An injury victim sometimes waits years for a legal recovery, whether by settlement or jury trial. When it finally comes, the victim and his/her family find a bit of solitude and peace of mind that victory is theirs. Or do they?
Instead, many victims find themselves faced with another legal battle. This time, the victim is now being sued. The suit challenges the victim’s right to keep the money, even though the at-fault party has been dismissed, released and legally forgiven from any further lawsuit for the victim’s injury.
It is easiest to understand by example. Suppose a collision with a semi-trailer leaves Jane Doe brain-damaged. She incurs approximately $400,000 in medical bills, most of which are paid by her health insurance carrier pursuant to her health insurance policy through her workplace. Of course, Jane has paid monthly insurance premiums to “ABC” carrier over the last ten years. Jane makes a gross recovery of $850,000. After deducting for legal fees (1/3, or 33%) and expenses of fighting through the court system, Jane’s net proceeds from the settlement are about $450,000. She and her spouse hope to use that money to fund her round-the-clock care, drugs, therapy and nursing home expenses for the rest of her life. She is 53.
Now, says ABC, Jane has been compensated, at least partially, for the same medical expenses paid by ABC, and now, ABC wants its money back. ABC files suit against Jane for $400,000. And, ABC says, if Jane does not cooperate, the health carrier will terminate (or suspend) any future health benefits.
Jane, on the other hand, has settled with the at-fault company and its driver.
In the insurance industry, the recovery practice is called “subrogation.” Employers and insurers say it’s necessary to insure the welfare of the plan. After all, it says, ABC should be able to recover for the medical expenses it paid because at least part of the settlement proceeds represent compensation to Jane for those same medical expenses.
How much power ABC and other health carriers have to enforce their right of recovery against Jane is found in a melting pot of complex state and federal law.
Our Firm makes it our business to keep up with this ever-changing, dynamic sub-specialty of personal injury law. Over the last several years, the U.S. Supreme Court has handed down several decisions related to a health insurance company’s right of reimbursement, and this area promises to be a pressure cooker for many years to come.