If you have ever had a personal injury claim that has resolved either through a settlement or a verdict, the attorney handling your case likely told you that a portion of your settlement would have to be used to pay back your health insurance company for the medical bills they paid relating to your injuries. This process is call subrogation and can have a major impact on your personal injury case.
For the purpose of this post, we will be discussing how subrogation works in the context of medical bills that have been paid by private health insurance companies, such as BlueCross BlueShield or Humana. However, it is important to note that the subrogation process applies, not only to private health insurance companies, but also to government entities such as Medicare, Medicaid, Tricare or any other entity that pays to satisfy your medical bills, which then make the basis of your personal injury claim, including hospitals. Furthermore, in regards to governmental entities, a failure to protect their subrogation interests can result in significant penalties to all individual attorneys and/or parties that impaired the governmental entity’s right to get reimbursed. Therefore, the attorney handling your personal injury claim should be aware of which entities are paying your medical bills, so they can make sure to properly protect their subrogation interest.
Here is generally how the subrogation process works as it relates to private health insurance companies: When you sign up for health insurance, you sign a contract with the health insurance company, which provides that, in exchange for you paying a monthly premium, the health insurance company will pay your medical bills when you seek medical treatment. However, that contract contains a paragraph stating that your health insurance company is entitled to seek repayment for the medical bills they paid, if you use those medical bills as a basis to recover from a third party. The idea is that your health insurance company would not have had to pay your medical bills if it weren’t for the wrongdoing of the third party, so your health insurance company is entitled to be reimbursed what it paid.