If you were to go to your “important papers” file at home and pick up a copy of your auto insurance policy, chances are that you will see all sorts of coverages and endorsements that could not be more confusing if they were written in ancient Greek. Folks may have a very basic understanding of phrases like “underinsured motorist”, “bodily injury liability”, or “personal effects”, but if they are asked how those terms apply to the insurance coverage available to them, most people are in the dark. The purpose of this article is to provide a basic understanding of “medical payments” coverage, and to caution the reader about handling claims under that coverage.
Medical payments coverage, or “med pay” as it is known in the industry, is coverage that will reimburse the insured party for medical, hospital, and similar expenses incurred as a result of an injury sustained while riding in a car covered by the policy. The coverage is optional and can range from as low as $500 to as much as $50,000 or more. In general, it doesn’t matter how the accident that caused the injuries happened, or who was at fault. If I am driving home in my car while eating a sandwich and talking on my cell phone and I end up running off the road and into a tree, the expenses I incur for treatment of my injuries are going to be reimbursable under my med pay coverage. All I have to do is send a copy of the bill to my insurance carrier, and they should send me a check. Sounds pretty simple, right? In most cases, it is. However, there are some common pitfalls that most folks aren’t aware of. I’ll talk about one of those pitfalls in this article, and another in a subsequent submission.
First, you need to keep in mind that if you are paid med pay benefits because of an accident that was caused by someone else’s negligence, the insurance company has a right of subrogation. Subrogation means that if you recover damages from the party who caused the accident, you are obligated to reimburse your insurance company the money that they paid you under the med pay coverage. Here is an example. Joe Blow runs a red light and plows into your car, resulting in you being taken to the emergency room. You incur a $5,000 bill, so you collect $5,000 in med pay benefits from your own insurance company. You then file a claim against Joe Blow and reach a settlement with his insurance company. At that point, you are obligated to repay your insurance company the $5,000 they paid you under the med pay coverage. In essence, and subject to one or two exceptions, the insurance carrier gets its money back. In nearly 40 years of practicing law, I have yet to have a case where a client was not surprised by the fact that after collecting benefits for which he has paid a premium for years, the insurance carrier is entitled to be repaid.
There is sometimes a way to minimize what you have to repay your insurance carrier under these circumstances. In WV, an auto insurer is required to bear its fair share of the expenses you incurred in order to make your recovery against the guy who caused the accident. Generally, those expenses will be attorney fees, which most often amount to a percentage of the overall recovery. Thus, if you paid your attorney 1/3 of the amount you recovered in settlement from the guy who caused the wreck, you can reduce the amount you are required to repay your auto insurer by 1/3 as well. At Bordas & Bordas, we don’t charge our clients a fee against money they recover under med pay coverage, so our clients benefit by collecting 100% of the benefits they are entitled to receive, and only paying back 2/3 of what they collected in the end. That benefit can amount to an extra $5000 or more in our client’s pocket in the end.
Watch our blog for a second article about med pay benefits coming soon. Until then, feel free to contact any of our attorneys if you have questions about your medical benefits coverage.