Managing Accident Claims:
No-Fault vs. Liability
Tennessee Music City AAHAM
Nashville, TN
September 26, 2013
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Chad Powers, Esq.
Vice President, General Counsel
Medical Reimbursements of America, Inc.
7105 Moores Lane
Brentwood, TN 37027
DISCLAIMER - This publication is designed to provide general information in regard to the subject matter covered. It is provided with
the understanding that the publisher is not engaged in rendering legal or other professional services. Although prepared by individuals
experienced in the medical reimbursement industry, this publication should not be utilized as a substitute for professional services in
specific situations. Although the individuals who prepared the publication may be legal professionals individually, such individuals are
not presenting the information covered herein as legal experts in the medical reimbursement industry. If legal advice or other
assistance is required, the services of a professional should be sought.
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• Introduction
−
Types of insurance
• Not All Automobile Insurance is the Same
−
−
What is No-Fault insurance?
What is Liability insurance?
• Coordination of Payment – Why it is important to differentiate
−
−
Pitfalls of contract language and clauses
Review class action lawsuits
• Conclusion
• Q&A
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Types of Insurance related to Accident Claims:
•
•
•
•
•
•
•
4
Med Pay (No-Fault)
PIP (No-Fault)
Workers’ Compensation
Commercial Health Insurance
Government Health Insurance
Liability Insurance
Under/Un-insured Motorist Coverage
Not all automobile insurance is treated the same:
No-Fault vs. Liability
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No-Fault Insurance:
• No-Fault Insurance (e.g. Med Pay or PIP)
is “first party” coverage;
• Pays regardless of fault;
• Pays the cost of necessary medical care
received as a result of an accident
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−
Automobile Med Pay- driver, family
members, passengers
−
Homeowners’ Med Pay- guests, not
homeowners/residents
−
Premises Med Pay- guests, patrons,
members
Anyone with No-Fault
insurance injured in an
automobile related accident.
For example:
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•
•
Driver
•
A person driving the insured
driver’s vehicle
•
Pedestrians with Med Pay in
their car insurance policy
Passengers – related or
unrelated – in the insured
driver’s vehicle
State No-Fault Insurance Requirements:
TENNESSEE:
• No-fault insurance is not required.
• Commonly purchased coverage: $2,000
http://www.allstate.com/auto-insurance/Tennessee-auto-insurance-coverages.aspx
Liability (At-Fault insurance):
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•
Liability insurance protects the insured
from damage the insured does to
others or to property in an accident.
•
May cover: medical expenses, lost
wages, pain and suffering, and
attorney’s fees.
•
If Patient is found “at-fault” or if fault
cannot be determined, liability will not
cover Patient’s medical expenses
Who does liability cover?
•
•
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Insures the “injuring” party
from…
… the “injured” party’s
damages claim.
State Liability Insurance Requirements:
TENNESSEE:
• Compulsory Coverage (25/50/15):
− Bodily injury: $25,000 per person and $50,000 per accident
− Property: $15,000
No-Fault vs. Liability Coverage:
• Liability insurance differs from other
insurance policies or plans . . .
• In the case of other types of insurance .
. ., i.e. no-fault insurance, group health
plans and workers’ compensation, the
insurance has a contractual obligation
to pay for medical services provided to
the covered person.
• Liability insurance, however, has a
contractual obligation to compensate
the alleged tortfeasor for any damages
the alleged tortfeasor must pay to an
injured party.
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Reimbursement – 3 ways:
PATIENT
NO-FAULT
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HOSPITAL
LIABILITY
INSURANCE
Hospital
From
Assignment
Lien
ofPatient
Benefits
LIABLE
3rd PARTY
Coordination of Payment:
Why it is important to differentiate?
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2012 NAIC COB Model Regulation:
Section 3, sub. (K)(3):
• “Plan” includes . . . The medical benefits coverage in automobile “no
fault” . . . type contracts.
• Section 6, sub. (B)(1):
• When a person is covered by two (2) or more plans, the rules for
determining the order of benefit payments are as follows . . .
• . . . A plan that does not contain order of benefit determination
provisions that are consistent with this regulation is always the primary
plan unless the provisions of both plans, regardless of the provisions of
this paragraph, state that the complying plan is primary.
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TENN. R. COMP. R. & REGS. 0780-1-53:
0780-1-53-.01(1):
• “The purpose of this regulation is to adopt the Model Group Coordination of
Benefits Regulation, as promulgated by the National Association of Insurance
Commissioners.”
