What is “Billed versus Paid” in North Carolina Personal Injury cases?

You may have heard your attorney reference “Billed versus Paid” or “Rule 414” and wondered what they mean and how they relate to your case. Here is a quick rundown of what they mean in North Carolina:

What is Rule 414?

North Carolina General Statute Rule 414 is the “evidence of medical expenses” rule. It is also known as Billed versus Paid because it limits evidence of medical expenses to the amount actually paid to satisfy the bills, regardless of the source of payment.

Why does Billed versus Paid matter in Personal Injury?

So, why does that matter? Let’s pretend that John was injured in an accident that wasn’t his fault and had to go to the hospital. John’s hospital and treatment bills end up being $10,000. John has health insurance, so the hospital bills his insurance. Let’s say that John’s health insurance only has to pay $5,000 of the $10,000, instead of the full amount because of their contractual discounts.

Under Rule 414, John can only present the amount that was necessary to satisfy the medical expense of $5,000 to the at-fault party’s insurance company. John can’t show the insurance company the $10,000 bill, only the $5,000 that was paid. That is why Rule 414 is often called “Billed versus Paid!”

Why is Paid less than Billed?

Health insurance companies don’t pay the same price for medical treatments as regular people without health insurance. Health insurance companies have entered into agreements with medical providers to get cheaper rates for medical care. This means that health insurance companies rarely pay full price for what medical providers and hospitals charge for treatments.

So, when that $10,000 bill is sent to John’s health insurance, they have deals and discounts with the hospital that reduce the cost for them to only $5,000.

How does this impact my Settlement?

As you can see, Rule 414 can significantly impact accident victims in North Carolina. It ends up limiting what you, as an accident victim, can present as evidence in your personal injury claim. Often, you will be presenting a smaller number to the at-fault party’s insurance than what you were initially billed by medical providers.

Since John’s insurance only had to pay $5,000, not $10,000, John can only show the liability insurance of the person who is at-fault for the accident the $5,000 paid by his health insurance.

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