Accident victims who have health insurance often get victimized a second time by health insurance company subrogation. What is subrogation? Subrogation is the right of a health insurance company to recover payments made for accident related health care expenses. But why should a health insurance company get their payments back? They were paid a premium to provide the coverage and pay the accident related medical expenses. They didn’t hire an attorney or help get a recovery. They’re not going to give you your premiums back. The theory behind health insurance subrogation is that your health insurance will pay for your accident related medical expenses up front but they get their money back if you recover money damages from the negligent party because theoretically when you recover personal injury damages in Texas one of the things you are recovering is the medical bills that your health insurance company has already paid. The reason that you don’t get your premiums back is because supposedly the health insurance company charged you a lower premium knowing that they were going to get some of their medical payments back in liability cases. If you believe that this blog is probably over your head.
Two Texas common law doctrines, the “made whole” and the “common fund” doctrines, have, until recently, softened the impact of health insurance subrogation. The made whole doctrine stood for the principle that because a health insurance company had been paid a premium to pay health insurance benefits they could only recover their payments after the victim had recovered all of their damages and had thus been “made whole”. The health insurance company fed last so to speak and had been paid to take the risk that there just wouldn’t be enough money to go around.
The “common fund” doctrine provides that because the health insurance company is seeking to recover their subrogation interest out of a common fund created as a result of the expenditure of attorney’s fees and expenses that they must pay their proportionate share of the attorneys fees and expenses. The common fund doctrine thus prevented the health insurance company from getting a free ride at the expense of the victim.
Unfortunately, as a result of intense political pressure from health insurance companies, Texas courts have all but eliminated both the made whole and the common fund doctrines. This often produces extremely inequitable results. Take for example the situation of the accident victim who has huge medical bills and is permanently disabled in an auto accident that was caused by a drunk driver with only $25,000 in liability insurance. The health insurance company that has been charging exorbitant health insurance premiums can, and usually does, take the entire liability policy proceeds and leave their disabled insured with nothing.
For more information contact a Tyler Auto Accident Attorney today.