Letter of Protection or Healthcare Insurance: Which Should I Use?

You are heading home from the grocery store one day after work when you stop at a yellow light that is clearly about to turn red.  The next thing you know, you hear a deafening noise, and your car is thrown forward into the intersection.  The driver behind you, clearly intent on making that light, does not even try to brake and slams into the back of your car.  You’re thrown forward, then unbuckle your seatbelt and try to get out of your seat, but you cannot move because the pain in your neck is so bad. Although you must be taken by ambulance to the nearest hospital emergency room, you receive good news from the physicians at the hospital.  After X-ray and MRI imaging of your back and spine is completed, the healthcare providers conclude that all you suffered in terms of injuries from the accident was a severe case of whiplash.  You will need to undergo a long period of treatment for physical therapy, massage and chiropractic care in order to manage your symptoms. On your first visit to the physical therapist’s office, you are told that that the practice can either bill your health insurer (the plan you have through your wife’s employment with a state agency) or treat you pursuant to a letter of protection under which payment will not be owed until your claim against the driver that injured you is resolved.  Which option should you choose?

Providing Healthcare under a Letter of Protection

Many medical providers, understanding that accident victims may lack health insurance, often will agree to treat accident victims under what is known as a letter of protection (LOP).  This is a contractual arrangement between the patient and the healthcare provider pursuant to which the healthcare provider agrees to accept payment from the proceeds of the patient’s personal injury insurance claim or lawsuit after it has been resolved.  At that time, you or your attorney will work out payment arrangements with the healthcare provider which will ultimately come out of your recovery from the insurance claim or lawsuit.

If you receive accident-related care pursuant to an letter of protection, there is absolutely nothing wrong with doing so.  In fact, this is an excellent option for many accident victims who may not have health insurance and have nowhere else to turn.  However, the problem you can sometimes run into is that, when your case ultimately settles or is resolved, the provider may want to recover as much as possible because he or she has treated you for some period of time during which the provider was not being paid anything.  For example, if you settle your case for $50,000 and your past healthcare costs are $35,000 pursuant to a letter of protection and the healthcare provider wants 100 cents on the dollar for the care that he or she rendered, then that will ultimately reduce how much you walk away with from the accident.  If your attorney either does not try to negotiate the $35,000 the healthcare provider is demanding down, or the healthcare provider refuses to negotiate, it severely reduces the net proceeds of your claim to you.

Treatment for an Accident Where the Provider Bills Your Health Insurance

On the other hand, if you have health insurance and the medical provider who treats you for your injuries suffered because of the other driver’s negligence in an accident bills your insurance, then he or she will only be paid whatever negotiated rate the healthcare provider has agreed to accept from your insurer for whatever treatment that healthcare provider gave to you.  In turn, the health insurer can only seek to recover from you whatever it paid for accident-related care.

What many people do not realize is that, in exchange for being a part of your insurer’s network, the healthcare provider agrees to accept a certain amount.  This is known as the contract rate.  This may be hundreds of dollars less than the billed charge that the physician may charge for someone who is “self-pay,” or uninsured.  What happens in many cases is that a patient with health insurance may end up being billed less than one who is being treated pursuant to an LOP because the healthcare provider is taking a chance that he or she may never be paid with each patient that the healthcare provider agrees to treat pursuant to a LOP.  There is always the risk that a patient who is being treated pursuant to an LOP may take his or her case to trial and lose, so the healthcare provider will end up recovering nothing for the patient he treated.  With accident-related care that is paid for by health insurance, the only amount that an insurer can insist on being repaid is what it actually spent.

Contact Schwed, Adams & McGinley

 At Schwed, Adams & McGinley, our experienced personal injury attorneys have more than 150 years of representing the victims of motor vehicle accidents and other personal injury scenarios in Florida.  Regardless of whether the healthcare provider who treated you for injuries caused by someone else’s negligence billed your health insurer or you instead received that treatment under a letter of protection, we will do everything we can to maximize your recovery both from the motorist whose negligence caused your injuries as well as by reducing the amount that any healthcare provider or health insurer may seek to assert against the proceeds of your personal claim or lawsuit.  We will always negotiate as much as possible with any healthcare provider that treated you pursuant to an LOP or a health insurer that paid for your accident-related treatment so that our client walks away with the maximum amount possible from that client’s motor vehicle accident or other personal injury claim.  The less that you have to pay in expenses from a settlement or jury verdict means the more that you, the victim of the other side’s negligence, have to make yourself whole for your injuries and losses as a result of that person’s negligence.  Therefore, if you, a family member, or a loved one have been injured by someone else’s negligence in Florida, contact the experienced personal injury attorneys at Schwed, Adams & McGinley, P.A today at 877-694-6079 or contact@schwedlawfirm.com for a free consultation.