By: Roger D. Horgan
A careless person or business causes an accident. The accident leads to injuries and medical expenses. An insurance company or other type of health plan will pay expenses for the victim. But then seeks reimbursement if the victim recovers money. Certainly, the party that pays the medical expenses should be made whole every bit as much as the victim who suffers the injuries. What could be simpler?
However, health insurers pay medical expenses that arise from accidents with and without someone at fault. In most situations there is no expectation of repayment. Nevertheless, virtually every health plan includes language permitting them to recover what they have paid in cases where the insured obtains a recovery from a negligent party.
What happens in the situation where the person at fault has no assets, no insurance, or inadequate insurance? Shouldn’t the law require the available funds to be divided evenly between the accident victim and the health insurer? What happens when the case against the negligent party is not perfect, and the situation calls for a compromise? Is the health insurer compelled to join in the settlement of the case?
Generally speaking, the answer to these questions is no.
The primary example of this lack of equity is seen in the case of self-funded health plans established by employers. Most of these are written with language which permits the plan to receive 100% of what it has paid out. This is true whether or not the accident victim recovers any money. The insurers are not even required to reduce their claims to account for the costs of litigation, including attorney’s fees. The courts enforce that language literally, whether or not doing so will leave the accident victim without any compensation.
What about when the accident occurs during the course and scope of employment? If a truck driver is injured by the negligence of another driver, his employer will pay workers’ compensation benefits. The payment of those benefits creates a lien against the negligent driver. The employer is given first preference in recovery of whatever funds are available. The injured party (the employee), may be left with no recovery at all.
Liens arising from payment of medical expenses by Medicare, Medicaid, and private insurance plans also create similar problems.
There is no perfect answer to the problems created by liens and subrogation, but we handle them on a case-by-case basis. We recommend purchasing as much underinsured motorist coverage as possible in your automobile insurance policy. Purchasing private disability policies may also provide relief.
Abes Baumann and other plaintiffs’ attorneys, fight the battle within the battle. We pursue every legitimate avenue to reduce or eliminate liens and undertake tough negotiations to obtain reductions or waivers of the liens where possible. Despite the lopsided playing field, we may be able to resolve liens in a manner that is acceptable to our clients and the lienholders alike. If you find yourself in a similar situation, please call Abes Baumann for advice.