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If your medical bills are more than your personal injury settlement, you are not automatically left owing the difference, but you may still be responsible for part of it. What happens depends on who paid for your treatment, who is owed repayment, and how much of each bill can be reduced before the settlement is divided.
This can happen when treatment costs add up quickly, or when the available settlement is smaller than the total medical charges. Another common reason is that the at-fault party carried only minimum insurance coverage. The amount billed is also not always the amount ultimately repaid from the settlement.
A settlement may look like one number on paper, but several claims may need to be addressed before you receive a check. Regan Zambri Long’s personal injury lawyers can help you understand how settlement money is handled when medical bills and repayment claims are involved.
More than one person or company may have a right to be repaid from a personal injury settlement. The answer depends on who paid for treatment while the case was pending and whether anyone agreed to wait for payment until the case resolved. 
A health insurer may have a reimbursement claim if it paid for treatment connected to the injury. Some employer-sponsored health plans are governed by federal law, which can affect the strength of the repayment claim.
Government health programs may also need to be repaid. Medicare and Medicaid have their own processes for identifying what is owed and deciding whether the amount can be reduced or waived.
A hospital may assert a lien against the settlement for unpaid charges, but this depends on state law. Some doctors or surgeons may also have treated the injured person with the understanding that payment would come from the settlement later. After a car crash, medical payments coverage or personal injury protection may create another repayment issue, depending on the policy and the state.
Settlement money is not usually handed to the injured person in one lump sum. First, the gross settlement has to be separated from the net recovery. Those are not the same thing.
Attorney’s fees and case costs usually come off the gross settlement first. Case costs may include expenses advanced to investigate the claim, gather records, hire experts, or prepare the case. After those amounts are handled, medical repayment claims are addressed from what remains.
The injured person receives the money left after those steps are completed. When the medical bills exceed the settlement, this middle stage becomes the key issue. There may not be enough money to pay every bill or reimbursement claim in full. The settlement must then be carefully reviewed before anyone can determine what the injured person is likely to receive.
Medical bills can sometimes be reduced before they are paid from a settlement. The amount listed on a bill is often a starting point, not always the final amount due.
Some billed amounts are higher than what an insurer would have paid for the same treatment. Bills can also include duplicate entries. In other cases, a provider may include charges for treatment that doesn’t relate to the injury claim. A careful review can compare the treatment dates and billing codes against the medical records in the case.
The available settlement can affect these discussions. When an insurance policy limit is lower than the total medical charges, insurers and providers may be asked to reduce their claims so the case can be resolved. In some situations, the law or plan language may require a party seeking repayment to absorb part of the fees and costs spent obtaining the settlement.
Government programs are handled differently from private providers. Medicare and Medicaid have formal repayment processes. Depending on the program and the facts, there may also be a process for compromise or waiver.
A reduction depends on the claim and the applicable rules. It also depends on the amount available from the settlement.
It depends on who is owed money and what they agreed to. If your health insurer paid a provider, that provider has usually already accepted the insurer’s payment rate, so the unpaid portion of the original bill is often not yours to cover. The insurer’s own right to be repaid is a separate claim, and it can sometimes be negotiated down.
A provider that treated you with the understanding that payment would come from the settlement is different. That provider may still expect the remaining balance after the settlement is divided, although some will agree to accept less to close the account. Because the answer changes from bill to bill, each one should be reviewed by you and your personal injury attorney before you accept a settlement offer, not after the check is issued.
Your net recovery should be calculated before you accept a settlement, because the offer is not the amount you take home. A settlement that seems reasonable at first may leave too little once the required payments are accounted for.
The reverse can also be true if some charges are reduced or do not need to be paid in full. Before signing a release, make sure you understand the likely total amount of your medical bills, not just the settlement amount.
Regan Zambri Long can review the claims made against a settlement, explain what remains to be resolved, and help you understand the likely final recovery amount before you accept an offer. Contact us for a free consultation today.
Have you or your loved one sustained injuries in Washington DC, Maryland or Virginia? Regan Zambri Long PLLC has the best lawyers in the country to analyze your case and answer the questions you may have.