Understanding Insurance Subrogation after a Car Accident

Key Points:

  • Insurance subrogation is when one insurance company must pay for injuries caused by another insurance provider’s customer.
  • If you were injured in a car wreck caused by someone else, your insurance company may pay for medical care. However, if you get a settlement from the defendant, you may be required to repay your insurance company.
  • Under Georgia law, some insurance policies only allow the insurance company that paid your medical bills to recover money if you have been “made whole.” This means the amount you received as a settlement exceeds the amount in damages that resulted from the injury. It does not include the costs that the insurance company is seeking to recover.
  • Identifying if an insurance companies is entitled to subrogation is one of the skills possessed by a good personal injury attorney.

Questions Answered:

After a car accident, you hope the settlement process for your insurance claim goes smoothly. In order to recover compensation from an accident, it is important to have your injuries documented and treated. It is also important to hire a competent personal injury lawyer. However, one unforeseen complication that can arise is insurance subrogation.

In this article, we’ll answer some of the questions you may have about insurance subrogation. We’ll explain how it works, when it applies, what it means to you.

  • What is insurance subrogation?
  • Do all claims involve subrogation?
  • Who will pay the attorney fees and court costs?
  • How can I protect myself from subrogation surprises?

What is Insurance Subrogation?

Insurance subrogation describes what happens when one insurance company pays for the injuries caused by another insurance provider’s customer. Here’s an example:

Sally was injured when Tom rear-ended her car while she was stopped at an intersection. When Sally was taken to the hospital for treatment of her broken hip, the hospital billed her personal medical insurance. Sally was treated and eventually released.

The problem is that Sally’s injuries were the fault of another driver. The bill ought to be paid by the at-fault driver’s insurance company, not Sally’s medical insurance. Sally’s insurance company notified her that under her policy they had a lien against her settlement for the bill of $19,852.

Sally was shocked when the notification arrived. She was unaware that she signed a contract that created such an obligation. Perhaps Sally didn’t read all the fine print.

This situation is not at all unusual.

Do all accident claims involve subrogation?

It depends upon who pays the bills and whether they have a right to be reimbursed.

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You may have an obligation to repay your insurance carrier if your insurer paid bills for injuries caused by someone else. For instance, if you were hurt in an accident, your insurance will pay for your medical care. However, if you get a settlement from the defendant, you may have to repay them subrogation.

There may be other instances in which reimbursement or subrogation may be required. Common claims include health coverage reimbursement by physicians or hospital practices. However, this can also happen when the injured party receives benefits from the government. These liens can be by Medicare or Medicaid, workers’ compensation, or claims under the Federal Medical Care Recovery Act.

Not everyone who is looking for subrogation from your injury case is entitled to it. Identifying the parties eligible for subrogation is the job of a personal injury lawyer. Paying a subrogation claim that was not enforceable can cost you big. However, not honoring a valid subrogation claim can result in problems and additional financial losses from your claim.

The sooner you know about any liens or reimbursement rights, the better it is for you. Having the big picture of your settlement claim earlier can help you retain more of your compensation. Unfortunately, most people have no idea that reimbursement demands might arise against their settlement until the claim has settled. This can significantly impact the amount of settlement money you end up with.

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subrogation quote two

Insurance claims can become more complicated when the Employee Retirement Income Security Act (ERISA) of 1974 is involved.

In some instances, what can be collected by an insurance company is limited. Under Georgia law, some insurance companies cannot be compensated for your bills unless you have recovered financially.

Under O.C.G.A. § 33-24-56.1(b) (1), a plaintiff is “made whole” when they are compensated for all their damages. This includes both economic and noneconomic damages. Economic damages are easily measured, like lost wages or medical costs. However, noneconomic costs are harder to determine because they include things like pain and suffering.

Therefore, being made whole is getting more than the value of your damages.  You’ve only been made whole by your settlement if you have been reimbursed for everything you lost. If you don’t recover for all your damages, the insurance company will be unlikely to recover. However, the Georgia “made whole” rule may not apply to insurance policies covered by ERISA.

It is important to know whether your insurance falls under ERISA or if it is covered by the made whole rule. Most insurance companies will insist upon reimbursement even if they’re not entitled to it. This is why it’s crucial to hire an experienced personal injury attorney.

How can I protect myself from subrogation surprises?

Subrogation quote three

Subrogation and reimbursement demands can seriously carve into your settlement. The old saying, “Being forewarned is being forearmed” is absolutely true here. Unfortunately, not everyone understands what they’re up against in an accident claim.

People often ignore subrogation notices because they did not realize a subrogation clause was part of the policy. The best protection you can have in an accident claim is a clear picture of what lies ahead.

Read your health insurance policy to see whether the insurer has a right to claim part of your settlement. If you have questions about that, consult with an attorney. Don’t take the insurance company’s word for it.

If you have not yet chosen a lawyer to represent you in your claim, give us a call today. Allow us to review your case and help you determine how to proceed. You’ll be glad you did.

Article Summary

Insurance subrogation can be a particularly thorny problem. Subrogation happens when a medical insurance company attempts to reclaim money it spent on your medical care caused by an accident.

A lien on your settlement can be an unhappy surprise and a particularly challenging one to overcome. To make matters more complicated, not every company that seeks subrogation from your settlement is entitled to it.

When the settlement amount is less than your damages, you have not been “made whole.” Therefore, the insurance company cannot recover. However, insurance policies covered by ERISA are often not subject to the made whole rule. This means that ERISA plans can claim a greater portion of your settlement.

It is important to consult a personal injury attorney to handle any subrogation liens that may arise.

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