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Health Insurers Are Seizing Entire Accident Settlement, according to a California Injury Lawyer, Leaving Injury Victims Devastated. Protect yourself.

Recently, a young California man was riding his motorcycle to work when a car suddenly pulled away from the curb and crashed into him. He suffered severe injuries, requiring five surgeries, preventing him from working for two years, and resulting in the loss of his job and health insurance. His medical bills exceeded $200,000, but the driver who hit him had no assets and was only insured with $100,000 in liability coverage. After the injury settlement, his health insurer was offered a portion of the money he received from the accident claim. He was to keep a portion to compensate for lost work, pain and suffering, and future medical expenses. The insurer refused. Citing recent case law, the insurer demanded all of the settlement money.

Cases of unjust insurance practices similar to this one have become increasingly prevalent in California. While most states protect their citizens from such practices, the Federal Government has tended to favor health insurance companies: in the 1960s, the Federal Employee Retirement Income Security Act, or ERISA, was enacted, dictating the rules for employer-offered health insurance and, in most cases, superseding state laws on such matters. Recent rulings by the U.S. Supreme Court have allowed health insurance companies to place their rights to reimbursement above the rights of victims by including a boilerplate provision in health insurance policies—policies most people do not read, nor would they understand.

After over 35 years as California injury lawyer, I have witnessed the recent increase in aggressive insurance practices firsthand. When the young motorcycle accident victim came to me, it was clear that his claim far exceeded the policy limits and he deserved some measure of assistance. We convinced the health insurer that full reimbursement was unfair, unacceptable, and that seizing the young man’s entire accident settlement would incite public censure of the company. Ultimately, we prevailed.

With the soaring cost of medical care, insufficient automobile insurance policies, and aggressive health care insurers, accident victims must be more cautious than ever before. Before resolving your accident case with the other party, negotiate the amount of reimbursement your health insurer will receive from the settlement. If your health insurance company continues to demand your entire settlement, expose them to the media. The threat of public censure may persuade them to compromise.

Under current ERISA law, accident victims have little recourse when dealing with unjust insurance companies. The legal process necessary to protect even a portion of an injury victim’s accident settlement is difficult and complex. Contribute to change by petitioning your Representative and Congress in favor of the “Common Fund” model, under which the insurance company and the accident victim are both entitled to a portion of the settlement contingent on the total damages suffered by each party. Under the Common Fund model, if you incurred 100,000 dollars in medical bills and 200,000 dollars in additional damages but only received 15,000 dollars from the accident settlement, the health insurer would be entitled to 1/3 of the 15,000 dollars—instead of the entire amount.

Protect your settlement after you have been injured in an accident. If the insurance company refuses to negotiate, an experienced California Injury Lawyer will advocate for you.

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