What is Subrogation and Reimbursement or "Why do I have to pay back my health Insurance company?"
All too often, in the course of settling personal injury claims, we are faced with this very common question from clients: "Why do I have to pay back my health insurance company?"
Of course, what we are talking about is the situation where somebody is involved in a car accident, or a premises liability accident, products liability claim, or the like, and some or all of their medical expenses have been paid by their health insurance (including Medicare or Medicaid). In these situations, if there is a monetary settlement paid by the "at fault" party (or their insurance), there is typically a requirement that any payments made by the health insurance of the injured person, for any medical care that is related to the injury claim, be paid back to the health insurance company out of the settlement money.
Although the basis for the repayment obligation is generally referred to as "subrogation", the fact of the matter is is that, more often than not, it is a claim for "reimbursement" and not "subrogation". Typically, if the repayment obligation is based upon the contractual language of the insurance policy itself, it is called "reimbursement". When the obligation is the result of a statute or even common law it is typically referred to as "subrogation". However, as far as the injured party, who is being forced to repay the money out of his settlement is concerned, it really does not matter what it is called.
The way it works is that your health insurance company (or Medicare/Medicaid, as the case may be) will often pay medical expenses which are submitted to them under your health insurance policy. If your case against the "at fault" party does not result in a monetary settlement, then you typically have no obligation to repay your health insurer for the sums they paid. However, if you do receive a monetary settlement than you are obligated to repay your health insurance company the amount that they paid out on your medical claims. The rationale for this is that, were you not required to repay them, you would receive a "double recovery" which the law does not allow. In other words, you will have recovered damages from the "at fault" party to pay for your medical bills, and you also have received the benefit of having those medical bills paid by your health insurer. This is not simply not allowed.
I have found that many clients feel this is unfair, and to some extent I can see their point. If they were smart enough, or practical enough, or just plain lucky enough to have and keep health insurance coverage, why shouldn't they get the monetary windfall which has now been created by that decision. Unfortunately, at least in Florida, that scenario is simply not supported by the current law.
Issues such as "subrogation" and "reimbursement" can be extremely complicated and confusing, and this article is no more than a general overview . This is particularly true when there is automobile insurance involved. This is one of the many reasons that you should seek the help of an experienced personal injury lawyer when faced with any possible injury claim.