Subrogation is a term that you may hear in the context of your personal injury claim. Subrogation is essentially the right of reimbursement for payments that were previously made on your behalf. When exercised, it is usually done either by an injured person’s health insurance company (or Medicaid) or by their own auto insurance company. Subrogation is when a third party demands to be paid back out of your injury settlement for payments that they made up front.
Circumstances of Health Insurance Subrogation
Let’s suppose that you were in a car accident and went to the Emergency Room. Then you receive a bill and to avoid collection issues while your car accident case is done, you have them bill your health insurance company. This is usually the correct course of action to take, by the way. After all, the emergency room doesn’t want to wait around for you to collect from the driver who hit you, and they don’t have to. So, your health insurance is billed and they pay. Your health insurance takes notice of the fact that the hospital bill they just paid was the result of your having been hurt in a car accident which may have been someone else’s fault. If they agree to pay your doctor and later be paid back by the at fault driver, they “subrogate” the bill. This means that they demand to be paid back later from your claim, since the at-fault driver (or their insurance company) will not be dealing directly with your health insurance company.
While this might seem unfair, it makes more sense if you look at it from the standpoint of “double dipping”. If the other driver (or his car insurance company) ends up having to take responsibility for the accident that they caused, and all of the medical bills that come with it, this will include bills that have already been paid for you. In fact, showing that your medical bill has already been PAID IN FULL is one of the surest ways to ensure that it will be included in the final payout on your claim or lawsuit, since you can only recover for treatment that was both reasonable and necessary. Paid bills are presumed to be reasonable. In any case, you can probably understand now why the health insurance company wants to be reimbursed for what they initially paid out, if you end up recovering from the other driver. It might be helpful to think of it in terms of avoiding ‘double dipping’ – having a bill paid by both your health insurance company and by the insurance company for the other driver. Welcome to the world of subrogation.
When will my Car Insurance Company Subrogate?
Auto insurance companies may also decide to subrogate and sometimes, will go after the other driver and file a claim against him or her, to be paid back for payments made under the “Med Pay” portion of your insurance policy or for what they paid out in terms of your property damage. If the car insurance company files a claim against the other driver, they are not trying to recover anything for you or for your medical providers- they only want to be paid back, which is why you will want to get your own lawyer first and not rely on the insurance company to act on your behalf. They do not work for you but will usually try to get back your deductible back for you in property damage cases.
How is Subrogation Dealt with in terms of the my Personal Injury Case?
Now that you understand what subrogation is, it is important to understand who gets what, as there may be multiple companies trying to get their hands on your settlement that we worked hard to get. Your injury attorney should be working on this for you, to make sure that everyone is only getting what they are legally entitled to and no more, thus maximizing what is yours. It can get very complicated with various bills, which is one of many reasons that you will want to hire a personal injury attorney if your injury was serious and multiple medical providers are involved. Remember, the insurance companies are not looking out for you (even your own insurance company). Business is business, and the insurance companies who initially laid out money can take steps to make sure that they get a piece of the action at the end from money that will come right out of your settlement.
Even when your health insurance company asks to be paid back as part of your case, this does not necessarily mean that they will take back everything that was paid out, dollar for dollar. After all, if it were not for the efforts of you and your lawyer, the other driver would not be held accountable. Without the other driver being held accountable, the health insurance company doesn’t get paid back by the car insurance company for the driver who hurt you. This might sound like you and your lawyer are doing work that benefits your health insurance company, without them having to pay for that. After all, you- and not your insurance company- are the one paying your lawyer. For this reason, the health insurance company will often take this into account and reduce what you have to pay them back. There are legal reasons for this, in addition to complex state laws that say how liens generally have to be dealt with in a personal injury case. Liens are closely tied to the concept of subrogation, and generally means that someone has a legal claim on your case that needs to be dealt with. Don’t worry about it too much, your lawyer will help you understand the implications for your case depending on all of the circumstances and potential settlement amount.
But why do I have to give away part of my settlement to my Insurance Company?
Let’s say that you had a doctor’s bill that was $1,000.00 to treat a leg that you broke when you got hit by a car when the driver of that car was texting and driving. The doctor has every right to get paid and is not required to wait, since injury claims tend to take a while. The doctor’s office sends the bill to your health insurance company and your health insurance company pays $1,000.00. As part of your personal injury case, your lawyer is able to include that $1,000.00 bill as part of your damages- and wants the guy who hit you (or his car insurance company) to pay for that. As a paid bill, it is deemed reasonable, and is included when an insurance adjuster, judge, or jury tallies up what they will give you as part of your personal injury award. You are being given $1,000.00 to, in theory, pay that doctor who fixed your leg. But the bill was already paid by your health insurance company a long time ago. So, by subrogation, you are just giving the insurance company back what they paid out.
What is the point of going through a personal injury case just to move money between insurance companies?
There is so much more to a personal injury claim than just having medical bills dealt with, especially if it was serious! Remember,
medical payments are just one part of your personal injury award. And sometimes, health insurance will not cover a bill. Maybe you have to first reach a deductible, or the provider is not in network, or you have a co-pay, or they only covered a part of the bill. A personal injury claim against an at-fault party is sometimes the only way that medical bills can be paid. Also, that broken leg in the example above was not a day in the park for you. Broken legs hurt and you were likely in a lot of pain. You had to deal with the hassle of crutches, casts, doctor’s visits, discomfort, and everything else that comes along with having a broken leg- maybe even surgery. No amount of money can erase what you went through, but pain and suffering can be compensated to you, on top of what you had to pay your doctor. Lastly, while health insurance companies have the right to subrogate, they don’t always do it. It gets complicated but your injury lawyer will know what to do with claims for reimbursement and may be able to work things out to maximize what goes into your own pocket- depending on the circumstances of your individual case.
Closely related to the concept of subrogation is the world of healthcare liens, a way for healthcare providers & professionals to make sure that they get paid. Some providers who have not yet been paid want to make sure that, if they have not been paid yet by the time that your case is over, that they get paid out of your case. When a provider asserts a lien, this means that you cannot be paid out until the lien holder is taken care of. How much they are entitled to is dictated by law and there are important procedures that need to be followed under what is called the Healthcare Services Lien Act (Illinois statute 770 ILCS 23/). Sometimes the liens cannot be worked out amicably, in which case a hearing to “adjudicate the liens” may be necessary (take it to court).
Subrogation will affect your bottom line
When it comes time to start talking dollars in terms of settling your case with the other side’s insurance company, it is important to know what, if any, liens may exist on your file so that they may be taken into consideration when calculating how much money will end up in your pocket. We make sure that everyone is paid out so that you don’t have to worry about paying out after you receive your check.
If this sounds complex, it certainly can be. The use of a lawyer is generally money well spent if you were in a bad accident and often times you’ll end up with higher compensation than you would have going it alone. Give us a call at 630 250-8813 to schedule a complimentary strategy session.