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Subrogation Interest: What happens when the wrong insurance pays for my treatment?
Scott Johnson Jul 20, 2020 12:00:00 AM
Claims for personal injury and workers’ compensation are often a mess of different and conflicting insurance policies. Depending on your circumstances, you may be protected by up to three or more layers of insurance coverage. Luckily, Minnesota law provides guidance on which insurance company is supposed to pay medical bills depending on the type of accident and what you were doing at the time.
If you were injured in an auto accident, your personal auto insurance is required to provide insurance coverage and pay the first $20,000 of medical bills related to that accident. Medical bills above and beyond $20,000 are the responsibility of the at-fault party. If you do not have your own auto policy, Minnesota has a No-Fault system in place to determine who is responsible for those first $20,000 of bills.
In a similar fashion, if you were injured on the job, then your employer and/or their insurance company is required to pay any bills resulting from your reasonable medical treatment related to the work injury.
In both cases, all medical bills should be sent to and paid for by the company that has the highest priority to pay. But that doesn’t always happen.
Sometimes, medical bills related to an auto accident or a work injury are sent to your own personal health insurance. An example of this type of provider would be Blue Cross Blue Shield or state-sponsored Medicaid.
When your personal health insurer pays bills that were supposed to be paid by an insurer with a higher priority, e.g. worker’s compensation insurance, then your personal health insurer gains a legal right to recovery for the medical bills that they paid. This right is called subrogation.
In a practical sense, an insurer with a right of subrogation is part of your injury claim whether you want them to be or not. They are, in effect, “piggy-backing” on your claim for damages against at-fault parties or for payment of workers’ compensation benefits. A subrogation claim consists simply of the amount of money that was paid toward your medical bills. The amount may also be referred to as the “subrogation interest.” This isn’t the same kind of interest as what you’d be charged for on a loan. It simply means the amount for which the insurer is “interested” in getting reimbursed.
If an insurer is claiming they have a subrogation interest in your claim, the insurer must be notified of any settlement so that their claim can be addressed. A subrogation interest cannot be ignored. It must be dealt with before your claim is completed. Fortunately, insurers with a subrogation right are usually willing to negotiate. If an insurer’s subrogation interest is overlooked or ignored, the insurer in question can seek legal recourse against you and/or your attorney.
To avoid these issues, it is imperative that you inform your attorney about any personal health insurance coverage you have while you are treating for your personal injury or workers’ compensation claim. Even if your doctor’s office which insurance bill, it’s still possible that they will mistakenly submit the bills to the wrong insurer. For this reason, your attorney will make sure that the health insurer is aware of your claim so that any potential subrogation interest can be addressed, and settlement of your claim goes smoothly.
Subrogation and insurance priority can quickly cause complications in an otherwise straightforward claim. If you have questions about this, or any other aspect of your case, call Aaron Ferguson Law today to schedule a free consultation with one of our experienced attorneys.