1. It allows the insurance company to settle for less than the medical bills. Typically, it takes a month for ER bills to be processed and sent out for payment. Meanwhile the insurance company is trying to settle directly with the claimants before they receive a bill, often just estimating as to the amount of the bills. Depending on the hospital and the trauma unit level involved, ER bills can range between $2,000-$30,000. So that offer from the insurance company to pay $10,000 in medical bills may sound great, unless your ER bill is $15,000. Once a claimant has settled with the insurance company for a set amount, the case is over, and it does not matter if the bills end up being more than the insurance company has agreed to pay.
2. It allows the insurance company to limit pain and suffering compensation to a minimal amount. With Open Medical, the insurance company pays a set amount for pain and suffering up front plus it agrees to pay medical bills incurred over a certain time period, such as six months. However, if a claimant keeps treating for these six months, under Open Medical the claimant has waived her right to receive any pain and suffering for this six month period. he $500-$1,000 the insurance company paid up-front is all that the claimant will receive for pain and suffering.
3. The insurance company determines on its own what is reasonable and necessary medical treatment. If the insurance company does not believe that a bill incurred was for reasonable and necessary treatment, then the bill will go unpaid and the claimant will be responsible for payment of the bill from her own pocket. The claimant could always sue the insurance company for not paying the bill, but such a lawsuit will cost the claimant attorneys’ fees and
costs. There is no bad faith if the insurance company refuses to pay a bill and as such, any lawsuit would just be about payment of the bill, no additional damages to the claimant. So even though on paper the insurance company agrees to pay for $10,000 in treatment, it does not have to pay for any treatment if it deems such treatment unreasonable/unnecessary. Given that insurance companies have a financial incentive to pay as little money as possible on claims, it is understandable that adjusters are not going to want to pay full price on a bill. Unfortunately for claimants, whatever the insurance company is not going to pay will come out of their pockets in order to avoid bills going to collections.
Simply stated, Open Medical is a tactic used by insurance companies to settle claims for pennies on the dollar. Open Medical allows insurance companies to limit pain and suffering compensation to less than two weeks and avoid paying any bills it is not willing to accept as reasonable and necessary. To avoid the pitfalls of Open Medical, it is best to contact a Las Vegas personal injury attorney before entering into any negotiations with the insurance company for an injury claim.