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In the personal injury context, subrogation is the right of health insurance to seek reimbursement for medical expenses paid on your behalf.
It is similar in concept to a medical lien, but for health insurance companies.
For instance, if your health insurance pays $1,000 to cover medical expenses associated with a personal injury claim, they could be entitled to subrogation – or reimbursement – for that amount out of any personal injury settlement.
1) What does subrogation mean in health insurance?
Health insurance subrogation is most common in the personal injury context.
Let’s say you incur $1,500 in emergency room medical expenses due to a car accident. Instead of paying that full amount, let’s assume health insurance only pays $1,000 to close out the ER bill on your behalf. This adjusted amount is based on their separate contract arrangement with the ER hospital.
Although the ER hospital no longer has a medical lien against you or your case, your health insurance has a subrogation lien against your case for the $1,000 paid on your behalf.
2) What is an example of subrogation?
In Georgia, a personal injury victim is expected to pay a subrogation claim out of any settlement.
The type of health insurance you have determines the extent of that obligation.
For instance, Medicare and Medicaid will accept a reduced – or discounted – rate of their subrogation claim. Georgia’s “made whole” statutes may also require private insurers to accept a reduced subrogation amount if the circumstances of your case permit. Federally-protected health insurance will always require full reimbursement of their subrogation claim.
3) Do I have to pay a subrogation claim?
Your health insurance should pay for you medical treatment because that’s what it’s there for.
You pay health insurance premiums for unforeseen medical treatment, such as in a personal injury case.
Health insurance will pay medical expenses promptly, avoiding harassing debt collectors seeking to profit off of your misfortune. Health insurance carriers almost always pay a reduced – or contractually adjusted – amount of the total bill to your medical providers.
When your personal injury case settles, you will have to reimburse the value of your medical expenses – whether that’s the full price through a medical lien, or a lower amount through your health insurer’s subrogation claim.
4) Why should my health insurance pay for my medical treatment?
An ERISA health plan is one that is covered under the Employee Retirement Income Security Act of 1974 (ERISA).
Usually, this involves employer-provided health plans or other federally-sponsored health plan.
ERISA health plans are important because they are federally-protected, and they are entitled to full reimbursement for any medical expenses paid in connection with a personally injury case.
5) What does ERISA mean and why is it important?
Generally, an employer-provided health plan is likely to qualify as an ERISA plan, though there are exceptions.
Similarly, federal employees or anyone else who is a beneficiary under a federal health plan is benefitting from an ERISA plan.
6) Does my health insurance qualify as an ERISA plan?
The made-whole doctrine protects a personal victim who is not “made whole” by the personal injury settlement.
“Made whole” in this context means the personal injury victim has not received complete compensation for all that has been taken from them – physical injuries, lost wages, pain and suffering, etc.
In Georgia, this doctrine has been codified in to law. If the health insurer or medical provider does not have a protected lien (i.e. ERISA, Medicare, Medicaid, or filed medical lien), the made whole doctrine may prevent them from receiving full reimbursement.
7) What is the made-whole doctrine and how does it work?
An injured victim is required to pay back all medical expenses associated with their personal injury claim out of any settlement.
This includes medical bills paid by health insurance carriers.
The reason for this obligation is that if a personal injury victim settles their case for the value of their medical expenses, the victim cannot receive a windfall for those medical expenses. Instead, the personal injury victim is expected to reimburse all medical expenses out of the settlement.
This duty is required and enforceable by law, though there can be certain exceptions such as those protected by the made whole statute.
8) Why do I have to pay back health insurance expenses?
A personal injury victim can be sued for not reimbursing their health insurance under a subrogation claim.
The health insurance company’s right to subrogation (or reimbursement) is a legally protected right, though it can be subject to by the made-whole laws in Georgia.
ERISA health plans are entitled to full reimbursement, and they are not subject to the made whole statutes.