First, allow me to use an example to explain subrogation: You are hurt in an accident. You go to the emergency room, are admitted to the hospital for several weeks and then have a few months of follow-up appointments and physical therapy. After deductibles and co-pays, your health insurance company pays all of your medical bills. After you recover from the accident, you settle your injury case with the at-fault party’s insurance company. Using the money you got from your settlement, you buy your first home. Several months later, you get a letter from your medical insurance carrier demanding to be paid back for the medical bills they paid on your behalf after the accident. You no longer have the cash because you bought a home, but they are threatening to sue you.
Can they do that? What about if you are on Medicare or Tenncare? Isn’t that why you paid the premiums for your medical insurance? If they sue me, could they take my house or garnish my wages? What if I never tell them about my accident?
Let’s take those questions one by one. First, can they do that? Yes, if your medical insurance contract provides for the insurance company to be subrogated to your rights, and most of them have such a provision, then they are allowed to seek reimbursement from you. To be clear, if you had sustained injuries in an accident for which you did not recover money from someone else, then the insurance company cannot pursue you. The subrogation interest only arises if you obtain a financial recovery from the at-fault party who caused your injuries for which the insurance company had to pay your bills.
Next, Medicare and Tenncare both have subrogation rights so the same rules apply. Moving on to the next question: yes, this is why you paid your premiums but the terms of each parties’ rights (yours and the insurance company’s are governed by the insurance contract, and most of them have a subrogation provision). If the subrogation interest is not protected, then your insurance company might sue you. If they win, then they could put a lien on your house, garnish your wages, seize your bank account or use any other legally-permissible debt collection tactic.
If you think your insurance company will not find out about your settlement, think again. There are some lawyers who do nothing but subrogation work. They comb through police accident reports, Facebook, Instagram, news reports and other data to find accident victims. In fact, here is a recent Bloomberg article on one of the originators of this type of practice.
Subrogation is complex and an experienced lawyer can often negotiate a reduction, sometimes a substantial reduction, in the amount that has to be repaid to the medical insurance company. If you would like to talk to one of our top-rated attorneys about your accident case, give us a call anytime at 615-742-4880 (Nashville) or 615-867-9900 (Murfreesboro) or 866-812-8787 (toll-free). We do not charge anything to talk to you about your accident case and we only get paid if we win. We have recovered millions of dollars for our satisfied clients, and we would like to help you too.