Here's an example of how I would typically utilize medpay.
Hypothetically,
Third Party Settlement: $15,000
First Party MedPay: $5,000
Total Gross Recovery: $20,000
Hypothetical Bills Owed:
$10,000 Chiropractic
$1,000 Hospital
$1,000 Treating Physicians
Here's how I would disperse it:
$15,000 Third Party Settlement
$5,000 Attorneys Fees (Based on $15,000 third party recovery, not total gross recovery of $20,000)
$5,000 To Chiropractor to cover 50% of their bill
$5,000 Net Total to Client
$5,000 First Party Med Pay
I would ask the MedPay adjuster to directly pay the remaining $7,000 of medical bills owed with the $5,000 of MedPay coverage. I would make sure this was done in a manner that prevented client from owing anything.
I rarely, if ever, have the MedPay benefits check sent to my office directly. I would rather not deal with writing checks and keeping records of it. I like for benefits to be paid directly to providers from first party insurance company.
Some attorney's take fees off MedPay benefits. If the contingency fee contract says 33% of the gross recovery this is permissible. I usually do not do that unless I have to fight hard to get them, which sometimes happens. This is especially true when MedPay coverage is a "secondary payor" coverage, which means I have to show the insurance company that health insurance paid out all they can on each bill before they release any MedPay benefits. This eats up a lot of time on my end.
If the client isn't satisfied with $5,000 and $15,000 is as high as third party will go, MedPay allows me leeway as the attorney to negotiate reductions with providers, the savings going directly to the client.
If MedPay coverage is from an Illinois policy my preference is to not use the benefits at all as each dollar would have to be repaid as a lien under the third party settlement. It is best not to complicate the settlement unless you have to.
