Recently, I got a call from a nice man who was injured in an automobile collision. His injuries were significant and his medical bills were high. Fortunately, his health insurer paid most of the medical bills, because the person who hit him was uninsured. Unfortunately, this man didn’t have much “underinsured motorist” coverage on his own insurance policy. Because his injuries were significant and the collision was clearly not his fault, his own automobile insurer paid the entire amount of his policy benefits under his “underinsured motorist” coverage immediately.
It seemed that his claim was working out fine. His auto insurer agreed to pay him and he hadn’t even needed to hire an attorney. However, shortly after he got his check, he got a notice from his health insurer demanding that he repay all of the money the insurer paid for his medical bills and that he pay it from the money he got from his auto insurer! His health insurer had paid over $80,000 for his medical care and his auto insurer had only paid him $100,000 (because that was the amount of coverage he purchased). He wanted to know if this really meant he had to pay back his health insurer. Could his health insurer really leave him with less than $20,000– when he had a permanent injury?! Unfortunately, the answer is probably “yes.”
But, why is that? How can it be? The answer is “subrogation.” This is a legal term that refers to when one insurer or entity pays benefits for you that should ultimately be paid by someone else. It requires that, when the ultimately responsible party pays you, you have to pay back the insurer who “advanced the payment” on your behalf. In this scenario, it meant that his health insurer “advanced” the payment of his medical bills up front (because their insurance policy requires this), but then expected to get paid back when this man’s auto insurer paid him for his claim.
Subrogation is legal and it is enforceable. Nearly all insurance policies have some sort of a subrogation clause. Sometimes it is referred to as “subrogation,” other times it is referenced under clauses such as “Payments by Others,” “Payments by Third Parties,” “Injuries by Third Parties,” etc. Regardless of the phraseology, it all means the same thing “if we pay you immediately, but someone else ultimately owes you money for this, you have to pay us back when you recover.”
Underinsured motorist coverage is a type of insurance you can purchase as part of your automobile insurance policy that will pay you benefits if the person who injures you with their car does not have any (or enough) automobile insurance to fully compensate you. This insurance will pay you if you are in your own car, in someone else’s car, on your bicycle, or a pedestrian when you are injured. If you do not have underinsured motorist coverage, buy it immediately and buy as much coverage as you can afford! It is essential to have this type of insurance coverage.
Some insurance policies require that you pay them back immediately “from your first dollar,” meaning that, those insurance companies don’t care if you get any money at all. They will take 100 percent of what you get, if their bills are higher than what you receive. Those insurance policies are generally governed by a Federal law known as ERISA. This occurs most often with health insurance policies. However, the Personal Injury Protection insurance you may have in your automobile policy also has a provision requiring you to pay them back.
So, how can you possibly protect yourself?
- Read your health insurance policy and know if it has a “Subrogation” provision and if it is governed by ERISA.
- Purchase as much “Personal Injury Protection” and “Underinsured Motorist” insurance as you can afford. This will increase the chances that you will be fully compensated for your injuries and that there will be enough money to pay back your health insurer.
- Hire an attorney immediately if you are injured. Under Washington law, if you hire an attorney, you get a discount on the amount you are required to pay back to your Personal Injury Protection insurer and under most health insurance plans. Plus, an attorney can often: (a) negotiate a better repayment deal with the insurer so that you get to keep more of the money; and (b) may be able to locate other sources of reimbursement for you so that the money you receive is greater than if you handled the case yourself. Don’t wait until after you have received a settlement to contact an attorney. By then, it is too late.
The bottom line is that you need to protect yourself NOW by buying as much Personal Injury Protection and Underinsured Motorist insurance. If you are injured, you need to hire an attorney to help protect you so that you can keep as much money as possible. If you have been injured, please give Nelson Boyd a call at (206) 971-7601 and let us see if we can help you.
Personal Injury Protection insurance is a type of insurance you can purchase as part of your automobile policy that will pay your medical bills if you are injured as a result of an auto collision, regardless of whether you are in your own vehicle, someone else’s vehicle, on your bicycle or a pedestrian. The conditions for using this insurance – and the repayment requirements – are significantly more favorable than using your health insurance. This insurance is very inexpensive and you should buy as much as you can afford!!
