Subrogation: The Hidden Bandit
You purchased automobile insurance with medical coverage or you purchased health insurance. When you were injured in an accident that was someone else’s fault, you thought the insurer and health insurer would just pay your claims. The bad news is they are likely to request repayment of all or some of what they paid for you on your claims before you can recover a penny from whomever caused your injuries! So your premiums really purchased a loan.
Hidden in your policy (that’s the document you never read) is a clause which says that your automobile or health insurer has a right to be repaid all of the money it spent getting you better as a result of your injury. Further, they get paid by the at-fault party before you do. With heath insurance policies, the news is even worse. Some health insurers who are truly self-insured plans, have a right to be repaid 100% of the money they spent on your behalf. Other health insurers are subject to arguments that may cause them to reduce their claims. Automobile insurers are also subject to such arguments.
Automobile insurers attempt to avoid hardball negotiations with you or your lawyer by attempting to recover medical payments made on your behalf directly from the at-fault person’s insurer.
So what can you do? First, your lawyer can effectively negotiate and if necessary, litigate with your health insurance company and force them to accept an amount which is frequently less than 50% of what they paid on your behalf. This way you have the opportunity of recovering close to 100% of your medical bills, pay your lawyer, pay the insurer, and have some money left over.
Your knowledgeable lawyer can also force your automobile insurer to take a position which is more friendly to you and which puts more money in your pocket. This gets very complicated. In some instances, it requires litigation with the automobile insurer or at least, a separate hearing.
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