AFFORDABLE CARE ACT’S IMPACT ON PERSONAL INJURY PRACTICES
By P. J. Javaheri, Esq., Founder, Power Liens & Robert T. Simon, Esq., Co-Founder, Simon Law Group
Typically, medical liens in personal injury cases have been used where the plaintiff is uninsured, or where the insurance provider will not cover or refuses to authorize recommended medical care. The health care provider who agrees to work on lien provides the necessary care, but does not get paid until the case is settled or recovered at trial. Because the services are provided outside of insurance, the doctor receives a reasonable rate or fair market value, as opposed to a lower negotiated percentage paid by insurance. This article will discuss (1) the application of California cases Howell and Corenbaum and (2) the full implementation of the Patient Protection Affordable Care Act (aka Obamacare) (“ACA”), and how each of these will likely increase the widespread use of medical liens by attorneys and physicians.
The PAST – Before Howell
It was long held that that a plaintiff’s monetary recovery was not subject to offset by any amounts that may be paid to, or benefits conferred on, that plaintiff from other sources. In awarding damages, a jury was not allowed to consider whether the cost of plaintiff’s past and future medical expenses were or would in fact be borne by (at a negotiated reduced rate) an insurance company.
The Present – With Howell and Corenbaum
In 2011, the California Supreme Court held that the damages awarded to a privately insured plaintiff for past medical bills must be limited to the total amount actually paid to the medical provider by the insurance company, which usually is a fraction of the total originally billed. Howell v. Hamilton Meats, 52 Cal. 4th 541 (2011). The Howell court reasoned that the difference between the billed amount and the amount paid by insurance was not a “recoverable loss” and could not be recovered by the plaintiff (since it was written off or discounted by the provider). The Supreme Court’s ruling in Howell was significantly expanded by a California appellate court in Corenbaum v. Lampkin, 2013 WL 1801996 (Cal. App. 2d Dist.). In that case, the court held that the amounts billed by health care providers were irrelevant and could not be considered in determining damages, but only the amount actually paid to the health care provider can be considered.Howell and Corenbaum substantially limit the amount an insured plaintiff can hope to recover via settlement or trial. For this reason, attorneys and physicians prefer to use medical liens rather than the patient’s health insurance to avoid the negative affect of these recent cases on the plaintiff’s recovery.
The Future – With the Full Implementation of the ACA (aka Obamacare)
Once Obamacare is fully implemented, the use of medical liens by attorneys and physicians will be more prominent. At the same time, it will not be long before the defense bar argues the common law maxim that a party is obligated to mitigate his or her damages. Under this concept, a party cannot recover damages for harm that might have been avoided with reasonable effort. Defense attorneys will argue that a plaintiff’s choice to “opt out” of insurance for a medical lien is improper and contrary to public policy because it is done only to maximize his or her recovery, and as a result, the plaintiff should not recover any amount beyond what would have been paid by insurance. In summary, it is certain that the ACA will have a wide-ranging impact on the management of personal injury cases. Because the mandatory insurance provisions of the ACA have just taken effect, it is not yet clear how and to what extent, the ACA will be applied by courts to reduce or limit a plaintiff’s recovery. Until the courts and/or legislators mandate a particular result, plaintiff attorneys are expected to more prominently utilize medical liens to work around the limitations the ACA threatens to impose and maximize their client’s recovery.
Benefits of Working With Providers On Lien, Instead of Going Through Insurance
One potential way to recover the full billed amount or fair market value of health care services provided to the plaintiff (and to be able to use those higher bills as the basis for calculating settlement value) is to work with providers on a lien basis. This effectively allows the plaintiff and his or her attorney to sidestep the insurance company and the impact of Howell, Corenbaum and Obamacare and their mandated lower negotiated rates, because the services are billed under the lien at full value in exchange for delayed payment. Of course, this is not the only reason why medical liens are preferred by attorneys. Many attorneys find the use of liens desirable because insurance may not cover or authorize services recommended by the treating doctor or the patient’s choice of an out-of-network doctor. Another potential problem with working within the constraints of insurance, as opposed working on lien, is that health care providers that bill through insurance often have little interest (or incentive) to take the time to prepare a well-documented medical report, by fully cooperating in discovery, making themselves available for deposition and expert witness obligations, writing thoughtful and thorough reports and “lifetime care plans,” etc.