Court Rejects Doctors' Challenge to "Balance Billing" Prohibition Statute
A Federal District Court dismissed a challenge by doctors to a statute that prohibits a practice known as "balance billing," as noted in a story in Crain's Chicago Business.
This decision should set legislators to work in closing some loopholes and generally helping to protect the consumer, or "end user," of medical services.
It also should have a rather significant affect on personal injury victims and their cases.
To summarize, the original statute put the stop to a widely used practice known as "balance billing," in which medical providers would charge a discounted amount to insurers for in-network charges but who would then turn around and bill the balance directly to the consumer. It was not unheard of for a consumer to incur a $10,000.00 hospital bill for in-network care, which their health insurer would discount to $3,500.00, pay that amount to the hospital, yet to have the consumer receive a bill from the hospital for the $6,500.00 balance!
In fact, this has occurred with frightening regularity in various permuations in personal injury cases, where often insurers would pay doctors or health care providers the contracted for and discounted amount only to have the doctor or provider then assert a lien upon the entire amount of their bill, thus making it nearly impossible to settle and resolve many injury cases. Do the math.
Let's suppose a personal injury case settles for $20,000.00 and that same medical provider who had the $10,000.00 bill, for which the insurer paid them $3,500.00, now asserts a lien of $10,000.00. Let's also assume the injured party's health insurer is contractually entitled to at least some percentage of the $3,500.00 it paid out already (health insurers are allowed to contractually recover dollar for dollar any amounts paid out if the injured party recovers from a "third party"). So that means after attorney's fees and costs, there is likely between $10,000.00 and $12,000.00 left to distribute between the medical provider (who wants $10,000.00), the health insurer (who wants $3,500.00) and the injured person (who would actually like to be compensated for his or her injury, if you don't mind!). It doesn't take a brain surgeon or a really smart trial lawyer (who said brain surgeons are the standard of smartness anyway?) to figure something has to give.
In short, this system is just not fair to the medical consumer and it's not fair to anyone but medical providers.
That is one reason the court dismissed the suit.
Without getting into the unfairness of liens and reimbursement agreements which continually hinder personal injury claimants while making insurers and medical providers even more flush with cash than they already are, this is a small step forward in my mind.
We'll take any progress we can get these days!