I am often counseling clients, who have health insurance, why they have to pay back money to their health insurance carrier when they settle a personal injury claim such as a car accident, or sip and fall accident in Florida. The reason why is a little thing called – “Subrogation.”
In Florida, and in many other states and jurisdictions, there exists a concept in the law known as the “right of subrogation.” It is written into almost very insurance policy which may provide for medical benefits coverage. In some cases it is not just limited to medical benefits, but for purposes of this topic we will keep it to medical benefits payments.
Say you are driving down the road and Joe Six Pack is texting on his telephone and rear ends your car. You get injured and seek medical treatment. No problem you think, since you have health insurance. Well first you are wrong! In Florida, if you are involved in a car accident, your Personal Injury Protection benefits will pay your medical bills, BUT only up to 80%, and only up to the maximum benefit of $10,000.00. The other 20% of the medical bills then becomes your responsibility to pay, or the doctor can wait and see if you recovery money from the at fault driver, or you can use your health insurance or if you have medical payments coverage under your automobile insurance, your bills would be covered 100%. The last two sound great – but wait !?!
If you have health insurance (or medical payment coverage under your automobile insurance policy), you owe the money the insurance company paid for your treatment back to the insurance company. Why you ask? Subrogation. Okay what is it?
In Florida, your health insurance carrier is able to take some of your money from a settlement or verdict to pay back it back for the medical bills it paid for the treatment of your injury. Is this concept fair? No absolutely it is not, but it is the law. It is not fair that because you were smart enough to pay for a premium each month for health insurance, or paid a little extra each month for medical payments coverage under your automobile insurance, that your own insurance company is now going to gouge you and want their money back. After all they have now been paid twice – once when you paid the premium and once again when you have to give up part of your settlement or verdict back to them. It becomes a double recovery for the insurance companies and leaves you with little or nothing for your injuries.
Many of my clients cannot believe they have to pay back money to their own insurance company. Many are darn right mad and tell me not to pay it back. I cannot do that. If I do not pay it back, I can then be a resident of our local jail system. That is not going to happen! In many cases, the insurance companies which paid for part of your medical treatment may be willing to accept a reduced amount and many times we are able to negotiate a reduction in the amount you have to pay back, but not always.
Many big companies such as Disney, Wal-Mart, Staples, and most national and international companies have health insurance plans which claim to be part of an “ERISA” plan. ERISA based plans will always demand 100% payments and many times they get it. This means if your health insurance is ERISA based and it paid out money, it will get every red cent back from your settlement or verdict – even if means leaving you with less money than the insurance company got paid back.
When Medicare or Medicaid are involved – forget it! When Medicare or Medicaid make payments, the federal government gets involved; and they always want dollar for dollar reimbursement. This is not even the start of it. Medicare and Medicaid can take as long as they want to tell you how much they want to be paid back. They hold up distribution of settlement or verdict monies for months and there is nothing which can be done to make them work faster or smarter. After all it is the federal government and nothing happens quickly where they are involved.
In short, Subrogation was a concept created by the insurance companies to keep injured parties from recovering the full measure of their damages. It is not fair – but it is the law. If you have been involved in a car accident, slip and fall accident or any other type of injury claim and you begin to use your health insurance benefits, Medicare benefits or Medicaid benefits, be prepared to lose part of your settlement or verdict awarded by a jury to them. In the end Subrogation only maximizes the recovery for the insurance companies, not for the injured party.
As for Medical payments coverage, at one time I advocated for clients to carry this coverage – no longer. Why pay a premium only to pay back a settlement to the insurance company. You are better negotiating with physicians, who are more reasonable, against the balance of the medical bill than trying to negotiate with an entity which by its very nature and existence is unreasonable – an insurance company – which wants to keep you from keeping more of your settlement or verdict for your injuries as opposed to giving it to greedy insurers.
For more information or for a free consultation for your automobile accident, slip and fall claim, or any other personal injury claim, contact Mark P. Cressman, by calling 407-877-7317 or go to our website at www.cressmanlaw.com.