Skip to main content

Am I legally obligated to inform my health insurance policy about my car accident settlement?

Palo Alto, CA |

I was recently in a car accident that required medical intervention. My medical bills were mostly paid for by my employee-provided ERISA health insurance, and I've learned that they may be entitled to money from any auto insurance settlement. Am I legally obligated to inform my health insurance company about a settlement? How do they find out about a settlement?

+ Read More

Attorney answers 8


In many cases the Insurance company will submit a demand for payment, or claim the existence of a "lien" on your right to recover an automobile settlement. In other cases, he health insurance company will not actively pursue the matter. Many such insurance policies have clauses stating that the insurance company has a right to demand reimbursement, and some say that you are supposed to let the insurance company know about claim, after which the company will handle any claim according to its own process. Many of these rights of reimbursement are either never asserted, and if asserted, the rights are usually negotiated down based upon the attorneys fees and costs incurred in making the recovery in the automobile case. Every attorney I know will handle the resolution of the health insurance claim as part of your automobile claim and settlement. I encourage you to retain an experienced personal injury attorney, and request that said law firm handle your auto claim and the issue related to your health insurance. It will be worth it to you.

Brad C. Brereton

In all cases it is advisable to consult an experienced attorney. Nothing stated herein is intended as legal advice for your specific situation, and you should use the information provided solely for the purpose of choosing an experienced attorney for the problems presented.


ERISA plans are entitled to recovery from a third party liablity settlement based on plan documentation. Under the plan you do have an obligation to notify them of settlement. The thing with ERISA self-funded plans is that they can recover 100% of the money they paid out. Therefore it is in your best interest to notify them early and negotiate a settlement early on so you're not short on the back end. Did you have an attorney handling this claim?

I am licensed in California, therefore, my answers are based on general prinicpals of law or California law, which may not be applicable in your jurisdiction. Answers posted to Avvo are for general information only. Do not conclusively rely on any information posted online when deciding what to do about your case. Every case depends is fact dependent, and responses are limited to and is based on the information you posted. No attorney-client relationship shall be created through the use reading of this response on Avvo. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information in this response.



I had originally thought to negotiate a settlement myself because the police officer wrote a report stating that the other driver was 100% at fault, but now the insurance company is trying to argue that I am partially at fault. Now that I know that there's an additional negotiation involved with the health insurance company, I will probably contact a local attorney. It's a tough case because the medical bills alone are close to 75% of the policy limits.

Sean Michael Patrick

Sean Michael Patrick


I know. These cases get really complex really quickly especially when negotiating with an ERISA claim. I have actually negotiated a number of these cases successfully. I am in Sacramento, but routinely handle cases throughout California.


Most plans have language that require you to notify them. Failure to do so can constitute a breach of contract. Plans hire companies to handle liens/reimbursements. They will contact you and try to get the info directly. They could fine out if your lawyer requested medical bills or records from providers. There is also a nationwide database of claims, and most ins cos will report claims to the database. If the health ins colector searches the database, they could find out about your pending case. they then have the info as to who your lawyer is/was, who the deft's ins co is/was, claim numbers, and sometimes even the settlement amount. You should talk to your current/former atty about it.


It is highly likely that they will know about the personal injury case and will assert a lien on your recovery (especially with an ERISA health plan). A good personal injury attorney will assist you in trying to negotiate the maximum reduction possible on this lien.

Nothing in this communication should be construed as creating an attorney client relationship. This is for informational purposes only. Attorney will take no action on your behalf unless and until a written retainer agreement is signed. There are strict time deadlines on filing claims and, as such, you are advised to consult with and retain an attorney immediately to file such claims timely or you will lose any right to recovery.


The short answer to you question: yes. The small print in the insurance policy requires that you notify them if you are making a 3rd party claim and get settlement. If you fail to notify them, they have the right to sue you - and if the policy is an ERISA policy, the lawsuit is Federal Court.

Your best course of action is to consult with a personal injury lawyer in your area.


Yes, you have a legal obligation to tell them. Your attorney has a legal obligation to tell them. The insurance company settling your claim has an obligation to tell them.

This participating Attorney does not warrant any information provided, nor are we creating an Attorney-Client relationship by providing said information to you on this site. Nothing contained herein is intended to constitute, offer, induce, promise, or contract of any kind. The content provided is presented as a courtesy to be used only for informational purposes and is not represented to be error free. The Law Offices of John N. Kitta makes no representations or warranties of any kind with respect to its answer to inquiries, and such representations and warranties are being expressly disclaimed. Given limited facts, we are attempting to share relevant information concerning this area of the law as a public service.


Yes, but a good lawyer can negotiate this down to ten cents on the dollar.

Only 29% Contingency Fee! Phone: 215-510-6755


ERISA insurance almost always subrogates against the recovery made by an employee when they have made payments because you were injured in an accident caused by another.

ERISA coverage is provided through your employer and may often be administered by an insurance carrier. Chances are your employer or coworkers know that you have been involved in an accident and have retained an attorney or are working on a settlement. Your employer has an incentive to make sure that the ERISA coverage administrator knows about your recovery, as repayment to ERISA through subrogation helps to keep your employer's medical expense costs down.

If you read your insurance policy given to you by your employer, you will see that you have obligated yourself legally to notify them and reimburse them. If you do not, you are subject to suit.

If you do not currently have an attorney, I suggest you retain one so that your ERISA lien and any other lien obligations etc. will be appropriately handled and not come back to bite you years down the road. Your attorney may be able to negotiate a reduction in the pay back to ERISA, although ERISA subrogation situations are often tougher than other types of medical insurance coverage to deal with. ERISA is generally governed by federal law and some of the State law subrogation defenses may not be available because the federal ERISA statute preempts state law.

Legal Disclaimer:

If this information has been helpful, please indicate below.

Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not 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 within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received.

This ans. does not create an attorney/client relationship.

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer