The Hospital Doesn’t Simply Receive What it Billed in an Accident Settlement

Many accident victims don’t realize that the hospital doesn’t receive what it billed in an accident settlement.  They only receive a portion of what was billed.

Finally, a case has been decided that is favorable for the plaintiff (the party that has been injured). In State Farm vs. Huff (2013), the court discussed the lien rights of hospitals. As some of you may know, when a hospital provides emergency type care to an injured party, there is a statute/law that allows the hospital to have a lien on that injured party’s lawsuit. If the injured party (the plaintiff) recovers anything, the hospital has to be paid, if the hospital has complied with the rules set out in the statute. These rules deal primarily with notice to the party, the attorney, etc.

In this case, after the case went to trial, the hospital wanted to be paid the amount of its lien, for the medical services provided to the injured party. The plaintiff objected, and so the defendant put the money into court to let the Hospital and the plaintiff argue it out. At the trial, the trial judge agreed with the hospital, and said the plaintiff had to pay the hospital out of the judgment that the plaintiff had received from the defendant. This was appealed.

The appellate court held that the hospital had not proven that the bills it was seeking to recover were reasonable. Even though the hospital submitted its bill, this was not conclusive as to what is reasonable. Just like a plaintiff is not able to submit the amount of what was billed to the jury, nor recover what was billed, nor can the hospital when it is asserting its lien for medical care it provided. A plaintiff can only submit to the jury what was paid, as that is evidence of what is reasonable. Therefore, the hospital has to prove what it likely would be paid if the bill was submitted to an insurance company.

This is going to be very difficult for the hospital because what it is likely to be paid has so many variables. Medicare might pay one thing; Medi-Cal might pay something different. An HMO and a PPO may pay different amounts, and different insurance companies will likely pay different amounts. But what is helpful for the plaintiffs is that the hospital doesn’t receive what it billed in an accident settlement.