After a slip and fall accident in New Orleans, trucking accident in New Orleans, car accident in New Orleans, or any other type of accident, you may be facing significant medical bills or need further medical treatment to get you back to the place you were in before the accident.
In some cases, you may need a surgery that could cost hundreds of thousands of dollars.
We have discussed generally in other blog articles about who is responsible for medical bill payments and the possibilities of getting some insurance payments for your medical bills while your case is pending here: Who is responsible for bills after an accident in Louisiana.
The reality is that generally, there is no requirement for a third party’s insurance to pay your medical bills in advance of your case ending.
Can My Attorney Pay my Medical Bills While My Case is Pending in Louisiana?
Often times our clients are uninsured or cannot afford their out of pocket costs under their health insurance following an unexpected accident. In these cases, we may advance the costs of your medical treatment so that you can focus on getting better and not on financial stress.
There is nothing problematic with this under Louisiana law, and it is very common for an attorney or law firm to help you get your medical expenses paid for while your case is pending.
What is a Funding Company?
A funding company is a third party that your attorney may advise you enter a contract with to pay your medical expenses. This company is not affiliated with your attorney at all, but your lawyer may not want to take on the risk or the expense of paying for your medical expenses.
We have seen many instances in which individuals signed a contract with a funding company and their attorney did not even explain to them what a funding company was.
A funding company is a company that will pay the medical care provider—a chiropractor, a surgeon, or a hospital, for example. The medical provider issues a bill for your medical treatment.
Typically, the company then has a contract with the medical provider itself that provides for payment to the medical provider a percentage that is often LESS THAN THE BILL BUT MORE THAN THEY WOULD HAVE OTHERWISE CHARGED YOU or your lawyer if you paid them directly.
In exchange, the funding company gets the right that allows the company to receive the FULL AMOUNT OF THE BILLED CHARGES. In reality (because the funding company needs to make money), the bill you will get is often much higher than what the funding company actually paid for the medical care (often hundreds of thousands of dollars) and higher than what private insurance would have paid.
The third-party company will then file a medical expense “lien” on the proceeds of the person’s settlement or jury award. Sometimes, the funding company may even take a percentage of your recovery of your case as a whole in exchange for paying your medical bills.
So, what does all this mean? Let’s take a look at a real world example that we have seen another attorney do to their client. Let’s assume that the individual recovered $100,000 from a settlement for a car accident where you had a disc herniation and had to undergo two epidural steroid injections for treatment with a pain management doctor.
The client actually had insurance with Blue Cross that would have paid her medical bills, but instead the attorney advised the client to “keep things simple” and go through the funding company.
Sample Settlement Calculation with a Funding Company:
Total Settlement $100,000
Attorney Fees $ 40,000
Court Costs $ 1,000
Funding Company Bills $ 39,000
TOTAL TO CLIENT $ 20,000
In this case, after being seriously injured and undergoing significant medical treatment, the client would get half of what their attorney would get !
Let’s look at the same Settlement Calculation if that litigant had used their insurance:
Total Settlement $100,000
Attorney Fees $ 40,000
Court Costs $ 1,000
Medical Bills $ 1,000
TOTAL TO CLIENT $ 58,000
Here, assuming a health insurance company did not assert a subrogation right, your only medical bills would be your out of pocket costs, copays, or deductibles. So, in the exact same case, with the exact same injuries, a client’s take home money would be almost $40,000 more if you had just used your health insurance.
Let’s look at the same Settlement Calculation if the client did not have health insurance to cover his or her medical expenses after an accident and the lawyer had paid the medical bills based on recent charges we have seen from pain management doctors for the same type of treatment that are not using a funding company:
Total Settlement $100,000
Attorney Fees $ 40,000
Court Costs $ 1,000
Medical Bills $ 7,000
TOTAL TO CLIENT $ 52,000
So, if the lawyer had just paid the medical bills instead of using a funding company with the exact same facts, the same settlement, the same injuries, and the same medical treatment, the client would have recovered $32,000 more in their pocket – almost three times the amount.
What Does an Attorney want me to use a Funding Company?
We cannot explain why an attorney is pressuring you into using a funding company other than to invite you to look at the three examples above. Regardless of what the client took home, the attorney’s fees stayed the same.
It’s possible that the lawyer simply doesn’t care what the ultimate net for the client is. Regardless of what goes into the client’s pocket, he is going to get paid the same amount, does not have to “front” any money for the client’s medical expenses, and it makes the case easier for him to settle because an insurance company may feel more pressured to pay if your medical bills are $39,000 versus $7,000.
That is, if he’s going to get paid the same anyway, it may be better for him to use the funding company because the case will be cheaper for him and may be less work – even if it is a $40,000 difference for their client who, often times, did not fully understand what the funding company was at all.
In cases where there is limited amount of insurance, the lawyer should fight for you to get the most amount of money in your pocket – because that is what matters. Our philosophy is that we care about our clients and not just their cases. This is why we never take a fee that is greater than what goes into our clients’ pocket if we settle their injury case.
Should I use a Funding Company to pay for my Case Expenses?
Put simply, we do not use funding companies and do not allow our clients to use funding companies because it could hurt your case or, it may significantly diminish your recovery.
The only winner when using a funding company is the attorney because a typical personal injury attorney.
Not only will using a funding company make you get a significantly lower amount from your case’s settlement or judgment, but it also may endanger your case. Recent laws have come out allowing a defendant or an insurance company to show the judge or the jury all of the information about the funding company and its agreement with you and your attorney to claim more medical expenses than were actually paid.
A jury may have the decision to award you just a fair amount of the medical expenses after hearing all of the evidence about the funding company. But you may still be on the hook for paying back 100% of the funding company’s expenses! So, using a funding company can actually prejudice your case in front of a judge or jury.
Do I have to Use a Funding Company?
No way! You have the right to choose how your case is funded and if your attorney is telling you otherwise, go get a consultation with another attorney. Don’t wait until your case is over because then it may be too late to control whether or not your case expenses were reasonable.
Don’t sign something just because your lawyer tells you to. This is about your case and your bottom line, not about whether the lawyer wants to make his or her representation of you easier or less costly. We wrote about how you can get a new lawyer or a consultation about changing your lawyer under Louisiana law here.
If you have been involved in an accident and are worried about payment of your medical bills, give us a call for a free consultation on your possible claim.