0780-1-53-.02(1)(e):
• “‘Plan’ may include the medical benefits coverage in group-type, and individual
automobile “no-fault” … type contracts.”
0780-1-53-.02(3):
• “. . . A Plan is a Primary Plan if either (a) or (b) below is true. . . .
• (a) The Plan either has no order of benefit determination rules, or it has rules
which differ from those permitted by this regulation.
• (b) All plans which cover the person use the order of benefit determination
rules required by this regulation and under those rules the Plan determines
its benefits first.”
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Contract Relationships:
PATIENT
HOSPITAL
Express Contract:
Express Contract:
Liability Insurance
has
Quasi-contract
:
No-Fault insurance has a
a contractual
Hospital
has rendered
LIABILITY
HEALTH
LIABILITY
LIABLE
Express
Contract:
contractual
obligation
to
pay
NO-FAULT
obligation
to
INSURANCE
INSURANCE
3rd PARTY
serviceshas
and Patient
is
Health Insurance
for
medical
services
provided
to
compensate 3rd Party
a contract
withto pay for them. Patient.
obligated
for damages 3rd Party
Patient and Hospital.
must pay to Patient.
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Contract Language – Health Insurance:
PATIENT
MED PAY
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HOSPITAL
HEALTH
INSURANCE
› Patient agrees to join
insurance “network;”
Insurance company agrees
to pay for medical
treatment.
› Hospital agrees to accept
payment from Insurance
company as payment in
full andLIABILITY
agrees to only bill
INSURANCE
Insurance
for payment.
Contract Language – Health Insurance:
PATIENT
HOSPITAL
Neither Patient nor Hospital
have a contractual
HEALTH
relationship
MED PAY with Liability
INSURANCE
Insurance.
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LIABILITY
INSURANCE
Sample Contract Language – BCBS:
Hold Harmless:
Providers hereby agree that in no event,
including, but not limited to nonpayment by
Plan, Plan insolvency or breach of this
Agreement, shall Provider bill, charge, collect a
deposit from, seek compensation, remuneration
or reimbursement from, or have any other
recourse against Member or persons other than
Plan acting on their behalf for services provided
pursuant to this Agreement.
http://www.anthem.com/provider/nv/f5/s5/t1/pw_b130897.pdf
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New MRA White Paper Available
MRA New White Paper – The Hidden Dangers of Liability
Billing
Hospitals Can Avoid the Threat of Class Action Lawsuits
from the Inappropriate Billing of Liability Insurance.
Get the new MRA White Paper at http://bit.ly/1eU6wSN
Class Action Lawsuits for inappropriate billing of Liability
Insurance represent a growing threat to hospitals across
the nation, especially given the recent $17M verdict
against a small 100-bed hospital. For nearly 15 years, MRA
has serviced hospitals across the country providing
solutions for accident claims management. Learn more at
www.medicalreimbursements.com
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Putting it Together:
The Lifecycle of a Claim
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Patient Gets
Injured
Hospital Treats
Patient
Med Pay | PIP
Commercial
Health
Insurance
Third Party
Liability
ACCOUNT INVESTIGATION:
Bills are submitted to the carrierThe
withbusiness
a written
office staff will submit claims to
The billing office staff will communicate with
For all remaining
notice of an assignment of benefitsthe
and/or
health
lien
insurance carrier.
Claims arebalances and/or claims
patients, employers, insurance agents, adjusters,
without
insurance coverage(s) the
so as to ensure that payments are
submitted
directedwith
to accident details, primary
subrogation
and health insurance carriers, to identify all
office stafffrom
will investigate litigated
the hospital. information, and exhaustbilling
documentation
payers and then bill/coordinate claims as the
claims
by
gathering
information from the
all primary insurances.
obtained information dictates.
patient’s attorney, billing any applicable
insurance carriers, or filing hospital liens.
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Conclusion:
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•
Distinctions
− No-Fault = First party insurance; pays regardless of fault
− Liability = Fault based insurance; only pays if 3rd Party at fault
•
Relationships
− No direct contract between hospital and No-Fault
− No direct contract between hospital and Liability
•
Hospital cannot pursue liability when patient is a commercial health
plan enrollee.
•
Recent litigation trends indicate that courts are likely to side with
insured patients when hospitals pursue liability primary to health.
Questions?
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Thank You.
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