How Liability Insurance Companies Deny, Discount and Shift the Burden

It’s Halloween time… and if you thought ghosts and ghouls were spooky, here is a real life topic that will really spook you! (See a few KidWorks’ trunk-or-treat photos at the bottom of this post)

The cost of healthcare has been steadily increasing over the last decade. In fact, it is estimated that total healthcare spending reached $4.9 trillion in 2022. This is compared to $74.1 billion in 1970.[1] Most estimates expect a continued, steady growth in the cost of healthcare over the foreseeable future. But, it is unlikely that you needed these statistics to confirm this fact – you are likely already feeling the squeeze of the cost of healthcare today.

Now, you might ask why I, a personal injury lawyer, am writing about the staggering increases in the cost of healthcare? Well, as you could reasonably expect, my clients’ personal injury cases are directly affected by the type and cost of the medical care needed by them to rehabilitate from their injuries. A personal injury plaintiff is not immune from the stark reality of healthcare in our country today. However, they are confronted with additional challenges in this arena. Let me briefly explain.

When you seek medical care for an auto accident, for example, you can use your health insurance to obtain medical care, but you may face challenges. Some of these challenges include individual providers (hospitals, doctors, etc.) unwilling to treat you because of an active personal injury case, or a refusal to bill health insurance due to fear or confusion regarding coordination of benefits with insurance or government sponsored programs like Medicare, or if insurance is utilized, the duty to reimburse your health insurance for any accident-related expenses. This can be a lot to manage for someone who has just been injured through no fault of their own.

When you hire a personal injury lawyer, due to the challenges discussed above, you may wish to treat with doctors of your own choosing, outside of health insurance. This can provide you greater flexibility, and you can get care more quickly by bypassing the need for any authorizations often required by health insurance plans. This is something I help my clients do. Now, these providers bill their regular and customary rates, and of course, expect to be paid. However, the proceeds from any settlement or judgment, rather than health insurance, is utilized to pay these medical bills. This places the responsibility for payment upon the one who caused the harm. As a lawyer, I am concerned with what is just and right, and in my opinion, this is what is fair. But, talk to a liability insurer, and you will get a completely different perspective.

The liability insurance companies I deal with complain endlessly, and refuse to pay my clients’ medical bills in full, citing “excessive charges” or “excessive treatment.” This applies to both the cost of past and future medical care. These insurance companies cite the lowest rates published by government sponsored programs like Medicare, or Medi-Cal, expecting such rates to allow my injured clients to obtain the care they need after a catastrophic event. Again, you probably don’t need a statistic to know that this is nonsense, but in any case, here is what the American Hospital Association has to say about Medicare rates:

Despite escalating expenses, Medicare reimbursement continues to lag behind inflation — covering just 83 cents for every dollar spent by hospitals in 2023, resulting in over $100 billion in underpayments, according to AHA analysis of AHA Annual Survey data. From 2022 to 2024, general inflation rose by 14.1%, while Medicare net inpatient payment rates increased by only 5.1% — amounting to an effective payment cut over the past three years [2]

There is only one way to interpret the data. Do not be fooled by these insurance companies claiming that personal injury plaintiffs – people who have been injured through no fault of their own – treat “excessively” or run up “excessive” medical bills. These liability insurers, concerned with their bottom line, and not my clients’ well-being, are looking for a discount. It is as simple as that.

These liability insurance companies are attempting to shift the burden from the tortfeasor (the one who caused the harm) onto the victim of such harm, or equally unjust, to society in general (borne either by the taxpayer, or by spreading the cost across all private health insurance premiums). It is not that these sophisticated, data-driven companies do not understand the cost of healthcare services – no, not at all! They understand the data so well, in fact, that they are trying to game the system by unscrupulously using the data to escape responsibility for paying what is fair and just. As an organized society, I would argue this is not something we can allow. As a lawyer, this is a war I fight everyday, one battle at a time.

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[1] KFF, Health Care Costs and Affordability. https://www.kff.org/health-costs/health-policy-101-health-care-costs-and-affordability/?entry=table-of-contents-how-has-u-s-health-care-spending-changed-over-time (October 2025).
[2] American Hospital Association, The Cost of Caring: Challenges Facing America’s Hospitals in 2025. https://www.aha.org/costsofcaring#:~:text=Medicare%20and%20Medicaid%20Reimbursements%20Are,annually%20between%202019%20and%202023 (April 2025).

Happy Halloween! Kelcie and I had the pleasure of joining KidWorks’ trunk-or-treat, showing up, naturally, in our shark costumes (lawyers are sharks, right)! We were able to give back to hundreds of kids and young adults who showed up for this fun event, and we had the opportunity to learn more about this awesome organization. KidWorks “walks with students from Pre-K to B.A. to develop confident, self-reliant adults who are equipped for the workforce and motivated to give back.” If you are interested in learning more about the organization, or if you are interested in volunteering, visit their website: kidworksoc.org. Have a spooky-safe Halloween!