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How Can a Letter of Protection Help in My Personal Injury Case?

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When an injured person arrives in the emergency room, the hospital will treat them until they are stable. No one can be turned away from an ER for lack of funds—the law guarantees that for any hospital that accepts federal funding. But hospitals and other healthcare providers know that after a significant injury, medical bills will add up quickly and won’t be paid soon.

In the case of an accident, the injured person’s health insurance company may refuse to pay the hospital bill on the grounds that another party or insurance company (i.e. the other driver’s car insurance) ought to be paying the medical bills. That’s if the injured person even has medical insurance that they believed would cover their situation. Once the injured person is stable and healthcare providers no longer have a legal requirement to treat them, they may refuse to continue to provide any medical care without a guarantee of payment.

This is where a letter of protection (sometimes called a LOP) can help them. A personal injury attorney working on the injured person’s claim can write a letter to the healthcare provider explaining the situation and promising that the provider will be paid out of the settlement.

A typical letter of protection would begin with language like: Our office represents Jane Doe, who was injured in an incident on [date], in regard to her claim for damages resulting from this incident. We request that you agree to satisfy your fees for services rendered out of any proceeds paid in relation to this claim…

The provider may then agree to defer the billing until a settlement or award is paid. In a sense, the injured person is being treated “on credit” until then. They submit their bills to the attorney’s office so that the attorney can create a record of expenses for the damages claim.

Benefits and Disadvantages of the Letter of Protection

An LOP has immediate benefits for an injured person, especially one who has poor health insurance or none at all. Healthcare providers who accept the LOP will delay billing and collection efforts. This allows the patient to undergo treatment without immediate financial pressure, harassment from debt collectors, or concern for their credit rating.

The LOP also has certain advantages for healthcare providers. The probability of an insurance settlement is a far better offer than they can otherwise expect from most individuals, especially those who are uninsured or underinsured.

This leads to one disadvantage of an LOP—insurance company disputes over the size of the medical bills. Health insurance companies generally have negotiated agreements to pay providers only part of the full listed price for a medical service. Because providers often don’t get paid full price for their services from insurance companies, they have an incentive to seek “deep pockets” and charge full price to patients that are expecting a settlement or jury award. Settlement negotiations and payouts can be slowed down as the insurance company disputes what was “reasonable and necessary” in the treatment and whether it was billed at the same rate as other treatments.

Another disadvantage is that the LOP relies on the settlement itself. If the injured person does not receive a settlement or receives only a small settlement offer from the insurance company, the injured person is still personally liable for the medical expenses.  It’s the job of insurance companies to make sure that payouts are as small as possible or even to avoid paying out, and so this risk is real.  

Under Texas law, a plaintiff in a personal injury case is only entitled to all of their damages if they were not at fault in the incident. If a court finds that they were a percentage at fault, their damage claim will be reduced by that percentage. And if they were more than 50% at fault, they cannot recover anything.

Since insurance companies handle most personal injury claims, the initial fault determinations are made by insurance adjusters, using the evidence from the site and claim reports. The report may place undue fault on the party making a claim in order to save the company money. An initial settlement offer is often far too low to cover the claimant’s needs, and if the claimant accepts it, they will remain on the hook for past and future medical bills.

An experienced personal injury attorney can defend a claimant’s rights and work to prevent this situation from happening. They can push back on the insurance report and negotiate a better settlement—and if necessary, they can take it to court. An attorney can also help negotiate with providers to reduce medical bills in the settlement.

How We Can Help

Outcomes can differ depending on the type of injury, the type of insurance companies involved, the amount of insurance coverage the party at fault maintains, and the context of the incident. The Crash Angels at Pelaez Law Firm handle personal injury cases every day, and we understand the needs of clients in differing situations, such as:

If you think you may have a case in Texas, call us today at 210-801-9314 to schedule your free consultation in our San Antonio offices. 

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