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Issue: Whether a workers’ compensation carrier must pay the full amount of medical expenses incurred or whether it has to simply reimburse the health carrier for expenses actually paid.
The background of this case is not all that important, but the holding will have significant impacts going forward. This was a workers’ compensation claim whether the insurer denied surgery to the cervical spine. The department held a hearing and found the surgery was related to the work injury and the employer and insurer were responsible for the surgery.
Claimant had very good health insurance, which paid for the cervical fusion. The amount billed by the health providers was over $100,000. However, the amount paid by the health carrier was just over $20,000. After the department’s decision, the insurer reimbursed the health carrier their $20,000, and paid the claimant his out of pocket expenses. The claimant filed a motion with the department seeking to require the insurer to pay the full amount of the charges.
The department held the insurer satisfied its obligation by reimbursing the health carrier for what was actually paid. The circuit court reversed and held the full amount of the bills had to be paid to the health carrier, with the claimant’s attorney receiving a fee on those bills. The matter was appealed to the South Dakota Supreme Court.
The court reversed and held the insurer’s obligation was only to reimburse the health carrier for payments actually made. The applicable statute indicates that in the event a denied claim is later determined to be compensable, the insurer shall immediately "reimburse" the parties who made payments. The court said the plain language of the statute must be applied, and rejected the claimant’s argument that this would encourage wrongful denials.
This decision will have a huge impact going forward. With the requirement that everyone have health insurance, we will hopefully see more claims where a claimant has personal health insurance. If health insurance pays for something that is later determined to be responsible, your obligation is to reimburse the health carrier. The amount paid by the health carrier will be a substantial reduction on what was charged, depending on the health carrier.
This was my case so if you have questions on it, please give me a call at 605-336-2424 or email me atcalarson@bgpw.com. Thanks!
Charlie Larson