Subrogation – What Is it?
Clients are many times concerned how their medical and hospital bills will be paid from their accident case. Some medical providers will work with the attorneys and agree not to bill insurance or insist on payment from the patient until the case is settled. Like the attorney has to wait to be paid their fee at time of settlement of the client’s case, the medical providers may be willing to wait for settlement to be paid on their bill. This usually occurs where the attorney and the doctor, clinic or hospital have a working relationship over many years and the medical provider knows they can trust the attorney to be paid at settlement.
In other situations, the medical provider may not want to wait until settlement, particularly large hospitals and clinics, and will send the bills into collection if they are not promptly paid. In those situations, we usually encourage our clients to use their health insurance, if they have coverage, to pay for their medical and hospital charges, just like they would be using their insurance if they had not been in an accident at all and it was a regular medical or health issue for which they were getting medical attention. If the client does not have health insurance, they sometimes are directed to start making monthly payments to avoid the matter going into collection.
If the clients do have health insurance and their insurance company pays on their hospital and medical bills, the insurance company maintains what is called “subrogation rights,” and they are entitled to reimbursement at the time of settlement of the accident case. If you are ill and see a doctor and the medical provider bills your insurance, you are not obligated in that case to pay your health insurance company back. However, where it is a third party accident claim and the insurance company is paying your bills, under the contractual terms of the policy, you are obligated to reimburse the health insurance carrier for the payments made at the conclusion of the case. Both you and your lawyer have obligations to make sure that the insurance company is reimbursed at time of settlement. Many times, the health insurance carrier will send out a “letter of reservation” or “notice of subrogation rights” both to the client and the lawyer, detailing the amount of charges and the notice of reimbursement at time of settlement. This also includes governmental liens such as Medicare, Medicaid, Badger Care, Title XIX and other forms of governmental health benefits. Under Wisconsin law, the insurer is subrogated to the rights of the insured, Statutes, sec. 632.32 (4) (c). Jones v. Aetna Cas. & Surety Com. 567 N.W. 2d 904 (Court of Appeals 1997).
In some cases, particularly in a larger accident case where a person has been seriously injured and has medical bills that may run in the $25,000 to $100,000 range (or more), the attorney can argue to the health insurance carrier that the injured person has “not been made whole” from the amount of the accident settlement and that the health insurance company either has to significantly reduce their lien or remove their lien altogether. If there is a dispute about the insurance company reducing or removing their lien, there can actually be a court hearing on that issue, where the matter can be decided by the trial court. The leading case for this in Wisconsin is Rimes v. State Farm Mut. Auto Ins. Co., 316 N.W. 2d 348 (WI 1982).
You also need to check the terms of the plan itself to see if is it a self-funded ERISA plan or a non-ERISA plan. If a non-ERISA plan, you can argue the “Rimes-not made whole argument.” However, self-funded ERISA plans are not subject to the rule.
The issue of reimbursement to health insurance companies under the rights of subrogation and whether an argument can be made that the insurance company can be made to waive their lien is complicated enough that you should hire a personal injury lawyer to assist you in the settlement of your injury claim and to assist in helping negotiate with the health insurance company to have their lien reduced or completely waived, as allowed under Wisconsin law.
The laws of subrogation and how health insurance companies get reimbursed at settlement can be quite complex. Contact an experienced personal injury lawyer to help you with your case. Karp & Iancu, S.C. offer over 34 years of expert representation in personal injury matters.