Insurance companies scored a major victory – and a major financial windfall – with legislation that recently passed the N.C. General Assembly.
The new law, part of House Bill 542, will impact everyone who is injured in a car accident that was someone else’s fault. The new law effectively penalizes injured people who have health coverage through private insurance, Medicaid or Medicare by reducing the amount of money they can recover in a personal injury settlement or jury award.
This particular unfair portion of the law is known as the billed versus paid provision and it relates to a complicated rule of evidence used in trials. It’s easiest to understand through an example.
Next time you visit the doctor and pay with insurance, take a look at the statement you receive in the mail from the insurance company. Chances are, the insurance company paid a “negotiated rate” – less than the doctor’s standard rate to settle the bill. What was paid was different than what was billed.
Before H542 became law, defendants in personal injury cases weren’t allowed to tell the jury if the injured person’s health insurance, Medicare or Medicaid picked up part of the tab. But now, the rules have changed – in favor of the insurance companies and against injured people.
When someone causes an accident, they’re liable for the damages and injuries they cause. The responsible party’s level of liability should not change based on whether the injured person has health insurance or not. But that’s exactly what this new law does.
"The Republican-led majority has said with this bill that it's OK for people who hurt others to benefit from their victims,” said Todd Barlow of the N.C. Advocates for Justice. “And they've extended that privilege to insurance companies."
Consider this example:
You and your best friend are driving to lunch when you’re rear-ended by another driver. You both suffer identical neck injuries, requiring months of medical treatment totaling $10,000. In fact, the only difference is you have health insurance and your friend does not.
Your health insurance kicks in to pay $5,000 of your $10,000 in medical bills, leaving you $5,000 to pay.
Because your friend has no health insurance, the other driver’s auto insurance pays her $10,000 to settle her medical claim. Meanwhile, you’re only entitled to a $5,000 settlement, even though your injuries were exactly the same! The auto insurance company just pocketed $5,000 of your money because your health insurance covered half of the bill.
That’s not fair!
What’s really unfair about this new law is that it gives insurance companies an advantage in court. Their attorneys can tell the jury that an injured person had health insurance that helped pay their medical bills, thereby reducing the amount of money that person can collect in court.
But injured people aren’t allowed to tell the jury that the responsible driver has auto insurance that will kick in to cover any damages. As a result, jurors often believe that the other driver will be on the hook and will have to pay out of pocket for any damages. But in nearly every auto accident lawsuit, it’s the insurance company that will end up paying the bill – not the at-fault driver.
This new law is just another example of who really benefits from so-called “tort reform.” The insurance companies continue to take money out of the pockets of innocent victims.
