While handling Medical Payment (Med Pay) lien claims for insurance clients, an issue I run across is when the insurance client files a Med Pay claim in Intercompany Arbitration to protect the Med Pay claim and the insurance client is named party in its insured’s personal injury lawsuit to protect its Med Pay lien. It’s just as convoluted as it sounds.
Intercompany Arbitration for Med Pay
Many times I find out the insurance client thinks its Med Pay is fully protected by filing in Intercompany Arbitration. However, in Ohio, and probably in other states as well, the tortfeasor’s insurance carrier will tender an offer to the insured with the understanding and requirement that the insured satisfy any and all liens including the insurance client’s Med Pay claim. This requirement is typically outlined in the Release signed by the insured, which covers payment of any outstanding liens (including any that may be filed and deferred in Intercompany Arbitration at the time of the settlement).
If the insurance client does not pay attention to the insured lawsuit and a settlement occurs, and then Intercompany Arbitration awards the Med Pay to the insurance client, we now have two separate paths to satisfying the Med Pay claim/lien. Insurance clients need to avoid this situation where there are two separate venues to resolve the same Med Pay claim pending at the same time.
Ohio Intercompany Arbitration
Additionally, an insured may argue an Ohio statute makes the Intercompany Arbitration void because the statute applies to determine what the insurance client is entitled to, which may be less than the Intercompany Arbitration decision. Moreover, the tortfeasor’s insurer may state the insured is responsible for satisfying the Med Pay lien and/or if it pays the Med Pay lien from the Intercompany Arbitration decision, it may file suit against your insured.
Med Pay claim in insured bodily injury lawsuit
While we understand Intercompany Arbitration is useful for resolving issues between carriers, if there is a personal injury action, we believe the most efficient way to resolve the Med Pay is to file in Intercompany Arbitration to protect the lien in the event the insured does not file a bodily injury suit. If there is a bodily injury suit, agree to a deferment in arbitration so your claim can get resolved when your insured’s injury claim is resolved. Refusing to participate in settlement discussions and relying on Arbitration only serves to muddy your insured’s case. It could also cause the insured to settle the case without resolving your lien and then you are forced to chase the insured for your money. (On a related note, if you are the RESPONDENT in Arbitration and there is a Personal Injury claim filed AGAINST your insured ALWAYS request a deferment. If you do not request a deferment and the Med Pay arbitration is decided against your insured, you could end up paying twice – once on the personal injury settlement and once in an unpaid arbitration award claim.
It is simpler and more efficient to address the Med Pay issue during the insured lawsuit and settlement as opposed to the Intercompany Arbitration. This ensures there is not a duel and potentially different award. Also, the tortfeasor’s insurance carrier will point to release language that says the insured is responsible for satisfying any and all liens, which will include the Intercompany Arbitration decision. So now the client has to deal with the tortfeasor’s insurance carrier and its own insured, which can potentially break up a bodily injury lawsuit settlement.
In summary, the insurance client should be cognizant of whether an insured has an active or potential bodily injury claim or lawsuit. The insurance client should expect to satisfy and deal with its Med Pay lien at that time of the insured settlement as opposed to waiting for the Intercompany Arbitration decision, which will muddy up any sort of insured settlement and who is responsible for satisfying the Med Pay lien.