A Medical Provider Billing Scam to Avoid

I’m Katelyn Holub, an attorney focusing on personal injury law in northwest Indiana.

Welcome to Personal Injury Primer, where we break down the law into simple terms, provide legal tips, and discuss personal injury law topics.

Today’s question is prompted by a call from a client.

A physical therapist persuaded a client to sign a form directing the therapist not to bill his health insurance but to authorize the provider instead to assert a lien on his personal injury claim.

We thought we’d bring this to your attention because it’s a common scam, and many people do not know how to handle it.

Here is what the patient was asked to sign:

I, the patient, hereby instruct my treater to submit my charges to any liable third-party insurance company and file a lien on my personal injury case instead of billing my health insurance company. I am aware that by doing this, my health insurance company may later deny the claim for untimely filing under their guidelines for claim billing. I am also aware that I will be personally liable for any balance remaining on my account should the third-party coverage not be sufficient to pay the full cost of my treatment. A representative of my treater has explained all of this to me, and I am directing my treater not to bill my health insurance carrier.

By agreeing to this directive, the patient is potentially giving up their health insurance benefit.

The patient has most likely paid premiums for health insurance so that their bills will be paid. There is no reason to give up insurance benefits that you’ve paid hard-earned dollars to purchase.

Here’s what fuels the scam.

Most medical providers have agreements with health insurance carriers to accept a lower dollar amount in payment on any bill that they submit.

In other words, when the provider bills $1000, they likely have an agreement with the health insurance carrier to accept $330 in full payment.

Of course, if you issued a bill for a thousand dollars and you had an agreement that you would accept $330 in full payment, you’d probably look for ways to bypass the agreement and get the full $1000.

But by signing such a document, the patient is essentially agreeing to pay the full $1000 bill. Unless they take steps on their own to file a timely claim with their health insurance, they will have wasted their money buying health insurance.

This means they not only have to pay the bill in full themselves, but they also lose the benefit of having the bill deemed paid in full had the health insurance carrier paid the negotiated rate.

So, the injury victim who falls for this scam is victimized by their treater as well as the wrongdoer who injured them.

Instead of getting the treatment that they need at a reasonable price covered through their own health insurance, which they paid for, by the way, they are now left with having to pay full freight for treatment.

Moreover, any treater who tries to pull this scam is raising a big red flag that they cannot be trusted as to treatment and care and should be fired immediately.

If you have an attorney and a medical provider requests that you sign such a document, immediately bring it to the attention of your attorney. Do not sign it. Instead, insist that the medical provider bill your insurance company. If the provider refuses, fire the provider.

I hope you found this information helpful. If you are a victim of someone’s carelessness, substandard medical care, product defect, work injury, or another personal injury, please call (219) 736-9700 with your questions. You can also learn more about us by visiting our website at DavidHolubLaw.com. While there, make sure you request a copy of our book “Fighting for Truth.”