As personal injury attorneys, there is a common question we face — “what is subrogation?” While most adults in Missouri have insurance, they may not understand the interplay between health, motor vehicle and commercial workplace insurance policies after a personal injury occurs. To guide you in your understanding, the attorneys at Casey, Devoti & Brockland have defined this common insurance term and the three circumstances a subrogation lawyer may encounter the most.
You may still be wondering, “what is subrogation?” Subrogation is when a third party asserts itself into litigation and makes the same claim the injured party makes against the party who caused the injury. In layman’s terms, it is when a third party stands in the shoes of the injured person.
Generally, subrogation is against public policy in the State of Missouri in a personal injury context. Subrogation only comes about by way of operation of statute or by contract. In personal injury cases, subrogation occurs in a few situations, including health insurance, motor vehicle insurance and Workers’ Compensation insurance.
Subrogation in Healthcare
But, what is subrogation in a healthcare context? Though Missouri does not allow for subrogation in most instances, federal law makes an exception for healthcare benefits provided by the government or through policies organized under a specific federal statute, the Employee Retirement Income Security Act (ERISA).
ERISA is a federal law under which many national corporations have organized their health insurance programs. Programs organized under ERISA may seek reimbursement for benefits paid to a beneficiary if the plan document provides for subrogation and the program is self-funded.
Personal injury attorneys also see subrogation claims in two circumstances involving health benefits paid through a government-sponsored program.
- Medicare. Medicare beneficiaries are typically either retired persons over the age of 65 years or someone with a disability who collects social security disability benefits — these people are eligible for Medicare coverage one year after being judged disabled. Medicare is allowed the right to subrogation by federal law.
- Medicaid. Medicaid is a need-based program providing health coverage for Missourians in financial need. Eligibility is not based on age or disability — Missouri makes Medicaid benefits available to those with lower socioeconomic status. The Missouri General Assembly carved out an exception to the general rule prohibiting subrogation, providing by statute the state the ability to subrogate and recover benefits paid on behalf of injured Medicaid beneficiaries.
So what is subrogation in healthcare? When an injured person requires healthcare benefits, their insurer pays claims under their established program. The program covers costs involved with recovery, including hospital visits to see a physician or therapy visits. While an injured person is recovering, their insurance provider initially takes on the responsibility of paying medical costs.
However, if the injured party recovers money in a personal injury claim, the health insurer may take a portion of the recovered funds. They can only take up to the amount of money they paid. For example, if the insurer paid $10,000 worth of hospital bills and you won $100,000 in your injury settlement, the most the insurer could recover is $10,000.
Subrogation in Motor Vehicle Insurance
So, what is subrogation in motor vehicle insurance? Again, subrogation refers to an insurer seeking money from a third party for benefits the insurer paid to or on behalf of its insured for injuries resulting from the acts of another. In this context, the insurer possesses a right to subrogation in collisions caused by an uninsured motorist.
Uninsured motorist coverage is a requirement in Missouri. A motorist must have liability and uninsured motorist coverage — at a minimum of $25,000 per person per collision. Generally, subrogation is not allowed as it is against public policy; however, an exception is made for uninsured motorist coverage since Missouri statute requires insurers to sell the coverage.
For example, if you are in a collision caused by someone who does not have liability insurance and your motor vehicle insurer pays $25,000 to you in damages, the insurer would be able to seek reimbursement from the uninsured motorist for the money the insurer paid to you.
Subrogation in Workers’ Compensation
Workers’ Compensation cases are typically a less common area for subrogation. Employers with five or more employees in Missouri must purchase Workers’ Compensation coverage for their employees — but what is subrogation’s role in this coverage?
Since the state requires it, employers have the right to subrogate after they pay out benefits for a workplace injury. For example, consider a salesman who gets into a car crash while traveling to a meeting. The employer would be on the hook for time off, medical care and partial disability benefits — meaning the employer and its insurer would directly pay these costs to and on behalf of the injured employee in the Workers’ Compensation claim. Once the salesman resolves his case with the help of a personal injury lawyer, the employer has the right of subrogation against the person who caused the crash.
The idea of subrogation sometimes deters an injured person from pursuing a claim against the person that caused his injuries. If they are significantly injured and the benefits paid out by the employer in the Workers’ Compensation case are extensive, a large chunk of the money resulting from legal proceedings will go directly to the employer. The total benefit must outweigh the costs before you begin a personal injury case after successfully pursuing a Workers’ Compensation claim.
Contact Casey, Devoti & Brockland
Subrogation lawyers are invaluable in cases providing subrogation rights to an insurance company providing health, automobile or Workers’ Compensation benefits. They try to negotiate with insurance companies on how to divide the money. Your attorney will be vital in navigating the legal proceedings and helping you understand the results waiting at the finish line.
Wondering what is subrogation’s role in your case? Contact an attorney at Casey, Devoti & Brockland for clarity and guidance as you pursue your case.