www.subrogation.org

Louisiana has introduced a bill that is problematic for both health and property and casualty carriers.  

As for health carriers, the bill seeks to only allow reimbursement from a med pay carrier with the written consent of the insured or legal representative.  Further amendments create a threshold and limit the written consent requirement to when the med pay carrier wishes to pay a third party the greater amount of five hundred dollars ($500.00) or twenty-five percent (25%) of available coverage.  As written, the bill does not state any criteria for when an insured and/or attorney can refuse consent.  An attorney or “insured” can simply refuse to allow the medical payments carrier to reimburse the health plan for no reason at all and it is legally enforceable.  The insured or attorney is placed in the position of determining when, how and to whom a med pay carrier will issue payment or even withhold payment.  The health plan may end up paying the same bills which the med pay carrier would be willing to pay, but for the “consent” of the insured.  This bill applies to all third parties and self-funded entities.

The bill states that a health carrier may seek reimbursement but, for only the amounts actually paid.  Additionally, if required to enforce the statute, the prevailing party shall be entitled to fees and costs.

A property and casualty carrier will be unable to comply with Section 1881 if it is passed and becomes law.  The bill requires a med pay carrier to obtain insured consent before issuing payment on a first party coverage.  If an insured decides to withhold consent at his/her discretion, a med pay carrier who is obligated under a contract to pay the claim, will be left to face a Catch 22 situation.  If they pay the claim without consent, they face a lawsuit under the proposed statute which would require the carrier to pay fees and costs.  If they decide to comply with the proposed statute and withhold payment, they could face a lawsuit under the Unfair Claim Practices Act or a breach of contract.  To propose a law that makes a property and casualty carrier’s decision on whether or not to pay a covered loss up to the discretion of their insured presents a no win situation for the carrier and a landscape that will be impossible to maneuver.  

NASP urges its claim members to contact their government affairs liaisons and attorneys to reach out to their congressional representatives to alert them of the harmful effects this bill will have on subrogation rights. Committee hearings are underway today in the Louisiana legislature to consider this bill.   We will keep you updated on the progress of this bill as it moves through the Louisiana Legislature.   

Kammy Poff
Amicus Chair

Joseph Willis
StateNet Chair

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This entry was posted by cmonfils on Wednesday, June 8th, 2011 at 10:00 am and is filed under Louisiana. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.