When you are injured by someone’s mistake (like a reckless driver’s error) and get treated for care, your health insurance provider may pay your hospital bills. But that care provider will likely want to be reimbursed if you receive an injury settlement from the at-fault party’s insurer.
Thankfully, California Civil Code 3040 (CIV) limits the money insurers can ask for in some cases, leaving victims with more to help them rebuild their lives.
(a) No lien asserted by a licensee of the Department of Managed Care or the Department of Insurance, and no lien of a medical group or an independent practice association, to the extent that it asserts or enforces a lien, for the recovery of money paid or payable to or on behalf of an enrollee or insured for health care services provided under a health care service plan contract or a disability insurance policy, when the right of the licensee, medical group, or independent practice association to assert that lien is granted in a plan contract subject to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code) or a disability insurance policy subject to the Insurance Code, may exceed the sum of the reasonable costs actually paid by the licensee, medical group, or independent practice association to perfect the lien and one of the following:
(1) For health care services not provided on a capitated basis, the amount actually paid by the licensee, medical group, or independent practice association pursuant to that contract or policy to any treating medical provider.
(2) For health care services provided on a capitated basis, the amount equal to 80 percent of the usual and customary charge for the same services by medical providers that provide health care services on a noncapitated basis in the geographic region in which the services were rendered.
How Does a Lien Work?
A lien, in the context of a personal injury case, is a financial claim that a health insurance company makes after paying off a victim’s medical bills. Since the victim is in line to receive a settlement from those at fault for an accident, the insurer will expect to be reimbursed for any invoices from the hospital and ER that have been covered.
It’s the same in a fatal accident. The insurers would expect a share of any wrongful death settlement or judgment the family received. This would be to pay back what was paid for emergency response, ambulance fees, and any care the victim received before passing on.
Under CIV 3040. Insurers can’t always ask for full payment for every bill that’s been paid.
- For Capitated Care – This is a payment structure that usually pays hospitals up front for multiple care sessions. It often involves patients being able to return for care as many times as necessary for one payment. When patients are receiving this sort of care and coverage, the amount that insurers can reclaim is limited. Health insurance companies would only be able to seek 80% of the usual and customary charge that non-capitated providers in the same region bill for the same services.
- For Non-Capitated Care – The cost for care provided individually to the patient could be sought through a lien at 100% reimbursement on what the provider actually paid.
- Patients With a Lawyer — The lien can’t take more than a third of the settlement or judgment. This, in effect, helps victims be able to keep more to pay for the legal services they needed to ensure fair treatment.
- Patients Without a Lawyer – The lien can’t claim more than half of the settlement or judgment.
The important part to remember is that hospitals may charge one price for their care, but large health insurance providers may get a standard discount on that price. Injured victims shouldn’t be asked to pay a higher price or an unfair amount.
When Health Insurance Lien Limits Don’t Apply?
This statute doesn’t apply to other entities that might help victims pay or delay their medical bills. Hospitals may also swallow the costs of care until a patient receives an accident claim.
Administrators would file their own hospital liens for costs that insurance companies didn’t cover. These liens wouldn’t be limited by CIV 3040, but would be placed under scrutiny by different codes.
CIV 3040 also doesn’t apply to Workers’ compensation liens or Medi-Cal Reimbursement liens. These are regulated by different laws.
Contact a California Personal Injury Lawyer
If your accident involves a serious injury like a broken bone, a neck injury, or head trauma, and someone else was to blame, it’s wise to speak to a lawyer.
Your Maison Law attorney can make sure you don’t receive the blame and that you receive the maximum compensation. Your lawyer can also help when hospitals and insurers demand too much from you before and after your settlement arrives.
Maison Law of California offers a free, no-obligation case consultation for all injured California accident victims. If you do need our help, there are no upfront charges. In fact, we aren’t paid unless we win your case for you. Then our fee comes out of the check the insurance company must write for you.
