In 2009, 6-year-old Sebastian Hizey was critically injured at a monster truck show at the Tacoma Dome. Staff at Mary Bridge Hospital, part of the MultiCare Health System did what they could to save his life — sadly, he died from his injuries.

The boy was covered by Medicaid because his father was unemployed at the time of the incident. MultiCare first billed Medicaid, but upon hearing that the Hizey family was filing suit against the monster truck organizers, told the administrators to reject the claim. When Sebastian’s estate settled their case, Multicare sent the medical bills to a collections agency to recoup their payment for services from the boy’s estate instead of the insurance company.

Why, you may be asking, would MultiCare do this? Medicaid would have promptly processed and paid claims instead of waiting for years for the injury suit to conclude, so the provider could have been paid much sooner.  This is where it gets interesting.

MultiCare’s collections actions are the direct result of its decision to discontinue attempting to collect payment from Medicaid – it didn’t get paid because it told Medicaid to reject the claims.  The reason for circumventing Medicaid in cases where there is an underlying personal injury claim is plain.  Providers can often recover more money from injured persons and estates than from Medicaid.

When MultiCare contracts with insurers it agrees that the services and treatment it provides will be rendered at a given rate.  Usually, this rate is much lower than the services and treatment would be worth on the market.  However, since Medicaid provides coverage for so many patients it’s good business sense to make this kind of deal.  Of course, if a company can get a larger reimbursement, it makes sense to go that directions, doesn’t it?  That’s Multicare’s position.  That larger reimbursement is coming out of the pockets of people who have been injured or killed by the negligence of another, or as MultiCare would have you believe, by the person or entity that hurt or killed them.

There are some conflicting opinions regarding this tactic. What are your thoughts? Should hospitals be allowed to skip over health insurance coverage and go straight to personal injury awards to recover money for medical bills from the deeper pocket? Or should they be required to go to the insurance first?