My clients who have been injured in an automobile collision often are surprised to learn that they are required to reimburse their own insurance company for their medical bills. They ask, “Why do I have to pay back my own insurance company?”
Good question, but, first, a bit of background. Everyone who has a car should have Personal Injury Protection (“PIP”) insurance. PIP will pay your medical bills if you are injured as the result of an automobile collision. If you do not have PIP insurance (or if you aren’t sure whether you have it), RUN, don’t walk, to the phone and call your insurance agent!! PIP insurance is one of the best types of insurance you can purchase. It is inexpensive and will pay for your medical treatment if you are injured as the result of an automobile collision, regardless of who was driving and regardless of who was at fault. It will also cover you if you are injured while in someone else’s car, as well as if you are a pedestrian or on a bicycle. Unlike health insurance, there is no deductible, no co-pay, no-preauthorization requirement, and you can choose your own healthcare providers. The only requirements are that (1) the treatment is received within three years from the date of the collision; (2) the treatment is provided by a licensed healthcare provider; (3) the cost of the treatment is reasonable; and (4) the treatment is necessary to treat injuries you suffered as a result of the collision. In addition, it provides a small reimbursement for funeral expenses, lost wages, and loss of services (childcare, lawn care, household care, etc.). There are different levels of insurance you can purchase. We strongly recommend that you purchase at least $35,000 worth of PIP insurance.
It is PIP insurance, not the insurance for the person who caused the collision, that will pay your medical bills while you recover from your injuries. After you have recovered sufficiently so that your case can be settled, the other insurer (often referred to as the “third party insurer”) should pay you not only for your “pain and suffering,” but also for the cost of your medical treatment (even though it has already been paid by your PIP insurer). So, why do you have to pay back your own insurer? Because your insurer was simply advancing the money so that you could get medical treatment until the third party insurer reimbursed you for it. If you kept that money, you would receive that money twice and would be “double dipping.”
Fortunately, Washington State has consumer-friendly insurance laws that benefit injured people who hire attorneys. In the old days, your insurance company could simply sit back and wait until your case was settled and then demand 100% of the money that you received from the third party insurer to reimburse you for your medical treatment. The Washington State Supreme Court agreed that this wasn’t fair and that your insurance company should share in the cost of the attorney’s fees and litigation costs that you incurred to recover the money for your pain and suffering and your medical bills. In other words, your insurance company doesn’t get a free ride! As a result, if you hire an attorney to represent you, your insurance company must discount its recovery by the amount of your attorney’s fees (usually 1/3 of the total recovery) plus its share of any litigation costs (the cost of court filing fees, medical records, deposition fees, etc.) you incur. This is a win-win for insured consumers who have been injured.
This is the way that your case should work if you are injured:
- You hire an attorney after being injured;
- Your PIP insurer pays your collision related medical bills;
- The third party insurer pays for 100% of your medical bills at the end of the case;
- You pay your PIP insurer back only 67% of the medical bills (as well as an additional small discount for litigation costs); and
- You get to keep the additional 33% because you hired an attorney (your attorney’s fees are usually taken on the entire lump sum settlement, so you keep this extra money from your PIP insurer since you have already paid your attorney’s fees).
Because we charge a contingent fee on injury cases and we take only a percentage of what we are able to collect for you, we do not get paid until your case is resolved, which means that you get the benefit of our work without having to pay an hourly rate as the case is progressing. We also handle all the communications with the third party insurer and your PIP insurer so that we make sure that you get a fair recovery from the third party insurer and only reimburse the PIP insurer for the amount required under law.
If you do not have PIP insurance, or if you are injured as a result of something other than an automobile collision and cannot use your PIP insurance, your health insurer may pay your bills while you recover. However, if you use your health insurance, you will have to pay your deductible and co-pays when you receive your medical treatment. In addition, your health insurer will still require that you reimburse it, but those laws may be much less favorable to you, depending on your insurance plan, than your PIP insurance. In some cases, your health insurer is entitled to demand that you pay for 100% of the benefits it paid, regardless of whether you are fully compensated for your injuries. For this reason alone, it is important that you purchase PIP insurance so that you can use it if you are injured as the result of an automobile collision.
Although we hope this article has explained the PIP repayment issue, it is admittedly a confusing area of the law. Fortunately, at Nelson Boyd, we have years of experience in dealing with all types of insurers. We know how to maximize our clients’ recovery while satisfying their obligations to their insurers. If you have been injured, give Nelson Boyd a call at (206) 971-7601.
