One of the more complex areas of Personal Injury Law is the concept of subrogation. Don’t know what that is? No need to sweat. Subrogation is a term not well known to those outside of the insurance industry, however, it is important to know. Especially for those with a personal injury claim.
What Is Subrogation And How Does It Work?
Merriam-Webster Dictionary defines subrogation as:
the assumption by a third party (such as a second creditor or an insurance company) of another’s legal right to collect a debt or damages
Primarily, subrogation comes into play when a personal injury plaintiff’s medical bills are paid by their health insurance company.
Almost every health insurance company has a subrogation clause that entitles them to reimbursement on what they pay out on the plaintiff’s behalf.
Subrogation: An Obligation To Reimburse The Health Insurance Company
In everyday life when a person visits their doctor, the doctor sends the bills to their health insurance company. Health insurance pays the bills, and that’s the end of the transaction (barring payment of deductibles and copays).
Similarly, in a personal injury case, a plaintiff goes to a doctor and the doctor bills their health insurance company. Again, the health insurance company pays the bills. However, then they notify the plaintiff (or plaintiff’s attorney) of their intention to seek subrogation.
The health insurance company asserts a lien on the plaintiff’s recovery. The money comes from the settlement. Once the case has settled, the plaintiff (or plaintiff’s attorney) has an obligation to reimburse the health insurance company in the amount paid out.
How Does Subrogation Come Into Play In Other Circumstances?
In the event of a low settlement, many times health insurance companies will negotiate or reduce the amount of their lien. Other issues with the case can also result in reduced liens.
However, there are many groups or governmental health insurance policies that fall under the Employee Retirement Income Security Act (ERISA). In most cases, these require full reimbursement of the lien amount.
Medicare and Medicaid have their own complex subrogation rules as well. Further, if a personal injury plaintiff has a workers compensation claim in addition to their personal injury claim, the worker’s compensation carrier will have a right to subrogation as well.
If You’ve Been In An Accident, Contact The Ticktin Law Group Personal Injury Department
Subrogation can become a very complex issue. Such matters usually demand the prompt attention of a knowledgeable attorney.
If you have been in an accident and need legal help, don’t hesitate to contact an attorney. The Ticktin Law Group offers complimentary consultations to answer any personal injury questions you may have as well as evaluate your claim.
Editor’s note: this post was updated on May 16, 2018