Q After an automobile accident do I have to reimburse my health insurance?
AMany clients are confused about their obligation to reimburse their health insurance after an automobile accident. Almost all health insurance policies contain provision that allows for reimbursement under California law. ERISA or the Employee Retirement Income Security Act also allows an insurance company to obtain reimbursement from an automobile accident settlement. However reimbursement is only required if you recover damages from the third-party who caused your injuries. How much recovery depends upon the circumstances of each individual case.
If you have fully recovered all of your economic damages in an accident including the payment of your entire medical expenses, wage loss, future medical expenses and any other out-of-pocket money you have spent, your health insurance company will demand reimbursement of their payments. Realistically however, in severe accidents there is very rarely enough insurance to pay for all your out of pocket costs.
In California, courts have consistently held that a health insurance company may not take all of the settlement proceeds if there is inadequate settlement money to compensate fully the person injured. Instead each party must obtain a proportionate share of their total damages. As an example if an accident victim had sustained $100,000 in damages including medical expenses, wage loss, and pain and suffering, and there is only $15,000 of insurance available, then the health insurance carrier would receive 1/15 of their total medical bills. In that same example, if the client received $100,000 of insurance and their entire case is worth $100,000, the health insurance company would then technically be entitled to full reimbursement.
As a practical matter, health insurance companies will negotiate reduction their reimbursement for hardship, additional damages you paid, future medical expenses not yet incurred, attorneys fees and costs. Occasionally we have had insurance companies be recalcitrant and refuse to settle or negotiate their liens. In such cases, litigation may be necessary to convince the insurance carrier that they are not operating in good faith and within the guidelines of law.
Federal law is quickly moving in this area, and changing monthly. Therefore, it is important to consult with a California personal injury attorney before you settle any personal injury case, to determine whether you have to reimburse health insurance, and to what extent. If you settle your case without first verifying the amount of reimbursement you would owe, you may be obligated to reimburse fully the lien amount at a later time. You don't need the hassle, and the attorney fee can in many cases be paid out of the lien reimbursement.
Call us at 1 866-981-5596 with any questions you may have about health insurance reimbursement rights and liens on your automobile or personal injury case.