Tuesday, July 22, 2008

Robbery In Broad Daylight: Insurance Companies Win--- And You Lose (Again)

Do you remember the popular arcade game “Pac-Man,” the darting head with an opening mouth that scurried across the screen gobbling up everything in sight? A 2004 Ohio Supreme Court decision has granted your health insurance company “Pac-Man” status when it comes to your injury settlement. Believe it or not, your health insurer can literally confiscate 100% of your auto settlement in certain situations, even if it leaves you without a penny.

For example: You're hit by a drunk driver. Your shattered leg needed 3 surgeries, you missed 9 months of work, and you had $100,000 in bills paid by your health insurance. Buried in your health benefits booklet is a "subrogation” clause, which means this: “If you’re injured due to the fault of another, and we pay your bills, we get repaid out of any settlement you get.” Translated, “subrogation” means that your health insurance company has its reimbursement fingers in your settlement.

Until 2004, Ohio law used to prohibit health insurance companies from leapfrogging in front of you and getting reimbursed out of your auto settlement if you did not get full compensation for your injuries (after all, you’re the one who broke your leg and needed surgery, and you paid for your health insurance coverage to boot).

The 2004 Ohio Supreme Court case of Northern Buckeye v. Lawson changed all that. In that case, the injured person’s health insurance company had a fine print subrogation clause that basically said “even if you as the injured person/insured are not fully compensated for all of your injuries, we still have first priority for reimbursement over any settlement you obtain.”

The Supreme Court of Ohio (in a 4-3 decision) ruled that the insurance company was entitled to leap over (and step on)the injured person and recover every penny of bills it pays, even if it leaves the injured person with little or no recovery. After this decision, your health insurer can now legally confiscate your entire settlement pie in certain situations. The Court’s reasoning? “Hey, it’s a contract.” As long as the insurance company spells out in the contract that it can stand first in line and take every penny of your auto injury settlement, it can. That’s right – you purchased health insurance, paid your premiums, weeks later got your policy in the mail with all these one-sided clauses that take away your rights– and you “bargained” for this contract, according to four members of the Ohio Supreme Court! It is laughable to suggest that all the fine print and exclusions in an insurance contract are "bargined for" by the consumer.

This is one of the worst decisions in years, because it makes an injured person nothing more than a collection agent from one insurance company to another. And now it is the law of Ohio. As King Louis XVI said in Mel Brooks "History Of The World" movie, "It's good to be the king!" Only that was comedy. There's nothing funny about injured persons getting their settlements confiscated %100 by their insurance companies. I used to think that happened only in Russia. Heck, even the IRS doesn't take all of your income in taxes............

Stay tuned. More to come. Unfortunately.

(visit our website at www.n-wlaw.com)

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