If you or a loved one were injured (or worse) in a personal injury case, wrongful death case, or car wreck case and have negotiated a settlement, you may be surprised when your health care or med-pay insurer sends you a notice that they are demanding reimbursement or repayment for the medical expenses they paid for your care. After all, the wreck or accident was not your fault so why doesn't the insurer go after the responsible party?
In many cases, your agreement with your health insurer (including Medicare and Medicaid) contained a subrogation clause so that in the event you are injured in an accident and file a claim for damages against the responsible party, they have a right to repayment for what they paid out. To be sure, your insurer has an obligation to pay for your care in most cases, but it also typically has a right to seek reimbursement by asserting a lien on whatever proceeds you receive from your claim or lawsuit.
Their reasoning is that they have a right to go after the liable party for what they were required to pay so you are, in effect, doing it for them. This includes reimbursement for expenses paid out of your med-pay provision in your auto policy if it is included as well as other medical insurance containing subrogation clauses. However, West Virginia law allows that med-pay reimbursement be reduced for pro-rata costs of collection.
The Made Whole Doctrine
There is a doctrine from common law whereby a person must be made whole before the subrogation rights of an insurer may be exercised. Under West Virginia law, in the absence of a valid contract or clear statutory law, this doctrine would apply so that the insured, or injured party, must be fully compensated before any lien or right of subrogation would arise. Under this reasoning, you can claim that your settlement did not fully compensate you based on the nature and extent of your injuries. For example, assume you suffered serious injuries ($100,000 in medical bills) but the responsible party only had a minimal liability policy of $25,000. If you lacked underinsured coverage, or it was also minimal, then you can certainly argue that you were not made whole and that the subrogation rights of the insurer cannot be exercised. Thus you may not have to repay the benefits paid on your behalf.
A court can hold a hearing to determine the “true value” of your claim. When ascertained, the court could determine that the settlement represented only a percentage of its true value. For instance, if the value of your claim was $10,000,000 but only settled for $100,000, then the settlement was only 10% of its true value. Accordingly, the subrogation amount would be 10% of the medical payments made, if any payments are required at all.
Negotiating with the Insurer
Most injury cases do not involve millions of dollars but your attorney can still assert that you may not have been made whole by your settlement. Factors such as the small liability limits of the defendant, your lack of underinsured coverage, contested liability, future medical expenses, multiple claimants and other factors may have contributed to the relatively small settlement. Also, what the insurer actually paid may be substantially less than what it is asserting.
In almost every case, we at Wolfe, White & Associates can negotiate with the insurer to reduce its lien so that you can save thousands or even tens of thousands of dollars based on the above factors. After all, it only counts if you get to keep it.
If you have a question about a car or truck wreck or personal injury settlement, give us a call. At Wolfe, White & Associates we know the law and how to help you minimize your subrogation repayment. Call us at 304-245-9097 for a free consultation.
Steven S. Wolfe