Effects of the ACA on Personal Injury Actions

US Capitol

The new Affordable Care Act (aka Obamacare) health insurance exchanges opened this week for residents of DC, Maryland, and Virginia.  All three of the exchanges have already generated a lot of interest, as people clamor to see the range of health insurance options available to them.  Over the coming months and years, the ACA will likely have an effect on personal injury cases as well, since health insurance becomes tightly intertwined with a client’s injuries and legal claims.

The biggest benefit for personal injury attorneys resulting from the ACA is that more clients will have health insurance.  Clients with health insurance almost always fare better physically, mentally, emotionally, and financially than those without health insurance.  Health insurance covers health care expenses up front, without the need to determine fault (it is even preferable to first party coverage like PIP and Medpay).  When clients know that they have health insurance, they are more likely to get the medical and rehabilitative treatment they need to recover.  Health insurance provides clients with financial peace of mind, while they await the resolution of their legal claim.  It will be easier for clients to avoid the usurious rates charged by legal funding companies.  All of these benefits will improve the client’s life, which will, in turn, improve her attorney’s life.

Health insurance subrogation or reimbursement will likely become a standard part of every case.  In cases I’ve worked on, the reimbursement procedures of each health insurer seems to differ from one another, and often differ from one case to the next even from the same insurer.  My sense is that subrogation and reimbursement practices have been steadily evolving in recent years.  With an increasing number of people buying health insurance under the ACA, insurer’s subrogation and reimbursement practices are likely to become standardized and more consistent.

The difference between individual health insurance policies and self-funded ERISA plans will likely grow.  Individual insurance plans are regulated now by a mixture of state and federal law, whereas self-funded ERISA plans are specifically exempt from state law regulation. It appears that self-funded ERISA plans are left largely untouched by the ACA.  The ACA does not require self-funded ERISA plans to offer coverage for the same essential health benefits that it requires for policies sold on the exchanges.  I’ve seen some comments that the ACA may induce many small employers to start their own self-funded ERISA plan in order to avoid having to purchase insurance for their own employees.  I could also see the ease and availability of individual plans on the exchanges causing fewer people to be covered by self-funded ERISA plans.

With more clients being covered by health insurance, there should be fewer assignments of benefits (sometimes referred to as A&As) directly from doctor’s offices.  Even though the ACA will still leave some people without any form of health insurance, Medicare, or Medicaid, the presumption will be that most people do have health insurance.  It will be interesting to see if doctors attempt to get injured patients to sign an assignment even if when the person has health insurance, in order to avoid the negotiated price.  Even though the local jurisdictions provide some protections for patients, such as requiring health insurance to take priority over other forms of coverage, an assignment may nevertheless be viewed as a binding voluntary contract.  It’s worth it to remind clients to actively tell all of their health care providers about their health insurance.  But as a whole, the ACA should reduce the number of liens and assignments on a person’s case to just one: the health insurer.

I think the heightened attention on health insurance due to the opening of the exchanges this week will also help to educate everyone about the way that health insurance works.  This raised awareness and education will help clients and potential clients better understand the impact that health insurance will have on their case.   Promoting health insurance is also good policy because it’s one of the few ways that people can protect themselves from financial ruin that is sometimes the unfortunate result of an unexpected accident.