The insurance company wants to settle your case as soon as possible if you are injured and not represented by an attorney. Use of a “Scheduled Release” (1) is a tactic used by insurance companies to entice unrepresented claimants (people who are making a claim to the insurance company) to settle their claims quickly. When claimants are wary and unsure of the claim process and their future medical condition, the insurance representative appeases them with the “scheduled release” and insists that since future medical bills for the injury will be taken care, the claimant is protected against future unknown medical expenses.
Schedule release forms rarely contain a right to cancel the settlement (2) unless the insurance company attempts to settle your claim within 30 days after the accident happens. Under Virginia law, a schedule release or a full release must contain a “right of rescission” notice which states that you (the claimant) have three business days to cancel the settlement agreement by notifying the insurer in writing that you want to cancel the settlement and also returning any funds or check that you received. (3)
The General Assembly recognized that an injured person, for a variety of reasons, may be in a weaker bargaining position than the insurance company. This weaker position and lack of legal advice makes claimants more susceptible to fraud, coercion or undue influence by an insurance company. So for a very short time period, Va. Code § 8.01-425.1 safeguards claimants by providing them the opportunity to avoid a release executed within 30 days of an injury. So if you settle your case within 30 days of your injury, you can change your mind and rescind the settlement if you do so within three days of the settlement.
With a scheduled release, the up front payment is for “pain and suffering” and medical bills to that date. The scheduled release contains language which states the insurance company will reimburse future medical payments either “out of pocket” (whatever is not covered by your health insurance) or “medical bills incurred”. Do not rely on what the claim representative tells you the scheduled release says or means – read it yourself. The insurance company will pay the entire bill if the scheduled release contains “medical bills incurred” language. However, the insurance company will reimburse only your co-pay fees and deductible amounts you paid if the scheduled release contains “out of pocket” language.
The insurance representative (claims adjuster) guesses or estimates how much and how long you might receive medical treatment to determine when the scheduled time period ends, and puts that in the release. It could be 2 months or 5 months. They rarely set a schedule release for 6 months or more because they want to close their files as soon as possible.
You also need to check the language in the “scheduled release” for what the limit is on when you can submit bills. Some scheduled releases say you must submit bills within the set time period. Other scheduled releases say that you can submit bills for treatment you receive within the set time period, and that you have some period of time after that to submit the bills. Suppose you received treatment two and a half months after the date of signing, but you did not receive the bill until three and a half months after the date of signing. If your scheduled release said you had to submit the bill within three months, it would be too late to submit the bill by the time you received it. However, if your scheduled release said you could submit any bills for treatment received within three months after the signing, but had six months to submit it, then you could submit the bill you received and get it paid.
A typical example of a schedule release might provide the following: the insurance company will pay you $500.00 at the time the release is signed (“up front”) for your “pain and suffering”, and then agree to pay you up to $10,000.00 for any medical bills incurred and submitted within a 3 month period after the release is signed (or within three months of the date of injury). If you submit bills for treatment during that 3 month period, you will be reimbursed up to the maximum of $10,000.00. If you submit bills totaling $12,000 during the 3 month period, you will only receive the $10,000 maximum that you agreed to. However, if you do not submit any bills or the bills are submitted for treatment received after the 3 month period, you do not receive any money. You do not receive any of the unused portion of the $10,000 set aside at the end of the 3 month period.
The schedule release is a ploy for the insurance company to keep its money as long as it can by hoping that you forget to submit your bills to them, or you submit them late and they can deny payment to you as too late.
Avoid being susceptible to a weaker bargaining position because of fraud, coercion or undue influence by an insurance company. If you have not recovered from your injuries and are continuing medical treatment, you should not sign a scheduled release. Your doctor, not a claim representative, is better at determining your course of treatment – how long to treat, what type of treatment and the likely recovery period from your injuries. When presented with a scheduled release, do what is best for you and consult your doctor and an attorney. Any time you sign a scheduled release settlement, you are giving up the right to seek more compensation if your injuries take longer to heal or require more treatment than the maximum time period or amount that is allowed in the release. You take the risk that you are settling before the true extent of your injuries and losses is known, and that you are settling too cheap.
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(1) A “scheduled release” is a settlement where the insurance company pays some money up front but also agrees to pay any future medical bills for a specified period of time. (Sometimes the agreement to pay future medical expenses also has a fixed maximum amount).
(2) Technically this provision or language in a contract is called a “rescission”. A release is a type of contract.
(3) Va. Code § 8.01-425.1