Medical Bill Subrogation in Bicycle Crash Cases

Subrogation is an important topic that can have a significant affect on your claim for compensation if you have been injured in a bike accident. Bruce Deming, The Bike Lawyer, shares his knowledge on the topic in his new video and in the transcript below.

Medical bill subrogation -  sounds a little scary, doesn’t it?  Most of you have probably never heard of subrogation before now, but if you’ve been injured in a bike accident, and your health insurance has paid for your medical treatment, it’s important for you to learn something about it.

Basically, subrogation means the ability of one party or entity to stand in the shoes of another. In personal injury law, subrogation can mean a number of different things, but the type of subrogation we’ll discuss in this video concerns the right of your health insurance company to be paid back money out of your injury settlement to reimburse them for the money they paid out for your medical treatment.

Got it? Your health insurer paid for your treatment, you settle your case with the at fault party’s insurance company, and your health insurer wants their money back – from you.

This is really important, because every dollar that you have to pay back to your health insurance company out of your settlement is one less dollar that you get to keep as part of your compensation.

Now you may be thinking: wait a minute! You mean I have to pay my health insurance company back for the treatment they covered from my accident? Why would I have to do that? Isn’t that why I pay premiums for health insurance in the first place?

The answer to that question, in other words, whether they have a valid subrogation lien on your settlement money, depends on the type of health insurance you have, and the state in which in which you live. 

Many health insurance policies these days have contractual provisions in the policy that say if you are injured by a third party, you are obligated to pay back your insurer for monies they spent on your treatment, if and when you recover compensation from that third party – either through a settlement, or from a court judgment should you win compensation in a lawsuit. In other words, you have to pay your health insurer back because you agreed to as part of the policy. After all, your health insurance policy is a contract between you and the insurer, and if you signed up for that policy agreed to that provision, then you contracted to reimburse the company.

How can you find out if you have this obligation? Take a look at what we call the “SPD” or “summary plan description of your policy.” Look for any section that talks about “If you are hurt by a third party,” etc. That is usually the tip off that you may have agreed to such a provision.

Let’s discuss how this typically works in the real world. Let’s say you have been injured in a bike accident by a negligent driver. You hire an experienced, competent lawyer to represent you in seeking compensation for your injuries. Your lawyer advises you – correctly – to be diligent on seeking appropriate treatment for your injuries sustained in the crash, and to make sure that your medical providers have your health insurance information so that your health insurer dutifully processes your medical bills in due course.

Then, one day, you receive something in the mail from a company that tells you they are working for your health insurer, and they have been asked to collect some information about your injuries. Two of the bigger companies that due this, by the way, are called Optum and The Rawlings Company. They include a questionnaire with the letter, which asks questions like:

• Have you been injured in an accident?

• Were your injuries the fault of someone else?

• Are you seeking compensation from that person?

• Who is their auto insurer? 

• What is the policy and claim number? Are you represented by a lawyer?

• What is the lawyer’s contact information?

And on and on…..

What should you do?

Well, you can fill it out and send it in, but let me suggest that the better course of action is to turn the letter over to your attorney right away, and let them handle the communications with that subrogation company.

Why?

Well, there are a number of reasons.

First, and most importantly, your lawyer can advise you, depending on the state where you live and the language of your policy, whether your health insurance company actually has a legally enforceable right of subrogation against you. Just because they are sending you this letter doesn’t mean they have a right to the money.

If your lawyer is competent, he or she will carefully review the policy language to make sure it is enforceable, and will also consider the subrogation claim in the context of the applicable law of the jurisdiction where you live. Here in Virginia where my offices are located, our state takes a dim view of subrogation, and has actually passed a statute outlawing it. Many other states have similar statutes, that either outlaw it entirely, or at least require that subrogation claims be reduced by certain percentages if the injured person is represented by counsel on a contingent fee basis, which is the way most person injury lawyers work. 

Unfortunately, however, whether any state law outlawing or limitation subrogation claims can actually protect you depends on a lot of things. 

For example, if you are on active duty in the military or are a veteran and your medical treatment was paid for through TriCare, then the Federal Government has an enforceable subrogation claim under a Federal statute that overrides state statutes that prohibit of limit subrogation. This is called the legal doctrine of preemption, which makes Federal law superior to state law under certain circumstances.

Similarly, if you are a Federal employee and you get your health insurance through your federal employment, regardless of which plan you have selected, the health insurer’s subrogation rights remain strong and enforceable even if the state where you reside has laws that prohibit or limit subrogation rights generally. Again, this is the doctrine of preemption at work.

The same is true if you are an older person receiving Medicare benefits, or if you are a person of limited resources, and you obtain your health care through Medicaid. Both Medicare and Medicaid have very strong, enforceable rights to be reimbursed from your compensation settlement for the amounts they paid out for your medical treatment, regardless of what state laws may say.

Now, what if it turns out that your health insurer does have an enforceable subrogation claim against your settlement money? Does that mean you will end up with nothing in the end?

Not at all. As you probably learned by now, subrogation claims are complicated, and are best handled by your attorney. But know this: in every case, no matter how strong a subrogation claim may be, there is always an opportunity to negotiate a reduction. Every dollar of reduction that your lawyer can negotiate is a dollar that remains in your pocket at the end of the day.

Please understand everyone, that this video only scratches the surface, of what is a very complicated topic.  Many factors come into play, including the facts of your case, the jurisdiction where you live, who your health insurer is, and what the language of your health insurance plan provides. 

The main thing to remember though, is that subrogation claims can be managed successfully, with the help of a knowledgeable attorney who understands the law, and the process.

I hope that you have found this information helpful. If you have questions or need assistance with a subrogation claim, please contact me today for a no-obligation consultation.