This is not a question for me. A friend’s 20 year old son was hit by an SUV on his motorcycle a week ago. As of the moment, he has no nerve activity below the waist and the likelihood that he is now facing life as a paraplegic is pretty strong. Never say never, of course, it’s early, but one way or another he has some major medical bills.
He was not at fault in the accident. The SUV was being driven by a 19 year old boy, it is his parents’ vehicle. There is definitely insurance.
But of course it isn’t likely that the policy as written will even come close to covering what my friend’s son is facing.
Which got me and a friend to talking… how does personal injury law work, anyway? When a properly insured driver causes an accident which leads to medical bills far beyond what the policy states it will cover, I assume that’s when the personal injury attorneys show up and sue. But what is the legal premise behind it all? It seems sort of obvious that you can’t hit someone and put them in a wheelchair for the rest of their lives and just say “oops! Sorry I was only carrying $50,000 in coverage for medical…too bad you’ll have to come up with the other $950,000 yourself!” On the other hand, the insurance company you bought the policy from gave you the option to carry more and you declined, how is it then their problem that you created a paraplegic with a million dollars in bills?
Not sure I understand the question—so forgive me if this isn’t what you’re asking. (And forgive the generalizations)
Tort suits are based on a cause of action (e.g. negligence). How much insurance someone has doesn’t really enter the picture during the trial and judgement. In many courts facts about the defendant’s insurance are inadmissible. If the plaintiff wins X, the insurance company pays whatever amount the defendant was insured for—independent of the amount the plaintiff was awarded. Clearly, if the defendant has more insurance than needed for the case, the insurance company doesn’t kick in more than the plaintiff won. If the judgment was for more than the insurance policy, the insurance company pays its obligation and the defendant is responsible for the rest.
Somewhat similar to health insurance. If you get sick, how much the doctor (generally) charges isn’t based on what insurance you have (e.g. co-insurance amount). The hospital bills you X, your insurance company pays Y. If it’s less than X, you’re responsible for the shortfall. If you’ve met your deductible but not your max benefit, they pay all of X but not any more.
I believe the answer you’re looking for is - once you max out the defendant’s insurance, then your only recourse is the defendant’s assets. You take his house, car, and life savings, he declares bankruptcy, and beyond that you’re on your own.
The plaintiff may have his own coverage that could include uninsured (or possibly, inadequately insured) other driver that might kick in some of the difference.
That’s my guess. I would sort of wait and see at this point. For example, looking at my coverage. If I was the driver, I would be covering your friend for up to $150,000 (which I think is the Wisconsin State minimum). Beyond that I carry a $1,000,000 Umbrella just to help out in case something like this happens (that is, it covers me if I paralyze someone and get sued for it). Also, I have $100,000 worth of underinsured motorist coverage (per person) that would also help out if I needed it too (this would be something your friend would be carrying).
Of course, there’s usually something like the Social Security disability (is that what the USA version is? Would he be eligible?). Not that it will pay anything close to enough to maintain a good lifestyle in the circumstances, but - if you consider what it may pay over the next 60 to 80 years, it will make a serious dent in an otherwise dismal total payout if the other driver had limited insurance. (provided certain politicians don’t get rid of the benefits…?)
And… when the defendant declares bankruptcy due to unmanageable debt, the courts don’t usually take everything - he could be left with a car if he needs it for work, the house if the equity doesn’t justify selling it, etc. I’m guessing if he is guilty of driving offenses, he may not need a car for a few months to years.
This is generally correct; details will vary depending on the laws of the jurisdiction where the accident occurred.
And remember, the basic principle of personal injury is to sue anyone who might be liable. The 19 year old driver for certain, but potentially also one or both of his parents, if they were registered owners of the vehicle he was driving (again, depends on the law of the jurisdiction, but in my experience, it’s common for the law to provide that the owner of a vehicle is liable for damage it causes, unless it’s been stolen or otherwise used without the registered owner(s)’ consent.) So mom and dad may be on the hook for their personal savings and assets.
And then, the plaintiff’s lawyer may also investigate whether there is any basis to sue the municipality - was the road badly designed? poorly marked? etc. Did the municipality contribute in any way to the accident?
My friend’s hubby went to see an attorney yesterday, I assume he got all this information. I haven’t learned much about the kid or the parents so far, that hasn’t been the focus - it’s been a hellish week just focusing on whether my friend’s son was going to make it at all.
It was a strange constellation of injuries - his friend was with him on his own cycle and saw the whole thing. He said my friend’s son (Let’s call him Joe) was thrown from his bike but didn’t evidently hit anything other than the ground when he landed face down. His head and face were fine (good helmet) and all his limbs are ok. But he broke almost every rib, including several which snapped off right near the spine, and he smashed the hell out of his vertebrae…without actually striking anything with his back that anyone saw.
He’s a marvelous young man with an extraordinary network of people watching out for him, and his parents are networked to the hilt, so we’re hoping some of that will help in getting him the best possible care and so far it seems to be.
It’s so surreal, yet almost predictable, since this young man is the letter-perfect example of the most common victim of spinal cord injury: extremely fit, ridiculously athletic, with a passion for the visceral experience. Fantastic skateboarder, skier, etc. Hence the motorcycle…that he’s had for a month.
He’d ordered a special kind of jacket with steel bones in it designed to protect the spine. It arrived about 3 days after the accident.
How does the plaintiff’s health insurance enter in to the equation? Say someone is struck by a meteor and left paraplegic, so that absolutely nobody is liable. Wouldn’t the health insurance pay for medical costs?
