do not have any health insurance to pay for treatment. In those situations, the patient needs treatment and a lien gives the hospital the ability to get paid from some source. However, the hospital should NEVER be allowed to charge and collect the highest rate against an accident victim. And, where the accident victim has health insurance, he or she should be allowed to use it. The hospital should NEVER be allowed to ignore valid health coverage in a manner that harms injured patients. Our system should have never provided hospitals with special legal rights to gouge injured patients at their weakest moment.
At the Blackwell Law Firm, we represent seriously injured people across Alabama. Many of our clients were injured in a car accident or commercial truck crash. If you have questions about medical payments or medical liens, we are happy to discuss your issues. Consultations are always free and confidential. We believe the best results in cases are achieved through hard work and preparation.