Mark Roman | February 21, 2014 | Insurance Companies, Personal Injury
Most people who make personal injury claims think their case is over when they reach a settlement or a jury returns a verdict. That remains true in some cases. Unfortunately, other cases remain complicated even after the primary claim is resolved. That’s because injured people must sometimes contend with health insurers, providers of employee benefits, and others demanding reimbursement out of their settlement or verdict money.
The basis for these demands is the concept of reimbursement (“subrogation” in industry terminology). Health insurers and other providers of benefits will typically pay for an injured person’s medical care or wages up front. Months or even years down the road, the injured person recovers those same expenses as damages from the at-fault party. The provider of benefits then asks to be repaid some of the money it advanced for the injured person.
Many people who have health insurance or other benefits are less than thrilled about this reality. It simply does not occur to most people that they might have to give up some of their hard-fought settlement money. They feel like receiving premium payments for a long time should be enough for the people who provide benefits to them. Nevertheless, these rights of reimbursement do exist.
Historically, plaintiff’s lawyers and benefit providers worked together reasonably well to resolve these claims. Benefit providers would agree to reduce their claims when the settlement was low, such as in cases where the insurance available was limited. Because the plaintiff’s attorney was essentially working for them too, they would also agree to reduce their claim to account for the attorney’s fees and costs paid by the injured person.
More recently, benefit providers have become increasingly aggressive and greedy. Buoyed by favorable decisions from certain federal courts, many providers have begun writing fine print provisions into their benefit plans. These provisions stack the deck against injured people who receive benefits.
For example, newer provisions often demand full reimbursement regardless of the circumstances. They also allow the benefit provider to piggyback for free on the efforts of the injured person’s lawyer. Some even demand that the injured person get permission from them before settling a claim against the person or organization who caused their injuries. Relying on this type of one-sided language, benefit providers may simply refuse to negotiate regardless of the situation.
Compounding the problem is a dizzying array of conflicting but sometimes overlapping federal and state laws governing this issue. Plaintiffs and benefit providers often can’t even agree on which law governs the dispute. Even if they do, conflicting court decisions can still give either side “talking points” and prevent agreement on the amount to be repaid.
This is an area of law badly in need of reform. While benefit providers should retain their right to reasonable reimbursement, they should not be able to take all the money in all the cases. Federal and state lawmakers need to pass laws to ensure that this process is fair to all involved. This would not require anyone to reinvent the wheel; the Florida worker’s compensation law already requires adjustment of reimbursement recoveries based on basic fairness. This established law could easily be applied to other types of reimbursement claims.
In the meantime, the best thing plaintiffs lawyers and their clients can do is start thinking about these issues before a settlement ever occurs. They may also need to be ready to fight or negotiate some more even after a case is over in the usual sense.
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