In a personal injury case, one of the most common issues that confuses a client is how the medical bills are handled. I have written previously about this in another post: Health Provider Liens and Subrogation. For our purposes here, the two big takeaways are that there is a statutory limit in Missouri on how much an insurance company or health provider may lawfully claim out of a claimant’s personal injury judgment or insurance recovery. Subrogation, moreover, is unlawful and against the public policy in MO; however, subrogation can be lawfully effectuated at the federal level under the Employee Retirement Income Security Act (“ERISA”).
From my experience, insurance companies never distinguish between medical bills and how much the claimant will have after the medical bills are paid. Instead, any capital paid out for the bodily injuries are seen as a general settlement — that is, an amount which is paid for any outstanding medical expense as well as the tortious harm that the individual suffered. This causes a lot of frustration to some clients because medical treatment is quite expensive. After attorney fees, medical expenses, and the time and aggravation the client is usually surprised to see how little is left over. Granted, compensatory damages are intended not as a windfall but merely to make a person “whole,” but disappointment nonetheless sets in occasionally.
The Missouri Legislature has taken note and there is a ceiling on the amount of liens that an insurance company or health provider can effectuate. RSMo 430.225 provides in pertinent part:
If the liens of such health practitioners, hospitals, clinics or other institutions exceed fifty percent of the amount due the patient, every health care practitioner, hospital, clinic or other institution giving notice of its lien, as aforesaid, shall share in up to fifty percent of the net proceeds due the patient, in the proportion that each claim bears to the total amount of all other liens of health care practitioners, hospitals, clinics or other institutions. “Net proceeds”, as used in this section, means the amount remaining after the payment of contractual attorney fees, if any, and other expenses of recovery.
Keep in mind that this statute is just State law. Federal laws such as medicare, medicaid, and even the VA are sometimes applicable. Things get much more complicated when there are in play.