Understanding Insurance Subrogation Rights from a Personal Injury Verdict or Settlement
“Why is my health insurance company entitled to a portion of my settlement?”
“I do not owe my insurance company any money, that’s why I pay them monthly.”
“Legally, can they take a portion of my settlement?”
Clients are often frustrated and confused when they learn that their health insurance company can bring a claim for a portion of the money the client receives from a personal injury settlement or verdict. Although your health insurance company is supposed to pay your medical bills, once those payments have been made, and your case is finished, your insurance company may be able to seek reimbursement for the medical payments made on your behalf.
Insurance companies will have what is called a “health insurance lien” or subrogation interest on the proceeds of the settlement or lawsuit so that before you are able to get paid anything from a settlement or verdict, the insurance company is first able to recover the medical bill expenses it paid because of your injuries.
Health Insurance Subrogation Rights
A subrogation interest comes from the idea that if another individual is liable for your injuries, and your health insurance company pays for your medical bills, they should be paid back or indemnified for the bills they have paid. I always tell my clients to think about it like this – If the negligent individual wouldn’t have caused your injuries, the health insurance company wouldn’t have been obligated to pay any medical bills. In addition, insurance companies include subrogation language in their policies to guarantee their right to be reimbursed for all medical bills paid by the insurance company if a third party is at fault. Take some time to look through your health insurance policy. You will almost always see a clause in any insurance policy relating to the subrogation rights of your insurance company detailing how and when they are entitled to receive a portion of any money you receive from a settlement or verdict against another individual.
How Much of My Settlement is My Health Insurance Entitled To?
Your insurance company is only entitled to the amount of medical bills they have actually paid. Therefore, if you get a settlement in the amount of $50,000 and your insurance company has paid $25,000 in medical bills, your insurance company is entitled to $25,000 while you are entitled to the remaining $25,000. Some insurance companies will agree to reduce their liens to honor the common law “Made-Whole Doctrine” which argues that an individual should be “made whole” before their insurance company is able to recoup any amount paid on behalf of their insured. Insurers will often also agree to reduce their subrogation interest by their portion of the attorney’s fees. However, insurance companies can also legally preempt this doctrine in the language of the contract allowing them to go after the full amount of their lien even if the client is not “made-whole.” It is important to look over this portion of your health insurance contract to make certain that you know exactly what your insurance company’s subrogation rights are in case you are injured and find yourself in settlement negotiations or filing a lawsuit.
Negotiating With Your Health Insurance
The bottom line is that if you settle a case or win a verdict you must be aware of your health insurance company’s subrogation interest and make sure to negotiate with them and pay it off. Hiring an attorney to represent you in a personal injury case also means that they are there to help you deal with your health insurance company’s subrogation interests, and your attorney may be able to help negotiate to reduce the lien owed to your insurance company.