How do settlements work after an accident?
In this episode of Groth Gets it! from Groth Law Accident Injury Attorneys, Jon talks with Katie, our settlement specialist. They discuss a variety of things around the topic of settlements including how negations with insurance companies work as well as who pays providers.
Transcript:
Jon Groth:
Very interesting stuff here. All right, here we are. We have Katie, who is our settlement specialist. And let’s see if Groth gets it with settlements. This is interesting stuff, or I think it’s interesting stuff because we have to really know the beginning of the process and the end of the process. And a lot of our podcasts, our recordings, have been about the beginning of the process or whether there is a case even, I guess, before the beginning of the process, where we’re just talking with people and trying to figure out do they have a claim? What’s the law, as it relates to cows or semi-tractor trailers or things like that? Now we’re going to the very, very last second of the case, which means that there’s been a verdict, there’s been a trial, and there’s a decision by a jury, and the court orders that someone must pay compensation to somebody else. And then we have to figure out where those dollars go, and that’s why Katie’s here.
Katie:
Hello.
Jon Groth:
Or we have a settlement before trial, or before a lawsuit’s even filed, where you have a negotiation between two parties and they decide that X amount of money will be appropriate in that situation to pay for the victims, the car crash, victim’s pain and suffering, medical expenses, incidental losses, mileage to the doctor, wage loss, loss of earning capacity, all that stuff. And there’s a lot to unpack from all that because there’s a lot of people that you have to deal with, and that’s why I have you here, because you can help me explain how this works. So let’s say we have a case, I’ll make it somewhat easy, let’s say somebody’s rear-ended on I-94, going to a Brewers game. The Brewers just beat the Dodgers and everybody’s excited.
Jon Groth:
And we have somebody who’s driving on I-94 and a bunch of intoxicated Dodgers fans are very upset and they rear-end our client, and our client goes to the emergency room. And because the Dodgers fans are not responsible… And I don’t mean to speak ill about Dodgers fans, but I’m just a Brewers fan, so I am, so let’s say the Dodgers fans aren’t responsible. They don’t have much in insurance. They only have $25,000 in insurance to cover the damages that our clients sustained. So how does that work? They pay $25,000 to cover all of our client’s damages. What’s the process there?
Katie:
Well, I guess it depends on whether or not our client has underinsured motorist coverage. So in that case, we will send affidavits of no other insurance to both the liability carrier and their insured, just to confirm that there is no other possible insurance that we can pursue for the at fault, and just to make sure that there are no assets that we may be able to pursue. If those both come back and we can’t find anything to go after, then that’s where, if our client has…
Jon Groth:
So let’s say our client does have underinsured motorist coverage and the underinsured motorist coverage says, “Yes, you can settle with the at fault Dodgers fan,” what do we have to do to get money in our client’s pocket?
Katie:
So are you talking about after we send the Vogt letter and all that?
Jon Groth:
Oh, no, now you’re going way far ahead. So first we have to have documents signed that the client has to… Well, okay, let me go back because now…
Katie:
I jumped too far.
Jon Groth:
You jumped too far. So we accept the $25,000. We send Vogt letters out. Boy, we could really get down into the nitty gritty here, so maybe this isn’t a simple example. So let’s go with that. What’s a vote letter?
Katie:
So does Vogt versus Schroeder, if I’m correct.
Jon Groth:
I think it’s V-O-G-T, right?
Katie:
It is. Yes.
Jon Groth:
It’s not V-O-T-E. V-O-G-T. Okay. And Vogt says?
Katie:
Vogt says that we need to obtain permission from the underinsured carrier, insurance carrier, to accept the settlement from the at fault carrier. They basically have the option to either substitute funds, so they can say, “No, we don’t want you to accept this money from the liability carrier. We’re going to pay this all instead.” And then we will, it’s called subrogate, but collect, essentially, from the liability carrier, anything that they had offered as a settlement before.
Jon Groth:
Okay. I had a conversation not too long ago with an adjuster from a big Wisconsin insurance company, who’s been an adjuster for as long as I’ve been a lawyer, so for over 20 few years here. And this adjuster said that in his experience, he’s never substituted funds. So I think that’s uncommon for them to substitute funds. But okay, so let’s say that you send the Vogt letter, and then right away, the underinsured motorist says you can accept the $25,000 in limits from the at fault party. Then what would happen?
Katie:
So we go ahead and we accept it from the at fault party.
Jon Groth:
How do you accept it? What do you do?
Katie:
Typically, there’s a letter that we send, or an email, that just states we accept 25,000 as full and final satisfaction of our client’s claim, and agree to pay any medical bills and liens out of the settlement. They will send us a release. We have the client send, or sign the release. Essentially, it’s just releasing the insurance company and their insured, assuming they have no assets, for any claims against the accident. So the 25,000 that’s going to satisfy the claim for our client against their insurance company and the insured, just for this accident, we send it back to the adjuster, obtain the check. And in the meantime, I am negotiating the health insurance liens, med pay liens, which in Wisconsin, we do have a made hole doctrine. And then, in the off chance that our client doesn’t have any health insurance, then I’m negotiating hospital liens, medical bills, things like that.