How about, then, if the accident was due to some mistake by the injured person? Say he fell asleep and ran into a tree. Does health insurance not cover these accidents?
Finally, what does health insurance do in the case where a defendant is clearly liable? Does health insurance refuse to pay for medical costs in these cases? My totally WAG is that health insurance would pay initially, but they’d go after the defendant’s insurance, defendant’s assets, and plaintiff’s auto insurance to recover as much as possible.
Health insurance will pay in all three cases. It doesn’t matter if it was the insured’s fault, someone elses fault, or it just happened. Most health insurance will even cover self-inflicted injury. The only exceptions are things like act of war or if the insured attempts to commit a felony.
If a motor vehicle is involved, health insurance is always secondary to any motor vehicle insurance. Once the motor vehicle insurance has paid up to the limit of the policy, they need to send an “exhaust letter” to the health insurance company stating that the benefits have been exhausted, as well as a list of the claims that have already been paid. Then the health insurance will start paying up until their limit. Health Care reform is doing away with “lifetime maximums”, the limit insurance will pay out to a person in a given lifetime, but some policies still have them. I had a low cost, major medical plan for students once with a $25,000 max, but several million dollars is more typical if a health insurance policy has one at all.
Health insurance is also secondary to TPL (third party insurance), say the insured gets injured in someone elses home or on a city street. Generally what happens is the TPL carrier refuses to pay and the health insurance company just leaves it at that, but even if it’s something stupid, say a kid walks down the street without paying attention and walks into a lamp pole, we still need to get the denial letter.
If someone else is clearly at fault, say an motor vehicle accident where the other driver is at fault, or the insured is a crime victim, we attempt to recover damages from the responsible party through subrogation after we’ve paid for the medical care.
Source: I work for a health insurance company that you’ve heard of.
As far as lawsuits, you can of course attempt to sue the pants off the person responsible. What you actually get may be substantial or squat. Generally there is “exempt property” which cannot be taken to satisfy a judgement or debt. This varies from state to state. To use Minnesota as an example, (Minnesota Statute 510.02, 550.37), the following cannot be seized: 1) A homestead valued up to $200,000, 2) Wages below 40X federal minimum wage or 75% of after tax income, whichever is greater 3) A motor vehicle up to $2700, and 4) Household furniture, etc up to $8100.
I think this means that if the potential defendent has a modest house and car, it probably wouldn’t be worthwhile to sue (and a lawyer probably wouldn’t take the case on a contigency basis if they’ll be nothing to pay him or her.) However if the defendent lives in a McMansion and has a Rolex watch collection it changes thing. I’d think a lawyer would be able to determine what seizable assets the defendent has and could advise you if it’s worthwhile to proceed.
Good reminder that everyone should buy as much uninsured and underinsured motorist coverage as possible. It’s cheap and you need it. I have a million dollars worth, and probably should get more. Many of the drivers out there don’t have nearly the coverage necessary if they hurt you, as seen in the OP.
How does the subrogation play into the paragraph above? It sounds like you go to their company first, then to your own, so would there still be subrogation possible?
Would this change if the OP is in a no-fault state? (IIRC, CA wasn’t when I lived there over a decade ago, but there was a little noise about it before I left.) If the plaintiff went to his own insurance, and maxed it out, would the defendant’s insurance company then say “We already paid out to your insurance company, so tough.”? Would no-fault prevent the “double dipping”, or are they separate coverages, with separate limits?
ETA: “double-dipping” isn’t really the right term.
I just spoke with my wife, and she said that in my no-fault state, Michigan, there’s an unlimited medical insurance that kicks in after our own insurance runs out. (She also said the insurance companies are trying to change that.)
Michigan’s insurance law is really out of control, which is why Michiganers pay so much for insurance. I saw a claim in my company’s system for a guy who was paralyzed in an auto accident and had received over a million dollars in benefits from our insurance–without an umbrella policy. It’s because Michigan, unlike any other state in the country, has a provision to provide **unlimited **lifetime medical benefits. Can you imagine paying for a policy with no BI limits for everybody in your state? It’s a nightmare.
No. CA isn’t a no-fault state. There is nothing like the law in Michigan anywhere else in the country, thankfully. Yeah, it’s a nice deal if you get paralyzed. But *everybody *ends up paying for it, because you can’t get something for nothing.
I’m not totally clear how auto insurance works, but I believe in the case of bodily injury one company or the other pays, and they may subrogate with each other depending on who is at fault. Some (all?)auto insurance companies will pay the medical bills directly rather than cutting a check to the injured party. Once any auto medical insurance benefits have been used up, then if the injured has medical insurance they will start paying subject to contract benefits regardless of whose fault it is.
The medical insurance then may attempt to subrogate. They will not go after the auto insurers as the benefits have already been exhausted, they will go after the other party if the accident was his/her fault. (I’m not sure how this would work in a pure no-fault state unless causation was determined in a subsequent lawsuit).
Normally in a case big enough to exhaust PI benefits there is litigation involved, and the health insurance company may attempt to recover dollars (have an interest) from the judgement the injured gets. Usually they will settle for less than the dollars they paid out in medical care rather than pursuing their own litigation.
It’s always the health insurance companies choice whether to pursue subrogation or not, even if fault is clearly established. The other party may not be found (as in a crime victim), may have not have worthwile assets, or it might make bad press in certain high profile cases. In the case of the I-35W bridge collapse, the victims received a settlement from the state, and all the health insurance companies chose not to try to collect any of it in consideration of the medical care they paid for.