Should I Use Medicaid to Pay for My Car Accident Injuries?

In 2013, a Colorado Court of Appeals case now makes the answer to this question a resounding yes!

In Smith v. Kinningham, the Court of Appeals clarified that Medicaid benefits are a collateral source. Under the law, a collateral source is an entity other than the at fault defendant, such as a health insurance company, that compensates an injured person for their injuries. The Court's determination is significant, because evidence of payments made by a collateral source on behalf of an injured plaintiff is inadmissible at trial. Accordingly, if you use Medicaid to pay for medical treatment related to the injuries you sustained in a car accident, the jury will never hear that Medicaid substantially re-priced your medical charges and paid much less than the gross amount that the medical provider actually billed for those services.

Since the passage of Colorado's Make Whole Statute, C.R.S. 10-1-135, insurance companies and their lawyers are no longer permitted to inform the jury that health insurance companies re-price doctor and hospital bills to a lower rate from the higher gross billed amounts. In the past, insurance defense lawyers would often tell jurors that because the plaintiff had health insurance, the $50,000 of claimed medical bills really only amounted to $12,000 worth of insurance paid expenses. The motivation, of course, was to cause juries to reduce the verdict to reflect the lesser amount paid by the health insurance company.

C.R.S. 10-1-135 did away with this argument because it was not fair for individuals who bought health insurance to have that coverage exploited by negligent defendants. Why should an at-fault driver derive any sort of benefit because the injured plaintiff had the foresight to purchase health insurance before the auto accident? After all, if the person did not take the financial responsibility to go out and secure health insurance, the at-fault driver would be paying a $50,000 bill. The intent behind the statute and the resulting case law is that if you go out and secure some protection for yourself, like health insurance, it should not be thrown in your face at trial, and certainly should not mean you should get a smaller verdict than an uninsured plaintiff.

Before the ruling in Smith v. Kinningham, the law was unclear on whether a benefit such as Medicaid, a benefit that people do not earn or pay for, should qualify as a collateral source under C.R.S. 10-1-135. Medicare is a benefit that a person earns through working and paying payroll taxes. Families have to purchase private health insurance and pay monthly premiums to maintain coverage. However, Medicaid is a benefit based solely on indigent status. Until recently, it was undecided under C.R.S. 10-1-135 whether insurance defense lawyers can throw in the face of an injury victim at trial that he or she was on Medicaid (suggesting an individual on the public dole is less worthy of recovery) and also that Medicaid vastly re-prices the billed medical expenses.

If you have private health insurance, when the hospital bill is $50,000, that amount will be re-priced down to perhaps $20,000 under the pre-negotiated contractual rate between the company and the hospital. But the same hospital bill under Medicaid might be further re-priced down to $3,000 of actual paid expenses. Of course, the seminal question is whether it is fair for an injured person who had Medicaid to have his or her medical bills considered differently by the jury because of the power of Medicaid to re-price?

The Kinningham court determined that Medicaid, like Medicare and every other private health insurance, must be treated the same. Namely, insurance defense lawyers are not allowed to mention health insurance or the effect of health insurance on any of the claimed medical bills. The legal requirement for someone injured in a car accident at trial is to prove that the medical charges are reasonable, necessary, and related to his or her injury. Based on Smith v. Kinningham, the jury will be told nothing about what happens in the payment process of the medical bills. The person injured with $50,000 worth of reasonable hospital bills, whether those bills were re-priced down to $20,000 or $3,000, are not limited in recovery to what health insurance ultimately paid.

So, under the new case law, would there be any particular reason why an injured person who has Medicaid should shy away from using Medicaid? The answer is clearly no. Medicaid is an incredibly efficient and appropriate system that allows injured people to get a substantial amount of medical care at affordable rates. As I have discussed in prior articles, people with health insurance, including Medicare and Medicaid, do resoundingly better, as far as money recovery from injury compensation than folks who treat using medical finance companies and liens. Doctors and providers who treat on liens generally charge higher rates for medical services when compared to the amounts paid by health insurance providers for the same type of care. Consequently, when a client's case resolves, more of the settlement or trial verdict must be used to pay the doctors' bills instead of going into the injured client's pocket.

At Anderson Hemmat, we uniformly advise clients with health insurance such as Medicare or Medicaid to use their insurance and to stay within networks that will accept their insurance. The results have remained overwhelmingly better for clients who take that advice than for those who do not. If you have been injured in a auto accident, please call and speak with one of our experienced car accident attorneys today.