Jon Groth:
So that’s important to talk about because this is something that I think a lot of our clients are asking, “Why am I paying my health insurance back? Or why am I paying the doctors back?” Why isn’t the at fault paying them back?
Katie:
I like to think of a settlement, kind of like a all inclusive vacation. So you’re getting this money from the insurance company, and it’s going to include your medical bills, any health insurance liens, which are inclusive with the medical bills, along with wage loss, mileage. Granted you’re not made whole in a policy limit situation, but that’s where I come in, to try and make you as whole as possible by reducing these things. So it just kind of comes down to just trying to pay everything back as little as possible. But the reason, at the end of the day, why we do have to pay back health insurance, is because essentially, if health insurance is paying your bills and you’re receiving a settlement, it would be considered a double recovery, if we’re not paying back your health insurance.
Jon Groth:
That’s a good point. And that’s the risk, right? The risk is that if we don’t pay them back and health insurance finds out, and I know that there have been other situations that people have come to us after they’ve settled a case with a different law firm or that there are other things happening, I’ll just stop it there, and their insurance, sorry, their health insurance has said, “We’re not going to pay for future care for you until you pay us back for the money that we paid on your behalf from that other car crash.” So that’s the scary thing, is that they do have that power.
Jon Groth:
Now, I think it’s very infrequent to very rare to actually have that enforced, but I wouldn’t want to have my clients be the next one or be the first one in a year that we see, that they could have some really important procedure coming up and it’s not paid for, and just think of that stress. So that’s why you’re covering all the bases, making sure that all the payments that have to be made are made. And there’s an agreement, that with this payment, health insurance is going to be okay, have payment in full and continue to pay for future care, as long as the client is properly insured, has paid their premium, is a beneficiary of that insurance.
Katie:
Right, yeah. And I mean, not every health insurance has the right to recovery from a policy limit settlement either.
Jon Groth:
That’s a good point. Yeah, there are some insurances, some health insurances, that are called ERISA plans, or have language saying that, and no matter what, they get dollar one. And there are other health insurance plans that, and we were talking about one just the other day that starts with a D, that does not have the right to recover. So then, you need to know really early on, if a client has multiple health insurance options, which health insurance you want to pay bills, because it’s going to make a big difference in the end, knowing what you can do to maximize the dollars in that client’s pocket.
Katie:
Exactly. And I like to think of it as a strategy. You’re looking to see what the options are for coverage for client’s medical bills, especially in catastrophic injuries. When there are multiple payers available, who’s going to be the best source to cover the treatment and procedures, and how do we make this work?
Jon Groth:
Yeah. And how do you make it work in a way that’s going to be less stressful for the client, get the most money for the client’s pocket, and not hurt them in the future? That’s a lot. And when you’re dealing with a lot of different clients who have a lot of different health insurances, you have to know a lot about, really, almost every health insurance out there, because with all the clients that we help statewide, you just never know. I mean, there could be clients who have before the courts or healthcare, UMR, Dean, all those different insurance companies.
Jon Groth:
And then there’s the other, the off chance that a hospital says, “Hey, we’re not going to take health insurance. We’re going to have a hospital lien.” And then you have that added stressor, because the hospital liens are the most difficult thing to break through because there’s a certain law in Wisconsin that says if a hospital decides not to take health insurance, or if the client has no health insurance and the hospital files a lien, they can get paid every single penny, right? Almost.
Katie:
Almost every single penny. I mean, we’re luckily in a spot right now where hospitals are kind of limited to where they can file liens. If a client has private health insurance, certain HMOs, then the hospital cannot file a lien. And that puts us in a great position because we’re better able to argue that. But in the circumstances where there is no health insurance, I know I’ve attended multiple virtual conferences lately and have been able just to look at that and see how to negotiate and what we can do with these things. It’s been very interesting just to see exactly what they can recover and what our position is on that at the end of the day.
Jon Groth:
So going back to our example, we have the Dodgers fan who rear-ends our happy Brewers fan, and the happy Brewers fan gets $25,000 in limits. And they have an ERISA plan, let’s say, that paid medical bills. So if the medical bills are $25,000, let’s see if you can pick up what I’m putting down here. If the ERISA, or if the client’s medical bills are $25,000, how do we get any money in the client’s pocket?
Katie:
Well, it comes down to what I can make happen on my end. I think the big part is knowing that the client’s health insurance has paid everything. We know that there going to be contractual adjustments granted with ERISA plans.
Jon Groth:
There you go.
Katie:
They typically pay a lot more than what a HMO or a PPO would pay. And that’s how I can tell what’s an ERISA plan or not. I’ve been doing this long enough where I’ve gotten to that point where I can just tell right off the bat what is what.
Jon Groth:
And that’s called what? The collateral source rule or… With write-offs, we can ask the at fault to pay the full amount of the bills, and then we pay back health insurance, be it ERISA or regular health insurance. We pay them back only what they paid out. And then, of what they paid out, we try to get them to take as little as possible.
