Health Insurance Subrogation

Health Insurers Use Subrogation to Wrest Damage Awards from Victims of Negligence

Let’s suppose that you, a consumer with health insurance from a private insurance company, have the bad fortune to suffer a serious injury in, say, a car crash caused by a careless driver. The health insurance carrier pays for some or all of your health care expenses, as called for by the policy. Since you were harmed by the negligence of the other driver, you wind up going to court against the driver who caused your injury, and maybe that driver’s auto insurance company.

You make your case, and ultimately receive a settlement or a court award for your economic injuries (such as lost earnings and out-of-pocket medical and legal expenses), and for your non-economic injuries (such as pain and suffering). But before you, the badly injured accident victim, can receive and use those funds, you watch your health insurance carrier claim some or all of the court award, under the legal doctrine of “subrogation.”

If you hunt through the small print of your private health insurance policy, you’re very likely to find strong right of subrogation provisions, which essentially allow the insurance carrier to recover all outlays it has made on your behalf, taking it from the court award or settlement you’ve won. Even though little-known to the public at large, subrogation is a long-standing insurance industry practice.

But wait a minute, you might well say. After all those years during which I’ve paid hefty premiums for my health insurance coverage, how does the insurance company get to take for itself some or all of my court-approved award as compensation for my injuries? If the insurance carrier gets to help itself to what my lawyer and I managed to win, in the name of recouping its outlays on my care, exactly what did I make all those health insurance premium payments for?

You might even view this as being victimized a second time — first by a careless driver, and now by your insurance carrier, which swoops in when the case is over, to grab what it can. Then ask yourself: Where would this leave me if I had been so seriously injured I would need life-long care, just as my insurer makes off with funds I’d need for that care?

It is especially in catastrophic personal injury cases that insurer subrogation has drawn the sharpest criticism. Insurance groups argue letting insurers extract from court awards or settlements the value of the benefits they’ve paid for an injured customer is equitable, by preventing the injured person from recovering twice for the same injury. What this overlooks, however, is the very real possibility the injured person doesn’t achieve even full compensation even once, much less twice.

For example, coverage limits may mean the health benefits paid by the insurer fall short of bringing the full treatment needed for the insured’s extensive injuries; court awards may similarly be inadequate, if the negligent party has little or no insurance or assets. In these cases, subrogation drains away even an inadequate settlement or court award, handing it to the insurer who has, after all, been paid to provide the benefits for which it now takes repayment. So subrogation acts to let the insurer pass on to its customers the risks it’s been paid to cover. Adding insult to catastrophic injury, some subrogating insurers have been found to lay claim to greater sums than they actually expended – in essence, bolstering their bottom lines at the expense of their badly hurt customers.

With our firm, we make sure that our clients’ subrogation debts are minimized, and that our clients’ financial recoveries are maximized to the full extent possible. We don’t simply walk away or stop working once a case has been settled. Rather, once a case settles, we will work closely with your health insurance carrier, whether it is a private health insurance company, Medicaid, or Medicare, to make sure that you will be the one who is provided with just compensation, and that no one else receives a windfall at your expense. If your health insurance carrier oversteps its authority, we will be prepared to go to court against them even after we settle your underlying negligence case.

If you, or a member of your family, has been injured through the negligence of someone else, or are concerned about possible insurance claims on a settlement or court award you have received, feel free to consult us for advice or assistance.