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Coping with Medical Bills and Lost Wages After an Accident

Posted by James Paisley | Mar 26, 2021

How to Pay for Medical Treatment Until You Receive Your Settlement

Car accidents oftentimes lead to medical bills such as EMS, hospital, and chiropractor bills. Medical providers can be aggressive about getting paid and may threaten to send bills to collections, resulting in damaged credit. For someone who was injured at no fault to their own, this seems entirely unfair. You are facing a plethora of obstacles: figuring out how to pay thousands in medical bills, figuring out transportation to work, or even how to make up for lost wages due to being unable to work.

Know that there are options for covering your medical costs after an accident. Work with your attorney during this time and they will find you options that ensure you receive the necessary medical care, without resulting in financial disaster.

Funding Treatment or Surgery for Car Accident Medical Bills

I emphatically dislike using funding companies but unfortunately in some cases, they are an absolute necessity to get my clients the healthcare they deserve. Physical therapists, chiropractors, and most orthopedic medical clinics will treat injury victims without demanding any money upfront and will assess a lien on the client's case. When it comes to surgeons or specialists like neurologists or neuropsychologists, they will almost always refuse to treat on a lien. If a client has no health insurance, then private medical funding becomes the only viable option for the client.  

Medical Funding Typically Works Like This:

Sam is hurt in a car accident and has no money or health insurance. With back pain so severe that lightning pain shoots through his legs when he tries to stand, he has resorted to maneuvering around his house on a rolling office chair.

Sam sees an orthopedist and after the MRI is ordered, has a follow-up with a spine surgeon who finds several lumbar disc herniations and recommends surgery immediately before the damage is catastrophic.

Sam is broke, so he has no other options – his lawyer should contact one of these funding companies and arrange for the surgery to be paid through the funding company. The funding company will pay for the surgeon, the facility, the nurse team, and the anesthesiologist. The amount they actually pay is much lower than what is billed – it's agreed upon between the company and the healthcare provider beforehand. Sam's surgery can be billed by all the providers at $100,000 and maybe the funding company arranged to pay upfront $40,000 (the lawyer and client never get to know as that is not disclosed on our end, but we know the difference is substantial).

Sam has his surgery and then settles his injury case where maybe the total policy limits were $150,000. Sam's lawyer will go to this funding company and beg the funding company to reduce their $100,000 lien on the case. Hopefully here, the funding company would reduce as much as 30-50% in order to maximize Sam's net payout when the case closes. I don't like the fact that I don't get to know what the funding company actually paid the doctors, but as of now, the disclosure is not legally required, and industry-standard is for non-transparency (read between the lines – we need regulation). The funding company here provided an invaluable resource to save the client from ongoing pain and surgery that would've never happened if the funding was not available.  

Again, I will only use a funding company if health insurance and other avenues are not available. With funding companies so competitive right now, there are several that will add value to their services: they will manage treatment schedules, arrange transportation, and regularly check on clients to ensure they are doing everything to maximize their claim.  

A quick note on bankruptcy I am not a bankruptcy lawyer, but I do know that any lawyer should reach out to someone who knows bankruptcy as there are rules against borrowing money for medical treatment while going through bankruptcy proceedings. There will likely be rules against further borrowing while a client is going through proceedings. Alternatively, there could be cases where the value of an injury case is so high, it might be prudent to drop the bankruptcy proceedings so treatment can proceed, and the debt can be resolved with the net injury proceeds.  

Cash Advances for Personal Injury Cases

In 2018, The Georgia Supreme Court affirmed the Court of Appeals decision in Cherokee Funding v. Ruth, 342 Ga. App.404 (2017). The facts alone give a cautionary tale on why a client should only use cash advance funding as a last resort. Ruth was a plaintiff and had borrowed various installments of cash advances of approximately $5,500 (plus various fees) as a non-loan sales contract with interest rates compounding the repayment amount at 4.99% per month. Three or so years later when Ruth's case settled, Cherokee sought to collect over $84,000. The Court ruled this was not a loan and therefore not subject to usury laws regulating such loans because of all the contingencies associated with the contract.   

One can see how $5,000 becoming $84,000 could destroy any good relationship one just had with a client. This drastically reduces their net payout. I believe that most good funding companies now (including Cherokee) will cap their repayment obligation at 150% of the borrowed amount. Without legislative regulation, we can only hope competition tends to self-regulate these practices.  

There is one more pitfall of cash advances: they can force a case into an early settlement that is far below the value of a case. If Martha is advanced $2,000 to make a down payment on a vehicle so she can go to work, but after making her pre-suit demand, the attorney is only offered $7,000 on her $25,000 case, then it becomes obvious that the $2,000 could grow exponentially over the next year or two if the case is litigated. If $2,000 becomes $6,000, then this might force the client into seriously considering a lowball offer if their pre-suit net payout wouldn't be drastically different if they litigated the case for a long period. Lessons from this: associate only with funding companies that cap their payoff amount at a reasonable amount.  

Cash advances are an absolute last resort, but they are necessary in some cases. I find them useful for people that must pay their necessary living expenses because they have no savings and will lose their home otherwise. They can also be used to fund an expensive deductible while still using health insurance. Choosing the right company makes all the difference. It's important to ask for a spreadsheet that articulates what the balance will be in 6 months, 1 year, 2, and 3 years and to look for companies that cap their balances when it reaches a certain amount. Lastly – everything is negotiable. None of these amounts are final and if margins are small on the case, the good companies will reduce the owed amount accordingly.  

Job in Jeopardy Due to Personal Injury Accident

One of the saddest parts of an injury case and an ultimate reminder that life isn't fair is when someone can't work and provide for their family for a long period of time because they were seriously injured. I have little to no knowledge of employment law, but I am not aware of any law prohibiting an employer from terminating an employee that's unable to work because they were injured in a non-work-related incident. Most people tend to first use all their vacation time, then turn to short-term disability, and then FMLA. Self-employed and independent contractor clients have the hardest times in scenarios like this.  

I always tell my clients to work if they can. Making a lost wages claim under Georgia law is complicated, not to mention the views a jury might have towards missing work. If a client had some back pain and rants on the stand about how working was impossible, fate will have it that there will be a paraplegic juror that works every week 50-60 hours. Just because a client can make a lost wages claim doesn't mean you should – especially at trial.  

Always Use Health Insurance 

Driving costs lower on a case should be almost as important as achieving a high number for a client. Whenever possible use health insurance. If a large deductible needs to be paid before surgery, then get the deductible funded through a funding company that caps the payback amount.  

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About the Author

James Paisley

Firm Founder + Senior Partner Born and raised in Georgia, Attorney James earned an undergraduate degree at Georgia Tech, graduating with high honors. Afterwards, he went on to study law at Florida State University, where he also graduated near the top of his class. James began his legal career i...

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