Most health insurance plans include a Subrogation Clause that allows them to recover any money that was paid toward healthcare expenses that resulted from injuries or an illness that were caused by a negligent third party.

Such examples could be related to an auto accident, injury on someone’s property, malpractice, product defect, dog bite, slip and fall or any other type of injury where a third party is deemed to be liable.

 An example of how subrogation would work

You are involved in an auto accident, caused by the other driver, and you receive substantial injuries that render you unable to work while you recover.

Because of your injuries, you incur bills from numerous different medical providers and facilities; from hospital and ambulance charges to lab and imaging services to physical therapy and medical supplies. All of these claims are billed to and paid for by your health insurance carrier.

Since your injuries are due to no fault of your own, you file suit against the negligent third party in an attempt to be compensated for your pain, suffering, loss wages etc.  

Your case is finally settled and your health insurance carrier, based on the Subrogation Clause, is entitled to be reimbursed for all, or a portion, of what they paid out for the accident related medical expenses that were incurred. Most Attorneys will build this into the settlement.    

So how does your health carrier know that your care was due to a negligent third party?

In a lot of cases, especially for severe injuries, it is evident that an accident has occurred and the hospital, ambulance and medical records will fully support this.

What if the accident only resulted in relatively minor injuries?

The health carrier will still subrogate. If the health carrier suspects that your condition may be related to an accident of any kind, they will ask you at the time of treatment to provide detail on how the injury occurred. They may also send you a letter asking you again about the injury.

Real world example

I decided to join this get fit challenge and during the course of doing more than I should have, I hurt my knee. By the next morning my knee was swollen so I decided to have it looked at by my doctor. He asked and I explained how it happened. After giving me the side eye and telling me that walking - at my age- would be much more beneficial, I was released with only a minor soft tissue injury.

 About two weeks later, I received a letter in the mail from my health carrier asking, again, how the injury occurred in detail and by signature I acknowledged that the information given herein is true and correct and that I authorize my plan to verify any information contained in the document. Make no mistake, your health insurance carrier will ask, and if not satisfied, they will pursue it.

 You might ask why not just bill the third party up-front for all related claims?

The reason why this does not usually happen is because it may take years for a case to be investigated, litigated and the proceeds disbursed. It would be unreasonable for providers to wait for payment while the case is settled.

Besides, you want to have full access to the providers that can help get you well without having to worry about large overdue bills.


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