In my practice I handle numerous types of negligence cases, but the largest number of cases involve injuries from motor vehicle accidents. As I discussed in previous blogs, my client's own automobile insurance coverage, or "PIP" is the first source of payment for medical treatment. More likely than not, the receptionist at the ER will insist on being provided proof of this insurance before any treatment is rendered. But what happens when the PIP coverage, usually $10,000.00 is exhausted? Since PIP only pays 80% of the medical bills, how is the remaining 20% paid ?
For those clients that have health insurance the answer is simple. Once Blue Cross/Blue Shield, United or Aetna is satisfied that there is no more available PIP coverage, they will accept responsibility for additional treatment. But what if no health insurance is available and the client needs continuing therapy, diagnostic testing or even surgery? In those circumstances, the doctor may agree to continue to treat the client pursuant to a "Letter of Protection", or "LOP". This is simply an agreement that the patient/client will pay the outstanding bills of the medical provider from the proceeds of a settlement or jury award at the close the case. The attorney agrees to not distribute any funds to the client until the medical bills are satisfied. The client specifically agrees that if there is no recovery or the recovery does not satisfy the remaining bills, the client will still be responsible for the balance.
As you can see, the decision to proceed under a Letter of Protection is multi-faceted. For both the attorney and doctor, the decision rests heavily upon the merits of the case and whether there is sufficient insurance coverage to pay the future bills which will be incurred. This coverage must come from either the bodily injury liability coverage of the at-fault driver, and/or the uninsured/underinsured motorist coverage which the client hopefully has elected to carry. As you might expect, clients with serious permanent injuries simply have no choice but to enter this type of agreement in the absence of private health insurance or Medicare.
Not surprisingly, insurance companies who defend auto negligence cases do not like these agreements whatsoever, and regularly cite a litany of abuses that can occur as a result. They complain that while doctors who accept insurance payments for their services are forced to agree to a strict (and often unrealistic) fee schedule, there is no such restraint for a doctor who operates under a LOP. As the argument goes, they have the unfettered discretion to inflate their medical bills and realize a windfall when the case is resolved. Defense attorneys also claim that LOPs give doctors a financial interest in the outcome of a case, and as a result, their testimony at deposition or trial cannot be trusted. Finally, they argue that where medical bills are higher, juries tend to award greater amounts for non-economic damages, or "pain and suffering" in their verdicts.
I see these arguments as an insult to juries everywhere - believing they do not have the ability to discern the difference between real injuries that require extensive treatment and those that are somehow " manufactured" by unscrupulous attorneys and doctors. Armed with billions in assets and the ability to retain high-powered experts to rebut the evidence put forth by the plaintiff, you should be skeptical of the insurance industry's claims that they are the real victims here. In my 37 years as a trial attorney, I can say that in the overwhelming percentage of the cases I have tried (win or lose),the jury has truly attempted to do the right thing based on all of the evidence presented.
Letters of Protection are here to stay. For many people, they are the only way to obtain competent ongoing treatment. In my practice I often review with my clients the pros and cons of entering such agreements. Should you or a loved one be injured in a motor vehicle accident and have questions about just how the medical bills are going to be paid, please call me at my offices at 727-822-3700 to schedule a no-cost consultation.