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Why Do I Have To Pay Back My Health Insurance Out Of My Car Accident Settlement Money?

When the time comes to settle a Maryland car accident case, or when the judge or jury has returned the verdict, and the award is announced- many people take surprise at the fact that they are required under the terms of their health insurance policy to reimburse their healthcare provider for amounts that the insurance company paid for medical expenses related to the accident. The thought is that

      ...if the health insurance company has already paid it, why should I have to? 

The thought makes sense, but, the obligation to reimburse in these situations is clear and well recognized. The law calls this type of claim a subrogation claim. The concept is that, if one have a right to collect payment for medical bills from an at-fault party which one incurred as a result of the car accident, and your insurance company pays those bills for you, they in effect step into your shoes, and can raise that claim directly against the at-fault party. Now, health insurance companies are typically not going to get involved in every car accident case in Maryland. The most common scenario to protect this interest is to insert into the policy itself right to reimbursement clause. It is overwhelmingly likely that in your health insurance policy, and almost certainly if it's a policy that you've gotten as a result of your employment, there is a provision that dictates that as a condition of accepting benefits pursuant to that policy, you agree, on behalf of yourself and anyone insured under that policy, that

.....should a third party be determined to be at fault for causing you accidental injury for which your health insurance company pays some or all of the expenses, that you agree to pay them back.

The reality is that when someone starts a job, and gets employee introductory package with the insurance manual, they do not read it. It is unlikely that the HR representative that provides orientation for the new hires tells them that if they are involved in a accident, they will have to reimburse the health insurance if they get a settlement. It just doesn't come up. The concept comes as a shock to many who have done some detailed calculations about what they plan to do with their settlement money, but have neglected to take the health care lien into account. 

Beyond that basic premise, the law in this area can become complex. An experienced personal injury attorney with knowledge of the applicable rules regulations and laws can play a big role in maximizing your recovery in these situations. Most states, including Maryland, have enacted legislation that either attempts to preclude these claims altogether, or to limit the effect of these subrogation provisions. Many insurers take the  position that state legislation that limits their rights is not applicable under a federal legal doctrine called preemption. There are other judicially created or supported arguments that a skilled personal injury attorney can use in these situations, in an attempt to limit the amount the health insurance company seeks for reimbursement.

A surprising number of people that are the recipients of either Medicaid or Medicare benefits from the government consider those benefits to be private health insurance. Although such government provided and funded benefits are not considered traditional private health insurance, there are similar rules that apply to the rights of reimbursement for those entities. Medicare and Medicaid rights to recovery can be sophisticated, and are dealt with in another chapter of these legal guides. 

I’ve resolved hundreds of reimbursement claims for my clients over the years. I extend a no-cost, no-obligation case analysis and personal, confidential conference and strategy session to all prospective clients. Contact me today. 410 591 2835, or simply complete the online form at the bottom of the page.  

     -This article was updated by Eric Kirk on 10/3/20.