In past postings, I have gone into some detail about how important it is to understand your insurance contract. Today I want to discuss one clause that may appear in your medical contract called subrogation.
What is subrogation you ask?
Well, unless you’ve been involved in an auto accident, or a lengthy litigation process, you probably are not aware of subrogation and the implications involved.
As simply as possible, subrogation is the legal process where your lawyer gets you a whole lot of money and the insurance company that paid your medical claims can step in and take your settlement away from you.
But let’s discuss this in the context of an employer-provided group medical insurance plan. Your medical plan may contain a subrogation clause, and you should be aware of it.
Let’s use an example of an auto accident in which you are injured in a non-job related auto accident, and the claim goes on for several years. All during the legal process your medical treatment is being paid by your employer group health plan. After three years you win, and you receive additional money for your pain-and-suffering. This is where subrogation suddenly becomes a big issue.
The medical plan has been paying your medical bills and they would like to get their money back. Your medical plan files with your attorney for subrogation against your pain and suffering settlement. They may get to go into your settlement and take back all the money they paid toward your medical claims, related to this accident.
I see this most commonly in one of two ways:
1) An employer calls me and says “Oh my God, some lawyer wants to see my Summary Plan Document, what do I do now?”
I ask if they have had an employee who’s been involved in an auto accident. When they say yes, I tell them the lawyer is looking for the subrogation clause in the medical insurance contract.
2) Or, I get a call from a covered client who tells me their lengthy court case is finalized, but the medical carrier just swooped in and took all of the settlement.
“Can they actually do that?”
I tell them yes; the insurance company can do that under the subrogation clause.
This is not meant to indict legal counsel because not every lawyer is aware of the implications of the subrogation clause in a medical contract.
I do want to point out the importance of understanding your insurance agreements, and not taking the cheapest option when your life and future may depend on it. Always try to find somebody who knows what they’re doing, has lots of experience, and actually cares about the outcome.
Note: I am not an attorney, I am not referring to any particular case, nor am I dispensing legal advice, I am advising you should obtain qualified advice in all matters.