What Is Subrogation and How Does It Affect Your Injury Settlement?
Subrogation is how insurance companies recover expenses they have paid. It affects your settlement because money owed comes out of it, leaving you with less that goes directly to you.
Working with a personal injury lawyer from Crandall & Pera Law, LLC could help you keep more of your compensation. Keep reading to learn more.
What is subrogation?
Subrogation allows insurance companies to seek reimbursement for medical bills and other expenses they have paid on your behalf. Some or all of their costs may come out of any personal injury settlement or verdict you receive in connection with the injury.
So, for example, say you are injured in a car accident, and your health insurance provider pays for $20,000 in medical care. Later, an at-fault party is found liable for the crash, and you receive a settlement of $60,000. This amount includes your medical expenses, as well as lost wages and compensation for pain and suffering. Your health insurer may have the legal right to seek reimbursement for some or all of its $20,000, leaving you with less than the full $60,000.
Subrogation essentially prevents victims from being doubly compensated. However, it can come as a surprise to some claimants. An injury attorney can help you plan for subrogation. There are also strategies a lawyer can use to protect more of your settlement.
How does subrogation work?
In most cases, insurance companies (and your lawyer) handle subrogation without your involvement. In fact, the subrogation meaning, by definition, is “the assumption by a third party (such as a second creditor or an insurance company) of another’s legal right to collect a debt or damages.”
In general, the process looks like this:
- You get injured in an accident. This could be an auto accident, a slip and fall, or even a workplace accident.
- You receive medical treatment, and an insurance provider pays for it.
- You file a claim against the liable party’s insurer for your injuries and losses.
- Your insurer and the at-fault party’s insurer work with one another to resolve your claim and the insurer’s subrogation claim. Your attorney can be part of these negotiations. Their job is to look out for your best interests and help you keep as much of your compensation as possible.
- You receive the remainder of your settlement. You may also receive reimbursement for insurance deductibles you paid.
If the party at fault for your injuries does not have insurance coverage, or their insurer will not settle, you can file a personal injury lawsuit, and the subrogation process will be a little different. If you go to trial and a jury decides your case, your insurers will have to wait for this to play out. They can then seek what they are owed from your verdict.
Which insurers can subrogate a settlement?
Basically, any insurance company that paid expenses on your behalf can file a subrogation claim to get its money back. This may include your:
- Auto insurance – If your auto insurer paid to have your vehicle repaired, it can collect those costs. Additionally, if you have a medical payments (MedPay) policy that covers any of your medical bills, it can recover those medical expenses.
- Health insurance – If you have health insurance (either purchased privately or through your employer), your provider can claim the cost of medical care it paid for after your accident.
- Workers’ compensation – If you suffered a work injury covered by workers’ comp and you also receive an injury settlement from a liable third party, your employer’s insurance company can seek repayment.
- Medicaid or Medicare – These government-run insurance programs will also look to recover medical bills they have paid.
Can every part of your settlement be subrogated?
Usually, insurance companies can only subrogate the part of your settlement that relates to their claim. So, your health insurance company can seek repayment for medical bills from the part of your settlement that compensated you for medical expenses. It generally cannot recover more than the law or policy allows, and settlement allocations may not control. Likewise, your auto insurer could get vehicle repair costs from your property damage compensation, but not from the part of your settlement that reimburses your lost wages.
Furthermore, private health insurers typically cannot dip into compensation you have received for future medical costs, as they have not paid these expenses.
Can you avoid subrogation?
In most cases, you cannot avoid subrogation if an insurance company is legitimately owed. But there are ways you can reduce the amount it takes.
First, in some cases, a private insurance company may be responsible for a portion of your attorney fees and court costs, and your lawyer could argue to have the subrogation amount reduced accordingly. Your attorney could also use other strategies, such as arguing that:
- You received an insufficient settlement amount, and the insurance company should lower its claim accordingly
- The insurance company is seeking reimbursement for medical expenses not related to your settlement
- The insurance company did not follow proper subrogation procedures
When should you speak with a lawyer?
Being proactive is the best way to protect your settlement from subrogation. If you or someone you love has suffered a personal injury, it is a good idea to speak with a lawyer as soon as you decide to seek compensation from an at-fault party.
An attorney can assist you with every stage of your case. This includes investigating your accident and gathering evidence to support your claim. Your lawyer will be part of insurance negotiations, helping you to secure the maximum settlement possible and protect it from subrogation as much as possible.
If you have not yet started the process of seeking financial recovery, do not delay. If you cannot get an insurance settlement and must file a lawsuit in civil court, your time to do so is limited by state law. According to Ohio Rev. Code § 2305.10, the statute of limitations for most personal injury cases is two years.
Discuss your case with Crandall & Pera Law, LLC today
Crandall & Pera Law, LLC has over 50 years of combined experience serving personal injury clients. We know how to handle subrogation claims and keep more money in your pocket.
Contact us today to learn more during a free initial consultation. We have offices in eight locations across Ohio and Kentucky and represent clients statewide.