Actual and Punitive Damages
Personal injures, due to the negligence of others, often involves actual monetary harms and losses such as past and future medical bills, and lost wages. There are other intangible items of actual damages, such as pain and suffering, loss of enjoyment of life, alteration of lifestyle and permanent lifetime injury and impairment that are not capable of calculation to a mathematical certainty; yet insurance companies insure against those types of actual damages. If the at fault party has acted willfully, recklessly, with intention or with a conscious disregard to the rights and/or safety of other, the common law allows for an award of punitive damages by the judge or jury. The theory is that punitive damages will specifically deter the wrongdoer from engaging in that kind of behavior again; but also, a punitive damage award sends a message to society as a whole that a particular type of behavior will not be tolerated and will be punished by the imposition of civil, monetary damages that punish the wrongdoer. Liability insurance covers the risk of punitive damages, in most instances.
Regardless of the circumstances surrounding a personal injury, it is normal practice to make use of either private health insurance or government health insurance such as Medicaid (for those with little money), or Medicare (for the elderly or disabled). Although hospital emergency rooms are obligated by law to treat those in an emergency without regard to payment, on intake, hospital administrators will usually ask for your health insurance card, Medicaid, or Medicare documentation so that they can make a claim and get paid according to your benefits. These private and government health insurance companies pay benefits to health care providers according to the terms of your policy, or the schedules of benefits laid out by the government. In addition, regardless of fault, your own automobile or homeowner’s policies have provisions such as Personal Injury Protection (PIP) and Medical Payments coverage claim following an injury.
These kinds of insurance claims are called first party claims, because you are the policy holder, contracting with an insurance company to pay for your medical bills, prescriptions etc…when you are injured, regardless of who is at fault. As will be discussed below, however, these first party insurance companies often get their money back from at fault parties or their insurers.
When a person or business has caused you injury or other damages, your claim against that at fault party’s insurance company is called a third-party claim. Even though you may have your own insurance, or government benefits to pay for your losses, the at fault party is still liable to you, regardless of what insurance policies you have. In South Carolina, the at-fault party’s insurance company does not receive credit for your own insurance or other benefit plans that pay your medical bills and other damages by the at fault party’s negligence. This is called the Collateral Source Rule.
When you have a third-party claim against an automobile insurance company or other liability insurance company such as State Farm, Allstate, USAA, etc…, there are often other first-party health insurance companies such as Blue Cross Blue Shield, or government agencies such as Medicare, that have paid for medical bills based on their contractual relationship with you. Those first party insurance companies and government agencies often have rights to get their money back in whole or in part based on contract and/or statutory right. This is called a subrogation lien on third-party liability insurance proceeds.
Attorney, Insurance Company and Insured Party Liability for Government Liens
The Medicare Secondary Payer Act (MSPA) is a federal law that, in part, requires re-payment of monies Medicare has paid out, when there is third-party liability. The government can sue the injured claimant, the attorney, and/or the third-party liability insurance company if this federally mandated subrogation lien is not paid.
Private Insurance Carriers Must Protect Themselves
Private health insurance companies have subrogation departments that communicate with you and/or your attorney to ensure their rights are protected. For example, Blue Cross Blue Shield requires all policy holders to fill out a questionnaire upon receiving a claim for health insurance benefits. It may be prepared at a doctor’s office or hospital, or, if you are unable to do so due to being incapacitated at the time, before payment is made to your health care provider , they will want this questionnaire filled out and signed, prior to paying benefits. The questionnaire will ask questions such as: Was this an accident? Was this a work related accident? Do you have an attorney? If so, what is that attorney’s name?
After receiving the questionnaire, signed by you, the health insurance company will write you or your attorney a letter, advising that they have a subrogation lien on any monies you receive from the third-party liability insurance company. If you have an attorney, the health insurance company will usually grant what is called a cost procurement reduction on the subrogation lien, since you have gone to the expense of hiring an attorney, the result of which will be them getting some of their monies back. Also, if there are extenuating circumstances such as limited third-party liability coverage, or difficult circumstances with questions of liability resulting in a reduced third-party settlement, the attorney can negotiate for additional subrogation lien reductions, to maximize the net money coming to you, the injured party.
In all subrogation lien circumstances, the attorney will review the health insurance company’s claim to ensure it is not seeking reimbursement for claims not related to your liability claim (i.e. charges for an annual physical exam included in a subrogation lien, where your claim against a liability insurance company is for medical bills related to a broken arm in an automobile collision).
Insurance for Work Injuries
South Carolina, and every other state has legislatively mandated compensation and medical benefits for injured workers, without regard to whether the employer or worker was negligent. This is much different than the compensation scheme in civil cases such as automobile accidents where fault is the basis for liability for damages. The South Carolina Workers Compensation Act sets forth what workers are entitled to when they are injured.
Insurance companies underwrite this risk as well, although some large companies are self-insured. Subrogation liens come into play when a third-party company is responsible for the injury of a worker. For example, suppose a utility truck is on the property of an employer doing work, and an employee for the utility company does something negligent and injures a plant worker. The injured plant worker will have rights to worker’s compensation benefits per the Worker’s Compensation Act, but will also have a right to file suit against the utility company (third-party action) for causing the worker’s injuries.
The worker’s compensation insurance carrier will pay benefits on the front end, but then by law, can assert a subrogation lien on proceeds the worker might receive from a third-party insurance claim against the separate company. The goal of the worker’s attorney is to get the worker’s compensation insurance company to take as little as possible from the proceeds of the third-party insurance insurance proceeds, to put as much money in the worker’s pocket as possible.
It is Best to Hire Experienced Legal Counsel
Having experienced legal counsel to assert these sometime complex insurance claims, to determine lien amounts and negotiate with various private and governmental parties is essential to ensuring that you, the injured party, put as much money in your pocket as is possible. Trying to navigate this alone can be a very costly decision, especially in serious, catastrophic cases. The McKnight Law Firm has navigated every scenario discussed in this article, and has done it successfully for our injured persons for 24 years. We hope that we can be of service to you and your family in a time of need.