The motorcyclists who survived a deadly collision in March 2010 aren't feeling so lucky two and a half years later. Not only have their lives been put on hold thanks to countless surgeries, they say they're getting hit financially by the people who treated them.
Susan Nachand-Prestidge has become close with many of the victims since the accident. Unfortunately, she's learned something, none of them can disclose. "I really don't have a doubt that when this hits the air, that people all over the place are going to say, 'Wait a minute, no, no, this is not right,'" she said. "There are several families that are now on welfare and are on food stamps," Nachand-Prestidge said. "I think people would be appalled."
Nachand-Prestidge lost her father, Clyde, in that accident. He was one of four motorcyclists killed. Five others were severely injured. Even though these families were awarded settlement money to cover everything from lost wages to property damages, according to Nachand-Prestidge, "It's not so they could retire or go on great vacations, it's just to keep them where they were or to get them back to where they were."
But they say they can't use their settlement money for that thanks to a little-known practice called “balance billing”. As experienced personal injury attorneys know, people are shocked to find out they have this extra obligation. Balance billing allows hospitals to go back to victims who not only have insurance but also settlement funds to bill them for the remaining balance. A practice legal in Arizona under ARS 33-931.
"This is significant because people don't get any benefit from their insurance or any benefit of the premiums that they've paid." Nachand-Prestidge points out, "They're almost being penalized for this because they had insurance, they're playing by the rules, and yet are being re-victimized because they got settlement money."
Insurance companies and hospitals agree on what medical services will cost long before coverage is needed -- basically, a negotiated rate. But in this circumstance, the hospitals not only can take the payment from the health insurance company, they can also hold their hand out for a portion of the victim’s settlement---even though they would never be able to bill the victim for another nickel if there was no settlement or claim.
"This is what I still have a hard time wrapping my brain around, it was a negotiated rate so the hospitals said, 'This is fair for the services we gave you and we're going to accept that you're not going to pay us the full amount,'" Nachand-Prestidge said. "Well, that was agreed upon so why are you going back on your agreement?" Nachand-Prestidge has a solution. "If they want more money, they should negotiate a higher rate from the insurance companies at the outset."
It is estimated that Arizona hospitals collect $100 million from balance billing each year. It's morphed into an extra source of revenue, and what's worse, it's getting more and more common as more medical providers figure out this scheme.
This causes big problems in getting claims settled. People don’t understand, and ask “If my health insurance paid, and the medical providers have received the payment they contracted for, and cannot come back to me for more payment otherwise, how are they legally entitled to anything from my settlement?
The answer is that they are “legally entitled” because that is the law in Arizona. It results in $100 million in windfall payments for medical providers every year. Sometimes medical providers are willing to work with the victim and their attorney on a reduced amount, to help get the case settled, but sometimes that refuse to budge. This can make the difference between settling an injury case and ending up in trial, where anything can happen.
The Arizona House of Representatives passed a bill that would have changed the statute during the last session, but it died in the Senate. Let’s hope that this matter is re-introduced this year, and provides some relief for the innocent victims.