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Q/A: Two Payers Both Paid the Claim. Who Gets the Refund?

Published May 13, 2019

By Wyn Staheli, Director of Research

Question 

We have a personal injury situation where we submitted a claim was sent to the patient's auto policy carrier who refused payment. We then submitted it to her other insurance. Eventually, both companies paid her claims. Her auto paid at full value, and her secondary paid at a reduced rate due to my contract agreement with them. Her account now has a credit balance. What do I do with the overpayment? Do I keep it? Is there a formula for parsing it to refund to the insurance carriers?

Answer

First and foremost, you can NOT keep the money. As for who gets the refund, it is essential to determine which policy is the primary policy and what type of secondary policy the patient has. In most cases, you would refund the money to the secondary payer. For example, if the auto policy was primary, keep their payment and then refund the secondary payer for the amount that they paid. Be sure to include a letter along with the refund to explain what happened.

However, be alert to rare occasions when the overpayment could belong to the patient (who paid the secondary premiums without any coordination of benefits). Legally, it all depends upon the terms in the contract. You don't want to send the money to the secondary payer when in fact it should have been sent to the patient.

To avoid this potential problem, we suggest a letter to the secondary payer with a copy to the patient stating: “Both primary and secondary policies have paid and there is now an overpayment, and we assume that it could belong to the patient. If we do not hear from you by (e.g., June 30th, 20__) we will remit the overpayment to the patient.”

The bottom line: Avoid any perception of duplicate billing, misrepresentation or fraud, and at the same do not overlook any amounts due to the patient.

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