If you were injured in an automobile accident before, one of the questions you probably asked yourself was: Can I afford to pay for the treatment of my injuries and for the repairs to my car? Generally, North Carolina law attempts to ensure those injured in motor vehicle accidents are compensated fairly. However, in 2011, the North Carolina legislature passed into law a new rule which made the compensation process more difficult for personal injury victims. This law is known as “Rule 414 of the North Carolina Rules of Evidence.”
WHAT IS RULE 414?
The full text of Rule 414 of the North Carolina Rules of Evidence reads as follows:
“Evidence offered to prove past medical expenses shall be limited to evidence of the amounts actually paid to satisfy the bills that have been satisfied, regardless of the source of payment, and evidence of the amounts actually necessary to satisfy the bills that have been incurred but not yet satisfied. This rule does not impose upon any party an affirmative duty to seek a reduction in billed charges to which the party is not contractually entitled.”
What does this mean for you? This rule means that when presenting evidence for your personal injury claim at trial, you are limited to presenting evidence of the amount required to satisfy the bill or if the bill is still owed, the amount of money that will be required to satisfy the bill, not the original amount billed. The distinction between the original amount billed and the amount required to satisfy the bill is important because if you have health insurance and you go to see a medical provider, your health insurance could provide a lower amount than what the medical provider originally billed.
HOW DOES RULE 414 WORK?
Here is an example of how Rule 414 works: Let’s say Driver A and Driver X are both involved in separate car crashes, have identical injuries, and both go to an emergency room directly after the accident. For both Driver A and Driver X, the bill from the emergency room is $5,000. However, Driver A has health insurance and the health insurance company (by contract) is able to reduce the bill for Driver A down to $2,500. Driver X does not have health insurance and so the bill for this person remains at $5,000. If both Driver A and Driver X both go to trial for their injuries, Driver A can only present evidence of the $2,500 needed to satisfy his bill but Driver X may present evidence of the full $5,000.
WHAT ARE SOME OF THE PRACTICAL EFFECTS OF RULE 414?
Although Rule 414 is technically a rule of evidence, insurance adjusters are aware of the rule and will apply it when negotiating a settlement. In some cases, the injured party’s health insurance has a lien on the personal injury settlement. If an injured party only receives in a settlement the dollar amount that his/her health insurance company paid to satisfy a bill, there is a chance that the health insurance company will receive the entire settlement amount and the injured party will be left with no compensation for lost wages, pain and suffering, or other damages.
Furthermore, when a jury is deliberating on a damage amount to award a person who has been injured, they tend to view the bill amount as an indicator of how serious the injuries are. In the example we looked at above, a jury may be led to think that Driver X has more serious injuries than Driver A and may award more money in damages, despite the fact that both people had identical injuries. This is especially true given that pain and suffering damages are typically determined by taking the amount in medical bills and multiplying that amount by some multiple (for example, if your medical bills are $100, a jury may multiply that by three and award you $300 in pain and suffering). The calculation for pain and suffering will be higher if the jury is allowed to see the original amount billed (before negotiations or discounts by the health insurer).
Finally, Rule 414 treats similarly situated people differently based on if they have health insurance and the type of insurance they have. For example, Medicaid and Medicare tend to receive a large reduction in the bill amount, so this rule has a disproportionate effect on the elderly and on those who are less fortunate. Importantly, the rule fails to account for the thousands of dollars that a person pays over a lifetime in monthly premiums in order to be insured, and tends to incentivize people to remain uninsured.
It is very important that anyone who is injured by the acts of someone else receives competent legal representation that navigates them through the process and protects their legal interests. Contact one of our personal injury attorneys and schedule your free consultation today and let us help you get the compensation you deserve!
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