You were in an accident that was not your fault and is not sure how you are going to pay for the mounting debt it caused. Most people assume that the at-fault driver’s insurance will automatically take care of it, leaving them with a false sense of security. The reality is that you need to be proactive, which likely includes retaining an attorney to assist you through the process.
Medical bills (which typically represents the largest expense) can be paid in a variety of ways but they must be paid. I advise my clients to use their health insurance to cover their medical expenses when possible. In so doing, the bill is initially paid by the health insurance leaving the client to pay the co-pay or deductible. The client is then required to pay their co-pay or deductible.
If the client has medical pay or PIP (personal injury protection) as part of their own auto insurance policy, they can and should immediately demand it. This money is theirs, regardless of having to prove liability for the accident. This money can be used to assist the client in paying for expenses not covered or in excess of what their health insurance paid.
An accident victim is entitled (among other things) to the full reimbursement of the medical expenses incurred as a direct result of the accident, regardless of whether the expense was actually paid by them. Thus, if a medical bill is $1,000 and the client’s health insurance paid $500 and the client paid a $100 co-pay, the client remains legally entitled to recover for reimbursement of the full amount of the medical bill ($1,000) not merely the $100 the client actually paid out of pocket.
Unfortunately, the client will not recover this amount until after the case has been resolved. In addition, under Arizona law, the medical provider is also entitled to recover the full amount of the medical expense regardless of the fact that they received a portion of the payment from the client’s health insurance company.
By way of the prior example, if the medical bill was $1,000 and health insurance paid $500 of that expense, the medical provider is entitled to receive the remaining $500 not paid by health insurance. The medical provider is given this right to reimbursement by statute, though the provider’s right to reimbursement is only against the potential recovery the client may receive from the at-fault driver and not against the client personally.
Consequently, if the client fails to recover against the at-fault driver, then the medical provider receives no further compensation for their bill and the client owes nothing further to the medical provider. In order to be compensated for the remaining part of the bill, the medical provider must adhere to certain statutory requirements, which requires the provider to record the remaining debt owed (lien) with the Recorder’s Office in the county in which the services were provided by a certain deadline. Failing to do so may result in the provider’s inability to recover against the client’s potential recovery (for the amount not previously paid by the health insurance).
If a client does not use their health insurance to pay their bills or health insurance does not pay for the medical provider’s services, the client still must pay the provider’s bill regardless of whether or how much they recover from the at-fault driver.
The debt the client owes to the medical provider is contractual and remains owing regardless of how the debt was incurred. In other words, the client received medical treatment and services from the provider and it makes no difference as for how the debt was incurred (accident or otherwise). It may need to be paid directly from the recovery received from the at-fault driver, or it may not. Either way, the debt remains and the provider can use all legal means to collect the debt.
Often times the client can make financial arrangements with medical providers prior to receiving treatment using a potential recovery as an agreed upon method of payment. Some medical providers understand and accept this type of arrangement while others will not.
For example, a client can explain to a medical provider that he/she needs medical care but that because the client has no health insurance or health insurance does not cover the type of treatment provided, the client will agree to pay the provider out of a potential recovery. This is commonly referred to a care on a “lien basis.” If such an arrangement is made between the client and the medical provider, then the client must pay the provider directly out of any recovery the client might obtain.
All expenses (medical or otherwise) a client may have incurred as a direct result of an accident are debts the client should and must pay, regardless of the manner in which they were incurred. These debts should be addressed with the people or entities owed prior to resolution of the case, as some may be paid through health insurance, others through medical payment provisions in the client’s automobile policy, still others through lien arrangements or by payment plans.