Learn about who pays for your medical bills after an accident that wasn’t your fault
Subrogation, in the context of personal injury cases, is the manner in which it’s determined who pays for an injured party’s medical treatment and how much they pay for it.
When someone goes to their doctor after an accident, they typically use some form of health insurance. When they do, their health insurance policy is paying the medical provider according to an agreed upon rate for those medical services. For example, a medical provider may charge $2,000 for an MRI, but the agreement in place with the patient’s health insurance means that the health insurance company only has to pay $800 for the MRI.
In a car accident case, the claim against the at-fault driver’s auto insurance company will be based on the full billing amount ($2,000). But at the end of the case, the health insurance may try to get the $800 they paid back from the personal injury settlement, which means the client gets to keep less of the final settlement.
There are many different types of liens and subrogation claims to contend with in personal injury cases. While they are usually in the form of health insurance subrogation claims and hospital liens, there are others worth understanding.
The ultimate goal of a personal injury attorney facing any subrogation issue is to reduce the lien or subrogation claim and help the client walk retain as much of the settlement as possible from their claim.
Personal injury claims attract a great deal of attention from medical providers and health insurance companies who all want to get a piece of the settlement pie. Managing subrogation claims effectively makes a huge difference in the final settlement for our clients.
Subrogation law and general insurance policies
In Georgia, the “Made Whole Doctrine” (O.C.G.A. § 33-24-56.1) limits the circumstances in which a health insurance company who paid out on medical treatment for a client’s injuries can subrogate from the personal injury claim. This is a complicated area of law but there are a few basic principles that can help reduce or eliminate subrogation claims against a client’s case.
Georgia’s Made Whole Doctrine states that a benefit provider (health insurance, generally) may only recover from a third-party claim (such as a client’s personal injury settlement) if the amount of the recovery exceeds the sum of all economic and non-economic losses. This essentially means that if a client has any ongoing medical issues or pain whatsoever, the insurance company is not entitled to subrogate anything from that client’s case.
In many cases, our personal injury attorneys can show ongoing damages, however minimal, which would be sufficient to eliminate or dramatically reduce a subrogation claim. While there may be a strong case to show that the health insurance policy has no rights to subrogation, it’s often a best practice to settle for a few hundred dollars in order to get a release of the subrogation claim from the health insurance so they can’t continue to pursue the client on the subrogation claim. There are some realities about how this applies depending on what type of benefit provider is claiming subrogation rights.
In the instance of general insurance policies, they are almost completely helpless against the Made Whole Doctrine. This includes policies from employers which are not ERISA (more on this below) and are simply insurance policies contracted through major providers as well as marketplace policies and subsidized policies like Ambetter or Amerigroup that are not Medicaid.
Subrogation claims and ERISA policies
ERISA policies are a completely different situation. They are formed under the federal Employee Retirement Income Security Act of 1974 and they “preempt” the Made Whole Doctrine, which is state law. ERISA policies are complicated and fighting them is both tedious and time-consuming.
The general rule is that if they are a legitimate self-funded ERISA policy, they have a right to subrogate most or all of the benefits they paid out. ERISA policies have greater rights to subrogation because they are “self-funded.” ERISA policies are exclusively offered by employers and are funded entirely by the premiums of the members (employees) paying into it.
General insurance policies offered to the public (or sometimes contracted through employers) are able to more effectively absorb losses because they’re funded by premiums from people all over the state or country. However, a business which has 100 employees on an ERISA policy can only absorb losses (medical expenses paid by the policy for injuries or illnesses of a member employee) across the premiums being paid by those 100 employees.
It’s important to note that although there are several ways to fight against a subrogation claim from an ERISA policy, it most often will not result in a complete avoidance of the subrogation claim. There are attorneys who represent the ERISA policy who litigate these policies on a daily basis and, while they usually try to avoid litigation, they are likely not willing to completely walk away from a claim.
That said, finding issues with the legitimacy of the policy or the contractual language of the plan can help the ERISA policy attorneys justify a settlement of far less than the original subrogation claim.
At the end of the day, we want to help a client retain as much of their settlement as possible, and any reduction on an ERISA claim is a success.
Hospital and physician liens
Hospital liens are extremely common with personal injury cases. Hospitals often try to recover their full billing charges from personal injury claims instead of accepting the lesser agreed rate from a client’s health insurance — and unfortunately there is no statutory provision preventing them from doing so.
In fact, Georgia law (O.C.G.A. § 44-14-470) grants hospitals the right to assert a lien against a personal injury claim without making mention of cases where health insurance coverage is available. While there are certain time limits and procedural policies that must be followed in order to perfect such a lien, hospitals in this area are very good at identifying potential personal injury claims and making sure they follow those time limits and procedures.
When the lien is legitimately asserted, the question is then whether or not the facility will be willing to reduce the lien. The answer usually is “No.” Hospitals very seldom will reduce, except occasionally if the settlement is simply so low that no one would get anything if they didn’t.
It is always better for a client if the hospital processes their billing through their health insurance and, occasionally, the client can make that happen with enough persistent calls to the hospital billing department. Most often, however, the hospital lien will have to be paid and it likely will be reduced very little, if at all.
Medical treatment liens
Treatment liens are liens that the personal injury attorney signs so that a client can receive medical treatment when they don’t have health insurance. While these are never the best solution, they are sometimes necessary and can be extremely helpful to a client who otherwise has no way of obtaining or paying for medical treatment.
One important thing to consider with such liens is the reputation of the medical provider. There are many medical providers that are willing to treat a client under a letter of protection — or a lien or funding agreement — but are only looking to make a lot of money off a client’s case and will engage in rampant, overpriced, ineffective, or unnecessary treatment of a client.
