Subrogation: Why Do I Have to Pay the Insurance Company?

Health Insurance and Subrogation

We all know how expensive the cost of medical care can be.  If you have suffered injuries in an automobile accident that was caused by a negligent driver, your bills could be astronomically high. If you have health insurance, it will likely kick in and pay for all or some of those bills.  If you then file an injury claim against the person who caused the accident and you ultimately receive a settlement, part of the settlement money is for payment for your medical bills.  At that point, if your health insurance has already issued payment for those same bills, they are going to want some of that money back.  This process is what is known as subrogation. 

Subrogation Defined

The term subrogation applies to an insurance company reclaiming monies it paid on behalf of its injured insured for costs related to the accident. If the person who caused the accident pays money directly to the injured person, the insurance company will want to recoup some or all of its costs.

Essentially all insurance policies contain a subrogation clause.  That part of the policy/contract establishes the company’s legal right for reimbursement of monies it paid out if those costs are later recovered through a legal settlement with the at-fault party.  

Who Pays the Subrogation Claim?

The money that will be paid back to your health insurance company will come from the settlement or judgment you receive as a result of your claim against the negligent party who caused the accident.  When the health insurance company becomes aware that there is an insurance claim or lawsuit related to the injuries for which they paid expenses, they will issue a demand for reimbursement, or lien.  Once the settlement is finalized and the at-fault party has issued payment, the health insurance lien will need to be paid from the settlement funds.  

How Do Health Insurance Companies Learn about Lawsuits?

When you go to the emergency room or see your doctor following an accident, the bill will be coded in a way that indicates that the visit was related to an automobile accident.  This will then trigger the health insurance company that pays the bill to send you a letter informing you of its subrogation rights towards any settlement you may receive from the at-fault party.  Often health insurance companies hire other entities to seek recovery on their subrogation claims, so the letter may not come directly from your health insurer, but rather from a different company on behalf of the health insurer. 

One reason it makes sense to hire an attorney following an accident is to keep track of the various entities who have subrogation rights to your lawsuit.  A skilled attorney will also know whether the company requesting money actually has a legal right to subrogation and whether the lien can be reduced to allow you to keep more of the settlement money.

Do I Have to Pay My Health Insurance Back?

Yes, in most cases, you do.  The contract you signed with your health insurance company is iron-clad, and it almost certainly establishes their right to subrogation. Most of the time, there is no argument for not satisfying the repayment right of the health insurance company.  Again, a skilled attorney may be able to reduce the amount that the health insurer will accept as full satisfaction of its lien in order to maximize your settlement.

Watch the YouTube video.  The clip below attempts to explain some of the confusing aspects of health insurance policies.

Redding Personal Injury Lawyer

Hello, and thank you for reading.   I’m Ed Smith, a personal injury lawyer in Redding, California.  Many automobile accidents happen every day on the highways and roads surrounding Northern California.  For more than 38 years, I have advocated on behalf of people injured in car crashes and other types of incidents caused by negligence.  If you have suffered harm due to the carelessness or recklessness of another, call to speak with a skilled injury lawyer at (800) 404-5400 or (530) 392-9400.  We are always happy to offer compassionate, free, and friendly legal advice.

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