What is a subrogation interest and why should I care about that?
If you have an injury that was caused by negligent medical care, a successful lawsuit about that injury will almost always give rise to what is called a “subrogation interest” or “subrogation lien.” If you have health insurance, either through a private company (i.e., Cigna, Blue Cross, etc.) or through federal programs (i.e., Medicare, Medicaid, or other state-funded plans), a subrogation lein is almost a certainty. Therefore, as a medical malpractice plaintiff, you need to understand what these interests are and how they can affect your claim.
Whatever health insurance coverage you have, there is a provision somewhere in your contract for insurance (or in the federal law) which basically says this: We the insurer are going to pay for the medical care you receive. But, if you find out that you needed medical care as a result of an injury caused by someone else’s negligence, and we paid for any of that care, we want to be paid back in the event you receive money from a lawsuit against the person who caused your injury. In other words, if you make a claim and get a settlement, you have to pay us back for any claims we paid on your behalf.
In private policies, this language can be found in a section of the policy usually titled “Third Party Liability.” For Medicare, Medicaid, and other federally funded or state-funded health programs, this requirement is actually found in the federal and state laws.
Am I obligated to tell my insurer that someone else caused my injuries?
YES! You absolutely have that obligation. Your insurance policy (or the applicable laws) specifically tells you that notifying the insurer in the event you are injured by another person’s negligence is YOUR RESPONSIBILITY. If you are represented by a lawyer, they should handle this for you.
If you fail to do so, you can be sued by the insurer. Your lawyers and the defendants’ lawyers will probably take an interest in how you handle this, because the health insurance company can sue them as well, for their part in failing to protect the rights of a subrogation lien holder. This means that the attorneys on both sides need to understand how subrogation works, and how to protect your interests to make sure that you cannot be sued later for failing to meet your obligations.
How will my subrogation liens be handled?
Different lawyers handle these issues in different ways. Sometimes your lawyer will hire another lawyer to handle these liens, and sometimes your lawyer can handle them without hiring another lawyer. You need to be sure you ask your lawyer what their practice is, and whether or not you will be charged additional fees or costs in conjunction with getting your liens resolved.
For whoever handles your liens, the process is essentially this:
- Health insurance providers are identified from information you provide, as well as from your medical records.
- Every insurer who paid any claims or is listed anywhere in your files will be contacted and notified of pending litigation involving you, their insured.
- Each insurer provides a list of all paid claims from the time period surrounding your injuries. Periodically throughout the course of litigation, your insurers may be asked to provide updated listings of paid claims.
- When the case is nearing resolution, the amount of your liens is considered, so that you can make a better decision about whether any potential settlement offer will be satisfactory to you.
- Your attorney will review the itemized list of paid claims, and notify the insurer which claims were related to the injury that gave rise to your lawsuit, and which claims were unrelated.
- Based on that information, your lien amount (the amount you have to pay back to the insurer after your settlement) may be adjusted to subtract out the claims that were not caused by malpractice.
- Additional discounts may then be negotiated, such as to account for attorneys’ fees. In other words, your attorney should ask the lien holder to discount their lien amount based on the fact that you had to pay attorneys’ fees to get your settlement, and the insurer did not have to do anything at all–the money is just coming to them by virtue of the work your lawyers did, and for which you paid.
- Once a final lien amount is reached, reflecting all discounts and adjustments that can be obtained for you, it must be paid from your settlement proceeds before your funds are disbursed to you. You may be able to receive some of your settlement money, but the lawyers will be required to hold back enough money to pay the liens, and will be required to keep that money in trust until the liens are resolved. Only then will they be able to refund/disburse back to you any amount not needed to pay liens because of discounts that may be negotiated for you.
Because you cannot get your settlement proceeds until your liens have been satisfied, it will become very important to you to know that your attorneys have a handle on what to do and how to get your liens resolved as soon as possible. Failure to handle liens in a timely way can result in a situation where your case has concluded, but your money is tied up and you cannot have it because liens are unresolved.
Be aware that Medicare and Medicaid sometimes take a very long time to provide a final settlement amount that they will accept, so it is extremely important to initiate the lien resolution process EARLY in the litigation. Notifying the insurers should be among the very first things your attorneys do after filing your lawsuit. Some states require that they receive notice of your claim within days of the filing of your claim–and if you fail to provide timely notice, you can be denied the benefit of any discounts. If you fail to provide any notice to them, you can also be sued. Experienced medical malpractice lawyers (or subrogation lawyers, if retained on your behalf) can usually negotiate some sort of discount for your liens. At Burg Simpson, we will have a plan in place for handling your liens, so that you will not have to worry about these issues.