While we can never direct a client’s medical treatment (nor would we want to), we make it a priority to talk to every client about the potential dangers of treating with a provider with a bad reputation in the area.
While a treatment lien may sound idyllic, the greatest downside is that the medical provider will have to be paid back at their full billing rate at the end of the case. That is the condition of the lien and, while they may reduce their total lien somewhat, the client will always end up paying more for treatment received on a treatment lien than they would for treatment paid through a health insurance provider.
Subrogation and auto insurance “Med Pay” policies
Medical payments (Med Pay) policies through a client’s own auto insurance policy are also subject to Georgia’s Made Whole Doctrine. Med Pay policies are usually very small – about $5,000 typically. Most treatment from a serious auto collision will amount to far more than that.
Additionally, Med Pay usually pays out at the full billing rate, meaning that if a medical provider charges $2,000 for an MRI, the Med Pay policy will pay them the full $2,000 because they don’t have an agreed rate like a health insurance policy does.
However, because a Med Pay policy is used over the course of a claim, their subrogation rights are similar to a general insurance policy under the Made Whole Doctrine. As such, Med Pay insurers often don’t have to be paid back or they will settle for a fraction of their initial subrogation claim. But because Med Pay is through a client’s own auto insurance, the client’s UM/UIM coverage may be contractually entitled to a setoff. This means that if there is a UM/UIM settlement with the client’s carrier for $50,000, the carrier may only have to pay $45,000 of the settlement due to the “setoff” from the $5,000 in Med Pay they already paid.
Personal injury subrogation and federal program liens
Medicare is a federally administered program. As such, they have a statutory lien on the proceeds of any personal injury claim related to the treatment paid for by Medicare (42 U.S.C. § 1395). Unlike the statutory hospital Lien in Georgia, which is enforceable only against the personal injury claim itself, a Medicare lien is enforceable against almost everyone and everything related to the claim — including the injured party, the at-fault party, the at-fault insurer, and the injured party’s attorney.
As such, it’s imperative to make sure that any Medicare liens are fully addressed and satisfied in the settlement. At the time of the settlement, a reduction can be requested on the Medicare lien. If the settlement is low, Medicare will sometimes reduce to account for attorney’s fees and to make sure that the client gets something out of the settlement as well. But as Medicare is federally established, they must be notified and their claim must be satisfied.
While Medicaid is also a federal program, unlike Medicare it is administered by the state through the Georgia Department of Community Health. Similar to Medicare though, Medicaid also isn’t subject to the Made Whole Doctrine. So again, the attorney is responsible for contacting Medicaid and ensuring that any lien they have is addressed. They will generally reduce their liens as a matter of public policy in cases where the settlement is low.
One important exception is that Medicaid may only subrogate from settlement funds specifically allotted to compensation for medical expenses. While this doesn’t come up often, it can become a very important legal issue.
In Georgia, a child has no legal right to make a claim for their own medical expenses as that claim rests with the parents. If non-economic claims (pain and suffering, not medical damages) are being pursued against the liability carrier on behalf of a minor child, any settlement on those non-economic damages would not be subject to subrogation by Medicaid. While this is a rare circumstance, it can become important when trying to help a client retain their maximum settlement value at the close of a case.
As a federal program, TRICARE follows much the same rules as Medicare and Medicaid. Attorneys are required to contact them and verify whether they will be asserting a claim and they have a statutory lien on any personal injury claim related to the treatment on which they paid out under 42 U.S.C. § 2651.
Further, as a program under federal law, TRICARe liens are not subject to Georgia’s Made Whole Doctrine. TRICARE normally becomes involved when a client is an active service member, veteran or a family member under that coverage. Of all of the federal organizations which provide medical benefits, the VA (which often is the treating medical provider) and TRICARE are 2 of the most cumbersome and tedious government organizations that can take enormous amounts of time to respond to requests or queries.
As with Medicare and Medicaid, TRICARE will usually reduce a subrogation claim if not doing so would cause an undue burden on a client due to a low settlement.
Workers’ compensation subrogation
Under Georgia law (O.C.G.A. § 34-9-11.1(b)), an employer may seek reimbursement for a workers’ compensation claim. However, they are still subject to the state’s Made Whole Doctrine and cannot recover if a claimant hasn’t been fully compensated.
Many personal injury firms don’t handle workers’ compensation matters and will often refer out a workers’ compensation dispute to another firm. When it’s time for the client to settle the workers’ compensation portion of the claim (which is normally before the personal injury claim due to the shorter time limitations on a workers’ compensation claim), the personal injury firm will follow back up with the client and pursue the personal injury claim from there.
Often, the releases proposed by the employer in the workers’ compensation claim will have expansive terms that can damage or even eliminate a client’s personal injury claim. The release can also have terms which speak to the rights of the employer to subrogate from other (personal injury) claims, meaning a client could end up being responsible for repaying more than they otherwise would be if the release isn’t carefully reviewed.
Further, if an injured worker was a federal employee of some sort, the workers’ compensation claim may arise under separate federal law which is not subject to Georgia’s Made Whole Doctrine.
How an experienced Georgia personal injury attorney can maximize your final settlement
Subrogation is a confusing and complicated legal area which often has as many grey areas as definite rules. It is incredibly important to hire an attorney who fully understands these issues and can help the client navigate them effectively when settling. Reducing or eliminating subrogation claims can make an enormous difference in what the client receives.
In one case with our office, a $50,000 subrogation claim was reduced down to $500, which meant that the client kept $49,500 they otherwise would’ve lost to a subrogation claim.
Understanding these issues allows us to fight effectively so that our client’s keep more of their settlement instead of losing it to greedy medical providers and insurance companies.
If you are receiving medical treatment due to an accident and have any questions about these issues, we would be happy to help. Contact Scholle Law to set up a time to talk to one of our experienced attorneys. Your first consultation is free.