Subrogation

Posted in: Subrogation, Uncategorized

Here’s a word most people are unfamiliar with. You may be familiar with it if you’re one of the small percentages of people who read your insurance policy word for word. Subrogation doesn’t come into play for most people until they’re in the process of settling an injury claim or lawsuit; then the word comes as an unpleasant surprise and its meaning even more sinister. Loosely, the dictionary defines subrogation as the right to recover for money, either by law or by contractual agreement. Most insurance companies include their right to subrogate in their policy language, assuring their subrogation right as a matter contractual agreement, and of law.

If you are injured in an automobile accident that was caused by another driver, you may seek treatment initially from a hospital emergency room, and, subsequently, from a family practitioner, an orthopedic, a chiropractor, and/or other providers; or all of the above. Most commonly, your health insurance will cover your medical care costs, however there is typically a significant gap in time from when you were injured, and your settlement.

Your providers may seek immediate payment from a variety of sources prior to your reaching maximum medical improvement (MMI). Some will accept a lien whereby you agree to pay your debt to the treating facility when your claim settles. Others will outsource your bill to a collector who adds interest over time. Others will reduce your debt to a manageable amount and let you pay over time, and some are unwilling to adjust the amount even modestly. Some providers are unwilling to wait until settlement for payment. The need for treatment and recovery supersedes the money issue for most people, and their medical debts pile up.

The treatment provider has become the creditor, you, the injured party, has become the debtor, and still you may be nowhere near maximum medical improvement.

However, while you’re treating your injuries, and hoping to become whole again, your car accident attorney has been negotiating with your insurance carrier, the tortfeasor’s insurance carrier, and quite possibly, with your treatment providers.

The day will come when you’ve healed as much as you are going to heal, you’ve reached MMI. This does not always mean that you’re able to be as athletic as you were before the accident.

The tougher part comes when you learn that all of your treatment providers, your insurance carrier, and other entities that provided treatment, have subrogation rights. If they’ve paid a dollar on your behalf for your treatment, they want it back.

One upside is that your accident attorney may be able to bargain for you, reducing the amount of subrogation. Some insurance companies will agree to a reduction of their subrogation interest, some will not. Similarly, some treatment providers will agree to a reduction of their interest, and some will not.

In the end, you’ll need to calculate your total medical expenses. You’ll also need to be realistic about what the tortfeasor’s insurance company will settle for. We’re not discussing types of damages here, so suffice it to say that the insurance company will consider your expenses when they make an offer to settle. Your own insurance company will consider what they have paid already on your behalf and expect the tortfeasor’s insurance settlement to cover their costs too. That way your insurance company recaptures what they’ve paid out, and their subrogation interest has been satisfied.

Keep in mind that a settlement must also pay your treatment providers who have exercised a lien for payment, and therefore have a subrogation interest as well.

For those of you covered by Medicare or Medicaid, they too have a subrogation interest for any monies they’ve paid towards your recovery.