A recent Ontario court decision is timely in light of the upcoming changes in medical and rehabilitation benefits. In Medcentra Inc. v. Economical Mutual Insurance Company (2010), 98 O.R. (3d) 624 (S.C.J.) Medcentra had provided a series of MRI’s to people injured in automobile accidents who were insured under auto policies issued by Economical. Economical had in the past accepted invoices directly from Medcentra and paid those invoices. Economical refused to pay the invoices at issue in the case.
Medcentra commenced a lawsuit to recover the outstanding amounts. The Court ruled that Medcentra had no right to sue Economical under the Statutory Accident Benefits Schedule. The Court found that there was no contract between Medcentra and Economical despite the fact the Medcentra had directed billed the insurer on many occasions in the past. The contract for services was between the patient and Medcentra, not between the patient’s insurance company and Medcentra. The Court dismissed the claim and awarded Economical $20,000 in legal costs, payable by Medcentra.
This case is important since it applies to all health care providers and not just to clinics that provide diagnostic imaging services. The case stands for the proposition that when you provide health care services to someone injured in a motor vehicle accident, you are entering into a contract with that person, not his or her insurance company. As a result, if your account goes unpaid, you must look to the patient for payment.
In most cases, your patients cannot afford to pay your account if their insurance company refuses to pay after you have already performed the services. The court in the Medcentra case confirms that you (the service provider) cannot sue the insurer directly for payment of an account – only your patient can sue the insurance company.
Our firm has been dealing with this problem for many years and it is not uncommon. Law firms who specialize in personal injury matters routinely work with health care providers to ensure that needed treatment continues and that health care providers are paid for their work.
There are several options available to accomplish these goals. First, as legal representative for your patient, the lawyer should include your unpaid accounts in any lawsuit commenced by the client to ensure that all health care providers are reimbursed for services rendered once the case settles. Second, a knowledgeable lawyer can arrange to have the client protect his/her health care practitioner’s account out of the proceeds of any settlement. This ‘protection’ is afforded by way of an Irrevocable Direction.
An Irrevocable Direction is a document the client signs in favour of the health care provider. It is a contract that directs the law firm to pay the health care provider out of the proceeds of settlement, before the client receives their settlement funds. The law firm pays the outstanding accounts directly once the case settles. Of course no one likes to work for free however the Irrevocable Direction is often the health care practitioner’s best chance at getting paid for services already performed, and subsequently denied by the insurer.
Either option provides you with a measure of security when treating patients who have been injured in automobile accidents and have insurance companies that refuse to pay for much needed treatment. By working together, we can ensure that your patients and our clients continue to receive treatment and at the same time we can assist you by stepping in when needed to ensure all health care practitioners receive payment with services rendered.