George Rawlings grabs a stack of computer printouts and stretches them six feet across his office, admiring data from police reports of Florida auto accidents: the names of those hurt and the severity of their injuries.
For Rawlings, this information is gold. It’s his job to track these injured people down and collect money from them.
“Finding personal injury claims is really hard to do,” he says about his trade. “We invented a way to identify them.”
The Kentucky lawyer is the father of a little-known but burgeoning industry that helped insurers like Aetna Inc. and Kaiser Permanente recover at least $3.5 billion in 2014 alone from policyholders hurt by someone else’s negligence. A growing body of law, including a 2013 U.S. Supreme Court decision, gives health insurers power to recoup expenses for medical treatment.
Critics say people end up being victimized twice, with Rawlings Company, and the competitors that its success has spawned, essentially acting as bounty hunters. Even though they paid their premiums, people often must reimburse insurers out of whatever compensation they receive for their injuries, sometimes leaving them with only a pittance.
“A whole cottage industry has grown up around these health insurance rights, and they’re going after reimbursement recoveries on the backs of the injury victims themselves,” says attorney Matt Wessler, who argued against the practice before the Supreme Court.
To Rawlings, insurers only hire him when their plans spell out that members must repay medical costs. If an insurer didn’t meet its financial responsibilities, he says, “people would be screaming bloody murder. The insured has obligations in that contract. Are you going to honor the contract or not?”
Rawlings Company, owned by Rawlings and his wife, is typically paid about 20 percent of whatever it collects, he says. The company says it has recouped hundreds of millions of dollars for insurers from product-liability cases, including the Silicone Gel Breast Implant litigation, Fen-Phen weight-loss drug case and recent multibillion-dollar settlements involving the painkiller Vioxx.
All but two states ban or limit the ability of health insurers to recover medical costs.
However, federal law, which has fewer restrictions, applies to people insured by Medicare and Medicaid, as well as the vast majority of employees for big corporations. While Rawlings won’t discuss his client list, it includes Aetna, Kaiser, and several Blue Cross Blue Shield plans.
Lawsuits provide a glimpse into what the industry can look like. Shaun Miller was riding his bike in California when a van plowed into him, leaving him paralyzed. Although Miller needed millions for lifelong care, the maximum available from the car’s auto insurer was $100,000.
‘Fairness and Decency’
Rawlings, representing Kaiser Permanente, demanded more than $33,000 to compensate the insurer for Miller’s medical expenses. Asking Rawlings to consider “simple fairness and decency,” Miller’s attorney offered $3,500. They compromised at $15,000.
Rawlings moved his company from downtown Louisville to rural LaGrange, Kentucky, eight years ago so that it would have ample room to grow. It now has 1,100 employees. At its three-story headquarters, most work in cubicles on floors as long as football fields.
Motivated by cash bonuses tied to how much they recover, they dig through court filings, scour newspaper articles and search Facebook, Twitter and Instagram for clues about how people were injured.
Eight Million Letters
One hundred technology workers, including four with doctorates in data mining, scan billions of claims from insurers. Charges for air ambulances, treatment of major traumas and almost any emergency room visit are flagged and investigated.
If you have received one of those annoying letters from your health insurer asking if a recent hospital stay was the result of an accident, blame Rawlings’ brainchild. His company alone generates eight million letters a year. Recently, a backroom print shop was cranking out mailings labeled “request for medical claim information” for Blue Cross Blue Shield of North Carolina.
Thousands of responses come in daily. As he gives a tour, construction crews put up steel columns for a wing to house almost 700 more employees.
Rawlings, 69 and six-foot-three, drinks a dozen cups of coffee a day. The son of a Baptist minister, he stops to talk with employees, addressing most by their first names; they call him Mr. Rawlings.
Rawlings frequently shows up at the office on weekends. He says he has no close friends, no children and that the only visitors to his home are all business-related. He says he plans to work until he dies.
He monitors expenses, approving amounts as low as $6. He ordered photos on desks be placed in black and silver frames. Coats must be hung in closets, not on the backs of chairs. His father John built one of the 10 largest congregations in the U.S., hosted a religious radio show and mentored evangelist Jerry Falwell, who officiated at the 2007 funeral of Rawlings’s mother, Orelia.
In the 1980s, Rawlings’s small practice represented casualty insurers like Allstate Corp. and the Kentucky Farm Bureau. He soon became familiar with the legal concept known as subrogation, which allows insurers to recover costs when another party is responsible for the damage.
If a building is destroyed by a fire caused by a faulty furnace, the property insurer can seek costs from the furnace maker. Rawlings noticed attorneys often included medical costs. He had an epiphany: Subrogation could apply to those too.
“The medical expense dawned on me one day,” Rawlings says. “Why isn’t this money going back to who it belongs to?”
The answer was that insurers were set up to pay claims, not to chase damages from lawsuits. He told Humana Inc., a Louisville-based health insurer, that he could bring a windfall. The first month, Rawlings identified 200 cases, but sifting through claims on paper was time-consuming.
In 1987, a Humana employee said she could create a printout of select payments he wanted. For two days, Rawlings searched billing manuals, finding codes for things like broken bones and head trauma — the kinds of injuries caused by auto accidents, falls and violent crimes. The resulting data dump was a treasure trove.
Rawlings says he was so successful that Humana cut ties with his company and helped fund a competing subrogation firm. Today, dozens of companies and law firms specialize in healthcare subrogation. Xerox’s business recovered $1 billion in the past three years. A UnitedHealth Group Inc. unit, Optum Inc., is also a major player.
“When I started out, companies didn’t come after this money or they at least would consider the human element,” says John Adams, who represented Miller, the California biker. Now, “it is just all about the money,” he says.
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