Subrogation: What It Is and
Why You Need to Know About It

By Halley B. Lewis III, Firm Partner

      In automobile accident cases, our client's medical bills are covered initially by the PIP portion of their car insurance policies. This occurs by law, regardless of whether the client has available health insurance through another source. Sometimes the medical expenses exceed the available PIP benefits however, and other times the car insurance only pays a percentage of the bills. In other words, the clients can be left responsible for some of their medical expenses in most automobile accident cases, and are usually responsible for all of their medical expenses in any other type of case.

      In these situations, the client can't turn to available health insurance coverage to help pay the outstanding medical bills. Once this happens, the health insurance company is generally going to cooperate and pay the bills as they are incurred, but they are probably going to assert what is known as a "right of subrogation" against the client's personal injury claim. This right of subrogation is very important, and cannot be ignored when it comes time to negotiate or mediate a claim settlement.

      Subrogation means essentially that the health insurance carrier has the right to "stand in the client's shoes" and bring a claim against the negligent party who caused the client's injuries. The public policy behind this is that the negligent party should be responsible for paying the medical bills, not the health insurance company who had nothing to do with causing the client's injuries.

      Whenever a client settles a claim, they usually sign a final release which forever bars any further legal action against the negligent party in regard to that specific accident. By signing this release however, the client has also extinguished any rights that the health insurance company had to bring legal action against that party. Therefore, the health insurance company's claim is considered to be included in the claim brought by the client, and more importantly, their monetary recovery is included in the settlement money that the client receives from the negligent party.

      It is very important to realize when subrogation exists. If your personal injury claim is not handled by an attorney who is extremely knowledgeable in this area of the law, you might end up paying all of your settlement back to your health insurance company and releasing your right to future health insurance benefits! There are several legal steps that can be taken to avoid this unfortunate scenario, and Fonvielle Lewis Foote & Messer handles each claim on a case-by-case basis to make sure that everything possible is done to give our client the maximum benefit.