1 Managing Accident Claims: No-Fault vs. Liability Tennessee Music City AAHAM Nashville, TN September 26, 2013

2 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. Chad Powers, Esq. Vice President, General Counsel Medical Reimbursements of America, Inc Moores Lane Brentwood, TN 37027

3 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

4 Types of Insurance related to Accident Claims: Med Pay (No-Fault) PIP (No-Fault) Workers’ Compensation Commercial Health Insurance Government Health Insurance Liability Insurance Under/Un-insured Motorist Coverage

5 Not all automobile insurance is treated the same: No-Fault vs. Liability

6 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 −Automobile Med Pay- driver, family members, passengers −Homeowners’ Med Pay- guests, not homeowners/residents −Premises Med Pay- guests, patrons, members No-Fault Insurance:

7 Anyone with No-Fault insurance injured in an automobile related accident. For example: Driver Passengers – related or unrelated – in the insured driver’s vehicle A person driving the insured driver’s vehicle Pedestrians with Med Pay in their car insurance policy

State No-Fault Insurance Requirements: TENNESSEE: No-fault insurance is not required. Commonly purchased coverage: $2,000

9 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 Liability (At-Fault insurance):

10 Insures the “injuring” party from… … the “injured” party’s damages claim. Who does liability cover?

State Liability Insurance Requirements: TENNESSEE: Compulsory Coverage (25/50/15): −Bodily injury: $25,000 per person and $50,000 per accident −Property: $15,000

12 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.

13 LIABILITY INSURANCE PATIENT HOSPITAL LIABLE 3rd PARTY LIABLE 3rd PARTY NO-FAULT Assignment of Benefits Hospital Lien From Patient Reimbursement – 3 ways:

14 Coordination of Payment: Why it is important to differentiate?

15 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 NAIC COB Model Regulation:

(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.” (1)(e): “‘Plan’ may include the medical benefits coverage in group-type, and individual automobile “no-fault” … type contracts.” (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.” T ENN. R. C OMP. R. & R EGS :

17 Express Contract: No-Fault insurance has a contractual obligation to pay for medical services provided to Patient. Express Contract: No-Fault insurance has a contractual obligation to pay for medical services provided to Patient. Express Contract: Liability Insurance has a contractual obligation to compensate 3rd Party for damages 3rd Party must pay to Patient. Express Contract: Liability Insurance has a contractual obligation to compensate 3rd Party for damages 3rd Party must pay to Patient. Quasi-contract : Hospital has rendered services and Patient is obligated to pay for them. Quasi-contract : Hospital has rendered services and Patient is obligated to pay for them. NO-FAULT LIABILITY INSURANCE PATIENT HOSPITAL LIABLE 3rd PARTY LIABLE 3rd PARTY HEALTH INSURANCE Express Contract: Health Insurance has a contract with Patient and Hospital. Express Contract: Health Insurance has a contract with Patient and Hospital. LIABILITY INSURANCE Contract Relationships:

18 HEALTH INSURANCE PATIENT HOSPITAL MED PAY ›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 and agrees to only bill Insurance for payment. ›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 and agrees to only bill Insurance for payment. LIABILITY INSURANCE Contract Language – Health Insurance:

19 HEALTH INSURANCE PATIENT HOSPITAL LIABILITY INSURANCE MED PAY Neither Patient nor Hospital have a contractual relationship with Liability Insurance. Contract Language – Health Insurance:

20 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. Sample Contract Language – BCBS:

21 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 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

22 Putting it Together: The Lifecycle of a Claim

23 Third Party Liability Patient Gets Injured Hospital Treats Patient Med Pay | PIP Commercial Health Insurance ACCOUNT INVESTIGATION: The billing office staff will communicate with patients, employers, insurance agents, adjusters, and health insurance carriers, to identify all payers and then bill/coordinate claims as the obtained information dictates. ACCOUNT INVESTIGATION: The billing office staff will communicate with patients, employers, insurance agents, adjusters, and health insurance carriers, to identify all payers and then bill/coordinate claims as the obtained information dictates. For all remaining balances and/or claims without primary insurance coverage(s) the billing office staff will investigate litigated claims by gathering information from the patient’s attorney, billing any applicable insurance carriers, or filing hospital liens. Bills are submitted to the carrier with a written notice of an assignment of benefits and/or lien so as to ensure that payments are directed to the hospital. The business office staff will submit claims to the health insurance carrier. Claims are submitted with accident details, subrogation information, and exhaust documentation from all primary insurances.

24 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. Conclusion:

25 Questions?

26 Thank You. 26