Katie:
Exactly. And at the end of the day, it comes down to who I know. I know I’ve built a lot of relationships with a lot of different insurance companies over the years. So it’s just a matter of how great of an argument I can make, what it says in the policy language, and just what I can make happen at that point.
Jon Groth:
Interesting. So then, if you can make it happen on the 25,000, then does health insurance have a right to get money from our client’s underinsured motorist coverage?
Katie:
Well, that depends on what their language says. Some policies cannot cover from underinsured motorist coverage so that puts us in a great position if I can negotiate it down. If they can recover, then sometimes I can come to an agreement with the insurance company where I can say, “Hey, can you accept this out of the liability or the underlying portion of the settlement? And can we pay the rest out of the underinsured?” A lot of them don’t like to do that because there’s never a promise with underinsured motorist coverage. But I think it just all comes down to how great of an argument I can make and how well I know the insurance company that I’m working with.
Jon Groth:
This I think is interesting, but again, I’m an attorney and I have maybe weird interests in what I think is interesting. So this is interesting, because you have clients who call and say, “Well, how can you help? And why should I hire you?” I think this is a good conversation that we can have with them to say, “Well, we have staff who are dedicated to just simply one portion, which is the settlement process, which is not just, ‘Okay, we’re going to get money to you. Here you go.'” I mean, there’s a lot more thought behind it and a lot more planning strategy to try to make sure that we are getting as much as we can from the at fault, and then into the client’s pocket.
Jon Groth:
And it’s not just as easy as we’re going to ask for it and we’re going to get it. We’re going to ask for it. We have to fight. And that’s what we’ve had other podcasts about. Well, how do you fight to get the most? And then after you’re done fighting with the at fault, then you’re really fighting with your client’s health insurance or their med pay. Sometimes even the client’s doctors. I know this is going back to, well, what we said before, where… Write-offs, for example. Sometimes doctors do is called balance bill. So what’s balance billing?
Katie:
Balance billing. So theoretically, let’s say your health insurance pays a certain portion, and this is where I’m going to highly emphasize just reading your EOBs when they come in from your health insurance, because a lot of times the hospitals, clinics, they will bill you just the difference of what your health insurance has paid and adjusted off. So at the end of the day, balance billing, the provider, hospital, chiropractor, et cetera, they receive the payment and the adjustment from your health insurance. And they don’t take into consideration whether you should not be billed for the remainder or if there’s a co-insurance amount, co-pay amount.
Katie:
They are just billing you for whatever the health insurance didn’t pay, which is illegal in Wisconsin. And there are many states where that is also true. But Wisconsin, they cannot do that. Unless there’s a co-insurance, co-pay deductible amount that you are required to pay, they can’t balance bill you. And that’s true now with hospitals, I believe as of 2022, with emergency room visits, regardless if it’s in network or out of network. There’s certain co-pays or deductibles, co-insurance that you’re responsible for. But previously, they could bill you the difference if you’re out of network. But with emergency situations, they cannot do that any longer.
Jon Groth:
Interesting. So I think balance billing is something that is infrequent. I think luckily it’s infrequent, but when you see it, it can be pretty egregious and it can really hurt the client. So that’s something that we have to be aware of and look at really every case to see that everybody’s doing what they contractually and legally should be doing. And that’s how we give added benefit to our clients, right? Interesting stuff. Well, I said I was going to keep it for 10 minutes. We’ve gone twice as long as I promised, so I apologize. Thank you very much, Katie. Is there anything else that we should know about the settlement process?
Katie:
I don’t think so. I think it’s difficult and complicated, but also partially straightforward.
Jon Groth:
Good stuff. Well, thank you for all your hard work. We have, I think the luxury now of doing a lot of this virtually, where you don’t have to… Back in the old days, we had to have this signed, all the settlement documents signed in front of a notary. And then we had to wait, and then maybe they go to the bank or they come to the office and have one of our notaries sign. Or you have to have two witnesses who are not related or things like that. Luckily, I think this is, I don’t know, the silver lining of the pandemic, is that insurance companies understand that we’re doing things similar to ways that the mortgage companies and banks have been doing things for probably 10 plus years.
Jon Groth:
So we can do things, have documents signed electronically. So that’s a lot of what you’re doing, is you’re sending documents out electronically. So it isn’t as difficult to come in. We can have clients sign these, look over the documents, meet with them virtually or just over the phone and have a conversation, and hopefully get things ironed out. All right. Thank you very much, Katie. Thanks for all your knowledge. I think we prove that you get it. So Groth gets it. Good job. What’s your next topic be?
Katie:
Ooh, there’s too many topics.
Jon Groth:
Do you have any opinions? We talked about animals. We went on various tangents about different things like that.
Katie:
Have we done motorcycles yet?
Jon Groth:
Oh, that’s a good one. We haven’t.
Katie:
And you can bring me back for that one.
Jon Groth:
Oh, there we go. Yes. Yeah, we should have you and Cindy and then you can talk about motorcycles. Who else is a motorcyclist?
Katie:
Just us two.
Jon Groth:
Just you two.
Katie:
Mm-hmm.
Jon Groth:
Yes. Awesome. All right, great. Thank you very much.
Katie:
Thank you.