If you’ve ever dealt with a personal injury claim, you’re probably aware that you have to use a portion of your settlement to pay back your health insurance company. This repayment process is known as “subrogation” and can significantly impact your personal injury case. Here, we identify how the process of subrogation works in the context of medical bills from private health insurance companies such as BlueCross BlueShield and Humana to government entities such as Tricare, Medicare, and Medicaid.
Who Gets Paid During the Subrogation Process?
After a personal injury settlement, it’s important to note that the subrogation process applies to private health insurance companies, government healthcare such as Medicaid, Medicare, Tricare, or any other entity that pays your medical bills.
Additionally, failure to protect the government entity’s subrogation interests can result in penalties to your attorneys and other parties that impaired the governmental entity’s right to reimbursement. The attorney that handles your case must be aware of which entities are in charge of paying your medical bills, to prevent penalties or additional repercussions on their behalf.
Subrogation in Regard to Personal Injury
Here is how the subrogation process works with a personal injury case: When you sign up for health insurance, you sign a contract with your health insurance company that states that in exchange for you paying a monthly premium, your health insurance company will pay your medical bills when you decide to seek medical treatment.
However, upon further inspection, you’ll notice that there is a paragraph stating that your health insurance providers are entitled to repayment if you have to recover from a third party. The idea is, if it weren’t for the wrongdoing of the third party, your health insurance company would not have to pay your medical bills, so they are entitled to be reimbursed for what they paid for your medical care.
The Importance of Lien and Claim Letters
During a personal injury settlement, health insurance companies consistently put attorneys on notice of their subrogation claims through a subrogation lien or claim letter. These letters outline the paying party’s rights to entitlement, which medical payments the health insurance company is claiming a subrogation interest in, and the specific amounts. While your claim is being handled, your attorney should be aware of how much subrogation your health insurance company is claiming, and if the entire claimed subrogation is related to your personal injury case.
Once your case resolves, your attorney can effectively negotiate a reduction of your health insurance company’s subrogation claim.
The Subrogation Process in Action
Suppose you are in an automobile accident and have to go to the emergency room. Let’s say the emergency room results in a bill for $10,000. Your health insurance provider does not pay the amount in full but pays a portion to satisfy the bill, let’s say $100. Your insurance company would then make a subrogation claim to be repaid the $100 they put towards your hospital bill.
Your attorney should be aware of this payment and work to reduce that amount as much as they can.
In Alabama, most health insurance companies are aware of the “common fund” doctrine, which requires the third party to pay a pro-rata share of the attorney’s fees and expenses incurred during the settlement. Simply put, the doctrine requires health insurance providers to reduce their subrogation claims and match the costs that you pay your attorney.
Subrogation can have a significant impact on your personal injury case. If you or someone you love was wrongfully injured in a car accident due to the negligence of another driver, contact Wettermark Keith for a free consultation.