i am being sued from my car insurance.

Your insurer has the right to pursue you for the settlement proceeds to cover what they spent in medical bills. This is called a right of subrogation. If you have other debts you should consider filing bankruptcy which would be able to exempt your personal injury proceeds and eliminate your personal liability on the $4k the insurance company is wanting.

LEGAL DISCLAIMER
Mr. Larkin is licensed to practice law in CA and is located in San Diego. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Larkin strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case.

Your insurance carrier's right to reimbursement for medical payments depends on the insurance policy and general principles of insurance law. Many policies contain provisions which strenghten the carriers's ability to obtain reimbursement over general principles of insurance law. Under general insurance law, some cases have held that the right to subrogation does not arise until the insured has been made whole. You may wish to consult with an attorney to have the policy reviewed and to determine the validity of the claim for reimbursement.

In California, an insurer is entitled to reimbursement of its expenses if and after the insured is made whole. This can be changed by policy language, or under Federal law if governed by ERISA, so the kind of policy and what it says are critical matters. The question of whether the legal fees and expenses the insured incurs in obtaining the recovery (from which the insurer wants its money) must be taken into account in determing "wholeness" is presently under submission by the California Supreme Court, having been argued May 28th. (21st Century vs. Sup. Ct. (Quintana).) This was one of several class actions filed by insureds who received auto medical payments in San Diego Superior Court against several insurers, so you might already be in one of them. Talk to a lawyer there to get some specifics about what to do. Good luck.