Health Insurance Subrogation

Subrogation Rights & Liens
Did you know that the federal and state government, as well as health insurance companies and hospitals, may have the right to assert a lien against any personal injury settlement you may receive? The insurance company has the right to be reimbursed for any money they paid on your behalf when you recover money from an at-fault party. The insurance company can file a lien against your settlement proceeds and demand repayment. When the insurance company asserts a lien against your settlement, this process is known as subrogation. Some subrogation liens are statutory or contractual in nature.

Statutory Liens
Legislation has mandated that some government insurers, such as Medicare, Medicaid, TRICARE (governmental health care program which covers active and retired military personnel and their families), ERISA health insurance plans, and the Worker’s Compensation Commission, be reimbursed for the payments they made on your behalf when you recover from an at-fault party. In fact, you, your attorney, or other representative, may be obligated to notify the insurer of your claim to recover a settlement from your injuries. Each government agency has different rights when it comes to placing a lien against your settlement.
Medicare is entitled to recover any money if the “service is reimbursable under Medicare rules, Medicare may pay conditionally, subject to later recovery if there is a subsequent settlement, judgment, award, or other payment. When a case settles, the Benefits Coordination & Recovery Center (BCRC) issues a formal demand letter advising the beneficiary and his/her attorney of its primary payment responsibility. This letter includes: 1) a summary of conditional payments made by Medicare; 2) the total demand amount; and 3) the information on applicable waiver and administrative appeal rights.
Medicare beneficiaries, through their attorney or other representatives, are obligated to notify Medicare when a claim is made against an alleged tortfeasor with liability insurance (including self-insurance), no-fault insurance, or against Workers’ Compensation. The obligation is fulfilled once you notify the BCRC, cms.gov.

Employee Retirement Income and Security Act (ERISA) plans are benefit plans, which includes health insurance, which are provided by, and funded by, private-sector employers. In North Carolina, personal injury victims have certain protections from NC insurance laws due to the prohibition of subrogation clauses in privately funded health insurance policies. This means privately funded health insurance policies will not be able to assert a lien from your personal injury recovery. However, ERISA plans are governed by federal law and not North Carolina law. Any insurance coverage under an ERISA plan is subject to reimbursement for all medical expenses paid for treatment related to your personal injury claim.
If you are a teacher or other state employee in North Carolina, the State Health Plan for Teachers and State Employees (SEHP) will most likely assert a lien against any personal injury settlement. Unlike other lien requirements, there is no notice requirement; it is an automatic lien. It is important to note that the SEHP cannot recover more than 50% of the net settlement. For example, if you receive a settlement, and $100,000 is your net proceeds after all attorney’s fees and expenses are deducted, the SEHP cannot recover more than $50,000 from you.

A Workman’s Compensation lien may be asserted if you are injured in a work-related accident, and your medical bills and/or lost wages have been paid through the state's workers' compensation fund. In NC, a Superior Court Judge can reduce, and even eliminate, a worker’s comp lien once there is a final settlement agreement between you and the responsible party. Worker's compensation laws vary between the states, so it's important to check the insurance carrier’s subrogation clauses to see how this will affect your settlement. Some statutory liens may provide for the insurer’s right to recover all or a portion of the proceeds from your personal injury claim.

Contractually Required Subrogation

Insurance policies have subrogation right clauses which allow the insurance company to assert its own claim against the at-fault party. Individual medical providers, such as hospitals, doctors, and emergency/medical transport, also may be able to assert a lien against your personal injury settlement. It is not uncommon for hospitals or other medical providers to have you sign a lien letter when the provider believes a third-party may be liable for the costs of your medical treatment.

Do You Have to Pay the Lien?
An attorney is required to disburse settlement proceeds in accordance with your instructions; however, an attorney is required to pay all statutory liens, and those liens which a medical provider has properly perfected. For a lien to be properly perfected, the medical provider must: (1) furnish all medical record requests to the plaintiff or plaintiff’s attorney free of charge; (2) furnish all medical bill requests to the plaintiff or plaintiff’s attorney free of charge; and (3) must give an affirmative written notice of the lien to either the plaintiff or the plaintiff’s attorney.
You are not required to pay the medical provider from your settlement proceeds if the medical provider fails to comply with any of the requirements. There may also be a statute of limitations regarding the amount of time a medical provider can collect money you received from a settlement. N.C.G.S. §§44-49, 44-50, and 44-50.1

Negotiating Liens
In many cases, the amount of a lien can be negotiated, resulting in a substantial reduction to fully satisfy the lien. Some liens, such as statutory liens, may have a cap on the amount of the reduction. Additionally, some liens may exceed the amount of your settlement proceeds. There are also occasions when the amount of the asserted lien is in dispute. When that occurs, your attorney should set aside the amount of the asserted lien until the dispute is resolved. An attorney may be personally liable for certain liens which are not paid.

Over the years liens have become increasingly important in personal injury cases.  With insurance carriers becoming even more conservative in their settlement offers, properly handing liens has never been more important in securing the most money for your client.  A great settlement or judgment is worthless if the entire amount is used to pay back an insurance lien.  Contact us today to speak with a lawyer who can discuss your case.  There is no fee for an initial consultation.