When you’re recovering from an injury caused by someone else, the last thing you want to deal with is the complex insurance process. Unfortunately, terms like “lien” and “subrogation” are often part of the settlement process, and understanding them is crucial to maximizing the compensation you receive.
Subrogation might seem like just another complicated term, but its impact on your settlement can be significant. How subrogation works in health insurance claims, how employer plans governed by ERISA add complexity, and how Medicare and Medicaid liens operate are all issues that arise when resolving your claim.
What Is Subrogation?
Subrogation, often referred to in short as “subro,” is a legal right held by a 3rd party that allows them to be entitled to some or all of the money you receive from your claim.
Imagine you’re rear-ended at a traffic stop. Your health insurer pays $5,000 in medical expenses. If your case results in a $20,000 settlement or judgment from the at-fault driver’s insurance, your health insurer may seek subrogation against you to recover the $5,000 they paid out.
Here’s how it works in simpler terms:
- If, for example, you’re injured in a car accident, and your health insurance covers the hospital bills, your insurer may have a right to recover those expenses from the at-fault driver or their insurance – and if you resolve the claim, they can seek payment through you.
- Subrogation ensures your health or car insurance company isn’t left covering costs they weren’t responsible for — and that the at-fault party takes financial accountability.
This process may also apply to car insurance, property insurance, and other types of coverage.
Why Does Subrogation Matter?
For you, the injured party, subrogation impacts how much of your settlement you can actually keep. If this process isn’t carefully managed, excessive subrogation claims could take some, or many times all, of your settlement.
When Does Subrogation Occur?
- Health Insurance Claims: When your health insurance pays for medical treatment related to a personal injury, they may have a right to recover those payments from you when you resolve your claim.
- Car Insurance Claims: After a collision, your car insurer may cover repair costs but later file a subrogation claim against the at-fault driver’s insurance.
Be prepared for subrogation surveys. These are documents sent by your insurer to gather details about the accident and the parties involved. You should consult an attorney if and when you ever receive a survey because responding thoughtfully and accurately to these surveys is vital. The responses you give can directly affect subrogation claims and your final settlement outcome.
How Long Does Subrogation Take?
The subrogation process is not always quick. It can take several weeks / months to get all payments and claims sorted out once your case is resolved. If there are improper attempts to subrogate or charge you – it can take even longer.
ERISA Subrogation
The Employee Retirement Income Security Act of 1974 (ERISA) governs many employer-sponsored health insurance plans. Under ERISA, these plans often have the right to full reimbursement of medical expenses out of your settlement, even in states with laws that limit subrogation.
Why Is ERISA Subrogation Unique?
- State Law Preemption: ERISA plans operate under federal law, which overrides state laws that may otherwise cap or limit subrogation claims.
- Strict Plan Language: These plans typically include specific terms that enforce their right to recover payments.
Medicare & Medicaid Liens
Government health insurance programs like Medicare and Medicaid also have subrogation rights, known as liens. These claims allow government programs to recover costs from your settlement.
How These Programs Differ from Traditional Subrogation:
- Medicare/Medicaid Requirements: Federal law entitles government programs to reimbursement, even if state laws limit other subrogation claims.
- Compulsory Payment: Lien reductions often require negotiation and may involve lengthy paperwork.
How to Handle These Liens:
- Negotiate: Skilled attorneys can often reduce lien amounts significantly by highlighting discrepancies or advocating on your behalf.
- Request Waivers: While harder to secure, waivers of subrogation may apply under specific circumstances.
Protecting Your Settlement from Excessive Subrogation
You have the right to protect your settlement. Here’s how to safeguard your financial recovery from excessive subrogation claims and liens.
Tips to Retain More of Your Settlement:
- Hire an Attorney: Legal expertise is crucial for reducing or eliminating subrogation payouts. An experienced personal injury attorney can negotiate on your behalf and ensure fairness.
- Understand Your Insurance Policy: Review the subrogation clause in your health or car insurance plan to understand your rights and obligations.
- Stay on Top of State Laws: Different states have varying laws on subrogation. Missouri, for example, generally prohibits health insurance reimbursement claims unless federal law (like ERISA) applies.
Take Charge of Your Settlement Today
Subrogation might sound intimidating, but understanding its role in personal injury claims can make all the difference. From recognizing when subrogation happens to protecting your settlement through knowledge and legal guidance, you’re now better equipped to handle this process.
If you’re unsure how subrogation might impact your injury claim, our experienced attorneys at DM Injury Law are here to help. We have a full staff of lien specialists who can help you throughout the process.
We have offices all over the Midwest, including:
We also take cases in Nebraska and Illinois.
Schedule your free consultation today to tell us your story. We are a contingency-fee-based law firm, which means you don’t pay us unless we win your case.