What Is Subrogation in Health Insurance?

Most accident victims who suffer injury because of another party’s negligence are aware of their right to collect compensation from the at-fault party for the damages incurred. However, most victims are taken by surprise when their own health insurance companies invoke their right to subrogation and seek reimbursement, from the victim’s settlement, for monies paid to cover the victim’s medical expenses. 

If you are suffering injuries and financial losses from an accident caused by someone else’s recklessness, contact an Atlanta car accident lawyer to pursue compensation and protect yourself from potentially unfair subrogation claims. 

What does Subrogation Mean?

To “subrogate” is “to put in the place of another.” Subrogation is the act of substituting one thing or entity with another thing or entity.

What Is Subrogation in Health Insurance?

Subrogation rights allow your insurance company to substitute itself for you and seek compensation from the party whose negligence caused your coverage-requiring injuries. When you pursue that compensation yourself through a personal injury claim, the amount you collect above your coverage amount belongs to you, but the insurance company can file a subrogation claim to recoup the medical expenses they have already paid.

Often, insurance companies have a “health insurance lien” on the proceeds of your settlement, allowing them to collect reimbursement before you collect your settlement award.

Does My Insurance Company Sue Me through a Subrogation Claim?

Your insurance company is not suing you. They are seeking to claim compensation from the at-fault party. Because the company has already paid your medical expenses, their reimbursement comes from the settlement the at-fault party pays you. The insurance company again “stands in your shoes” to collect.

Why Are Insurance Companies Permitted to File Subrogation Claims?

By exercising their right to subrogation, insurance companies prevent you from receiving double compensation from your settlement and making a profit from your accident. 

While your personal injury case was pending, you received medical care covered by your insurance. If your insurance companies did not file subrogation claims after you received your settlement, you would ultimately be compensated for damages twice as you received services you did not pay for and then received compensation for those services.

Is There a Limit to How Much of My Settlement My Insurance Company Can Take?

When your insurance company collects reimbursement, it can only collect what it actually paid out. Often, medical care providers charge a higher fee for treatments or tests because insurance companies do not cover the full amount of those interventions. For example, you may be charged $2,000 for an intervention, but insurance only pays the provider $1,500. 

Through subrogation, your insurance company can only recover the $1,500 payout. Your settlement is also protected by the “made whole doctrine,” which limits how much insurance companies can be reimbursed. 

What Is the Made Whole Doctrine?

To be “made whole” means you have been restored to your pre-accident position: your medical bills, wage losses, and out-of-pocket expenses have been covered by your settlement. According to the made whole doctrine, when the at-fault party cannot cover all your accident-related damages, your insurance company cannot seek compensation from that party’s insurance until you have been made whole first.

For example, imagine an accident costs you $130,000 in damages. Your health insurance company pays out $30,000 in medical expenses. The at-fault party’s insurance only provides a $55,000 settlement. That settlement amount does not make you whole by covering your full damages. 

You can therefore invoke the made whole doctrine to protect your settlement against your insurer’s claim. 

Does the Made Whole Doctrine Always Provide Protection?

Many insurance companies include language in their policies and contracts, allowing them to overrule your invocation of the made whole doctrine. Often, policyholders sign these agreements without realizing they have opened themselves up to subrogation should they experience a serious personal injury case.

Further, while Georgia state laws codify the made whole doctrine, most private employers provide health insurance by private insurance companies, which are governed by federal laws, leaving victims unprotected by Georgia’s code. An experienced personal injury attorney is your best option for fighting against subrogation, especially in cases where the policy gives the insurance company protection or the company operates outside of Georgia’s laws. Your attorney may be able to find weaknesses in the policy language, show your case falls outside the parameters of the policy language, or use other cases as precedent for demonstrating the made whole doctrine is the default rule of all health insurance.

Can My Insurance Company Invoke Subrogation Rights if I Am Responsible for My Accident-Related Medical Needs?

Subrogation rights only allow insurance companies to seek reimbursement from an at-fault third party. When you bought insurance, you did so to cover your medical expenses. If you have to pay the insurance company back, there is no reason to buy insurance in the first place.

If you are at fault for an accident and your injuries, you have no one to sue, which means the insurance company that would “step in your shoes” has no one to sue either.

Do I Need a Lawyer to Handle Subrogation Claims?

Following an accident, it is always best to secure representation from a personal injury attorney who can not only negotiate a fair settlement from the at-fault party’s insurance but negotiate your insurance company’s subrogation claim. Personal injury and subrogation laws especially are complicated, and insurance companies have their own interests, not yours, as the priority.

And you do not have to worry about additional legal costs when securing representation. Your attorney knows that Georgia law requires subrogation claims to be lowered to cover your legal fees and will ensure this reduction occurs.

Getting the Legal Representation You Need Is Vital

After enduring the trauma of an accident, the pain of your injuries, and the medical and financial fallout, learning of your insurance company’s subrogation claim can be shocking, confusing, and discouraging. Fortunately, an experienced Atlanta car accident lawyer is ready and more than able to handle the claims, protect your settlement, and bring you some peace of mind. Simply contact us to schedule a free consultation.