Will I have to Reimburse the Insurance Company if I Receive a Settlement from the Person who Caused the Injury?
As discussed here, victims of negligence who suffer injury will typically first need to turn to their own health insurance to cover medical expenses associated with the injury. In those circumstances, these victims will have the benefit of having insurance pay for some or all of the medical expenses. The law, however, also provides that injured victims can recover the costs of medical care from the individual or business who caused their injury. This includes the expenses paid by the injured victim’s health insurer. This can mean that an injured victim may get what the law calls a “double recovery.” That is, the victim had the benefit of health insurance paying the medical provider, but then the victim can go back and collect that same amount from the individual or business that caused the injury. It is also important to note that the injured victim can recover their own out-of-pocket expenses from the liability insurer for the individual or business who caused the injury.
The vast majority of health insurance plans do not allow this “double recovery.” Certain types of health insurance, such as Medicare, Medicaid, health plans provided to State employees, health plans provided to employees of the federal government, and healthcare plans provided to members of our Armed Services, have laws on the books that require injured victims to reimburse these health plans for expenses these health plans paid. These reimbursement obligations only arise if the injured victim actually makes a recovery from the liable individual or business. If no recovery is made, then the injured victim has no obligation to reimburse the health care plan. Fortunately, these laws requiring reimbursement contemplate that the healthcare plan will share in the costs of making a recovery from the liable individual or business. For that reason, the injured victim is not required to shoulder the entire amount of legal costs and attorneys’ fees associated with making a recovery in the injury claim.
A large number of employer-provided group healthcare plans are also entitled to be reimbursed for expenses these healthcare plans paid. These reimbursement rights of group health care plans are not created by specific laws on the books, but rather are created as contractual rights found directly within the group healthcare plan’s documents that afford insurance coverage. Like the healthcare plans who have a right of reimbursement codified by law (such as Medicare), the injured victim does not have to reimburse the group healthcare plan if no recovery is made. Unlike healthcare plans whose right of reimbursement is codified by law, however, these employer-provided group healthcare plans will often refuse to shoulder their fair share of legal expenses and attorneys’ fees associated with a recovery against a liable individual or business. Negotiations with these group healthcare plans are generally required to get them to shoulder any of the costs associated with making such a recovery.
Not all employer-provided group healthcare plans have this reimbursement right. Ultimately, it comes down to whether or not the group healthcare plan is “self-funded” or not. If the group healthcare plan is self-funded it may (and probably does) have a right to reimbursement. At that point, it is important to look at the Plan Language to fully evaluate the extent of the reimbursement right. If the group healthcare plan is not self-funded then it is prohibited from seeking reimbursement out of any recovery made by an injured victim.
If an individual is covered by private health insurance, or a health insurance plan obtained through the Affordable Care Act’s “marketplace” (i.e., Obamacare), such a health insurance plan is not entitled to be reimbursed out of any recovery an injured victim makes from a liable individual or business.