by Guest » Wed Sep 22, 2010 07:10 pm
I have an estate i am working on where the gentlemen died as a result of injuries in an auto accident. The auto insurance paid up to the maximum benefits. However, his primary health insurance, GHI, is advising that they will not pay as secondary any balance owed to any providers which were partially paid by the auto insurance. They are providers not paid at all since benefits were exhausted. Is this correct?
Posted: Thu Sep 23, 2010 01:53 am Post Subject:
Did the decedent cause the accident that resulted in his death, or was he fatally injured by a third party?
Typically, in a third-party situation, medical bills are paid by the health insurance policy, then they subrogate their claims against the insurance. If a first party claim, the decedent's own auto insurance (medical payments) is normally "excess", meaning it would not have paid anything until all other insurance had been exhausted. His own liability coverage is meaningless, since that only covers the claims of third parties.
GHI, is advising that they will not pay as secondary any balance owed to any providers which were partially paid by the auto insurance. They are providers not paid at all since benefits were exhausted. Is this correct?
Again, this depends principally on whether this is a first-party claim (decedent's own fault) or a third-party claim. If a first-party claim, this is not correct, since they had a contract to cover their insured's medical expenses. But as a third-party claim, it is entirely correct. They have no contractual responsibility to pay the decedent's medical expenses that were caused by the negligence of a third person. That's the responsible party.
In administering the estate of the decedent, if the third-party's insurance limits have been exhausted, your only other recourse is a civil suit against the at-fault party for the remaining unpaid damages, along, perhaps, with a wrongful death claim.
Obviously, this has the potential to tie up the estate for many years, and those with claims against the estate will have to wait in line with their claims in hand until all legal processes have come to a conclusion. And any heirs will also have to be put off the entire time as well, since the claims of creditors must be satisfied first.
I don't envy your role in this, since it is going to consume a lot of your time and energy -- and if you don't feel that you are up to the task, you can petition the probate court to relieve you of the responsibility and appoint another administrator/executor. Your expenses to that point, or to the end if you stick it out, will also be a claim against the estate, but at least they have a priority over most others due to the importance of the role.
Posted: Thu Sep 23, 2010 06:59 am Post Subject:
Great explanation Max...I'd just like to get clarified with something over here -
Your expenses to that point, or to the end if you stick it out, will also be a claim against the estate, but at least they have a priority over most others due to the importance of the role.
I do agree about the priority thing...but I'm sure you'd agree that in order to go after such claims one needs to invest a lot of time. Would it be worth investing so much time on it? Won't you consider the worth of money involved in such an estate while deciding whether to stick to it or not?
Posted: Thu Sep 23, 2010 08:46 pm Post Subject:
in order to go after such claims one needs to invest a lot of time.
Undoubtedly. That's why people hire attorneys and give up 30%-40% to get something for them. They neither have the time or inclination to do it on their own.
The executor of an estate has a fiduciary responsibility to the estate to (1) protect the assets and (2) to pay all legitimate claims so that (3) heirs achieve the maximum reasonable benefit. If that means protecting the estate against the claims of creditors that are legitimately the responsibility of a third party, then the executor must pursue that.
If the executor is not capable or competent to do that, then the attorney representing the estate in the Probate Court will do it, or hire outside counsel to do it. But that expense becomes a claim against the estate.
Generally speaking, executors and estate lawyers have their base compensation set by statute. But their extraordinary expense are directly compensable, generally described as an hourly fee time the number of hours expended.
It's a thankless job, and if being handled by a family member, can strain the good bonds of family in the process, from which no one may recover. Because when money is involved, human beings often revert to their vulture heritage.
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