New Med Pay Statute Shields Insureds from Deceptive Billing Practices

The medical expense
benefits coverage of automobile insurance, commonly referred to as “med pay,”
is the part of an insurance package that pays medical expenses for you and any
passengers in your vehicle during an accident.

Med pay coverage is an
invaluable component of any insurance package, because its benefits are payable
regardless of who is at fault in the accident that triggered the benefits. The benefits are also paid directly to the
injured party who is asserting the claim, even if the injured claimant is
covered under a health insurance plan.[1]

However, some claimants
may unknowingly allow medical providers to usurp the med pay, rather than
billing a claimant’s health insurance, as they would do normally. This is problematic because healthcare
providers—like hospitals—are usually required to discount treatment charges as
a result of their contractual obligations with health insurance companies. But using med pay circumvents their
contractual obligation to reduce treatment charges. So, some healthcare providers require
patients to relinquish their med pay to the provider by executing an assignment
of benefits. This means that the
healthcare provider may submit medical treatment charges to the automobile
insurance company directly under the patient’s med pay coverage, sometimes
depriving patients of the additional benefits of the med pay coverage.
Furthermore, assignments of benefits contracts are usually one-sided,
non-negotiable, and can be required by the healthcare provider.

Assignments are even
further problematic because they are often buried in pages of paperwork, and
many patients are unaware that they have signed over their med pay this way
until after consulting an experience personal injury attorney. As a consequence, signing over med pay
benefits can also significantly reduce a client’s recovery in a personal injury

At Allen and Allen, we viewed
this practice as abusive and deceptive, and so members of our law firm lobbied
the Virginia General Assembly to enact legislation to end to the unfair use of
assignments of benefits. In July of
2013, the Virginia General Assembly modified the med pay statute[2],
to impose rules governing the use of assignments of benefits.  Currently,
an assignment of benefits is valid only if it is in writing, is signed and
dated by the patient, and is provided to the med pay insurance carrier, the
liability insurance carrier, and the claimant’s attorney via certified
mail. If a claimant is uninsured,
then the healthcare provider can directly bill med pay carriers. If a claimant is insured, healthcare
providers that are inside the insured’s network must bill the patients’ health
insurance before billing the med pay carrier, and healthcare providers that are
outside the insured’s network may directly bill med pay carriers.

If you are injured in an
accident and are seeking medical treatment, keep in mind the following:

  • Always
    provide your health insurance card to any and all medical providers involved in
    your medical treatment, and use your health insurance unless an attorney has
    advised you otherwise.

  • Seek
    medical services from in-network providers when possible.

  • Read
    all patient intake forms carefully and contact an attorney for advice
    concerning any forms or contracts that appear unclear or confusing.

  • Do
    not sign anything you do not understand. We at Allen and Allen encourage our clients to call us immediately if
    they do not understand a document. 

  • Review
    all explanations of benefits (EOB’s) from your health insurance company as soon
    as possible.

Be aware of the importance
of med pay coverage, and consider adding it to your insurance plan if you do
not already have it. Most of all, be
aware of assignments of benefits contracts, and other billing practices that
can reduce the benefits of your med pay coverage.

rel=”nofollow” >[1] If a claimant is covered under a health insurance plan, the claim for med pay is limited to those expenses actually incurred by the health insurance company, plus any out of pocket expenses incurred by the claimant.

rel=”nofollow” >[2] Virginia Code § 38.2-22.

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