Medical Expenses or Other Benefits Potentially Subject to Subrogation

Subrogation is a complicated concept and likely one that you had not heard of until getting involved in a lawsuit. Narrowing the scope of this blog to personal injury cases, subrogation allows an insurance provider to stand in the shoes of the injured party.  In the context of personal injury claims, the question is who should pay for an injured party’s medical expenses and how much should be paid.

Let me illustrate.  Say you are injured in a car accident at no fault of your own and you are rushed to the emergency room.  After being discharged, you begin treating with an orthopedist.  Subsequently, you need surgery and are required to undergo weeks of physical therapy.  The whole time, your health insurance is paying for all or a portion of your treatment costs.  You decide to sue the at-fault driver.  Now the question is whether the at-fault driver’s insurance should reimburse your health insurance for the treatment it paid for.  The thought being that you, the injured party, would never have needed this treatment but for the actions of the at-fault driver and thus the at-fault driver’s insurance should be paying for your treatment.  Subrogation would allow your health insurance company to stand in the shoes of you, the injured party, to recover those costs of treatment that had been paid.

Subrogation, however, is not an automatic right.  Just because a health insurance or benefit provider paid for your treatment resulting from an accident does not mean the health insurance company is automatically entitled to reimbursement from the at-fault party’s insurance.

Whether subrogation is legally enforceable depends on the terms of your coverage and Georgia law. Types of coverage that may be entitled to reimbursement include Medicare, Medicaid, self-funded ERISA plans, benefits paid pursuant to CHAMPUS, state health care plans, etc. This list is neither exhaustive, nor exclusive.

Importantly, Georgia follows the “made whole” doctrine.  This doctrine prohibits subrogation by insurance companies that have made medical payments unless the injured party has been made whole, meaning fully compensated for the personal injuries sustained, which includes all economic and noneconomic losses.  See O.C.G.A. § 33-24-56.1.   The made whole doctrine thus can limit a health insurance provider’s right to reimbursement.

For example, with Medicare and Medicaid, O.C.G.A. § 49-4-149 provides a statutory right of reimbursement to the extent of the reasonable value of medical assistance paid.  The extent of reimbursement, however, may be subject to a pro rata reduction for attorney’s fees and expenses of litigation incurred by the injured party having to bring the claim in the first place.  O.C.G.A. § 33-24-56.1.  What this means is that the reimbursement costs for the benefits the injured party received are lessened by attorney’s costs.  Thus, upon resolution, only a reduced amount of benefits need be paid back to Medicare or Medicaid by the injured party.

Some health insurance coverage, on the other hand, can supersede state law and therefore may not be subject to the made whole doctrine.  A self-funded ERISA plan is an example of one such health insurance plan.  These are employee benefit plans usually provided by large companies which are governed by federal law.  Consequently, these plans are not subject to equitable principles provided for by state law, such as the made whole doctrine.   U.S. Airways, Inc. v. McCutchen, 569 U.S. 88, 133 S.Ct. 1537 (2013).  What this means is that the injured party must pay back the full cost of benefits received, even if the injured party has not received full compensation for all economic and noneconomic losses.   Thus, you want to consult an attorney about the nuances of subrogation.

The consequence of an enforceable subrogation claim is that it requires the injured party to pay a portion of their settlement proceeds back to their health insurance provider.  This obligation in turn can reduce the amount of recovery that the injured party receives.  Thus, a seasoned attorney would know to consider any and all enforceable rights of reimbursement when negotiating a settlement, to ensure their client is fully compensated and all obligations or reimbursement are covered.

Subrogation as it relates to the reimbursement of medical or other benefits paid as the result of a personal injury claim can be one of the most understated aspects of a personal injury case.   Not many people think that after winning a settlement that they will have to pay back their health insurance for the treatment that they covered.  You pay monthly for your health insurance and yet, upon settling a personal injury case, your health insurance is asking for you to pay some of that settlement to them.  It is for this very reason that it is important to hire knowledgeable attorneys who can navigate the complexities of subrogation and rights or reimbursement. Finch McCranie, LLP is one of the longest-standing personal injury firms in metro Atlanta with over 50 years of experience.  Give us a call today for your free consultation at (404) 658-9070.

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