Why do I have to use money received from my settlement recovery or judgment to pay back my health insurance company when I pay monthly health insurance premiums? The money is mine. I am the injured victim. I took the time to hire an attorney and prosecute my case. I filled out the paperwork, worked with my attorney, and went to court. Plus, I already paid for my medical treatment through my premiums. My health insurance company should get nothing more.
We receive these questions and comments every day from our clients, and you are not alone if you are critical of this aspect of our justice system. It makes common sense. The health insurer already has been paid by you to pay for medical services needed by you. Why should they receive your premiums and in additional get reimbursed from your personal injury recovery? If you had been injured by your own fault, then the health insurance company would not have been able to receive any additional money.
However, the health insurance industry takes a different stance. The health insurer had to pay out for your medical treatment so the health insurer believes it too has been injured by the party that injured you. After all, if you hadn’t been injured, then they would have saved money on medical expenses. Therefore, if you recover money for your medical treatment, then the health insurer wants it.
In an effort to get recoup their losses, the private health insurance industry has found a clever way to gain reimbursement for money expended for your medical treatment when someone else caused you to be injured. Typically, when you sign up for private medical insurance, you have to review and sign documents. As part of those documents, you typically agree to notify the medical insurer when you are injured in an accident and are seeking recovery against someone else or someone else’s liability insurance company. You then agree to reimburse your health insurance company from proceeds received from a settlement, judgment or award. The health insurer’s right of reimbursement is a condition of your health insurance policy.
Indeed, you have signed a contract agreeing to reimburse your health insurance company from any recovery received for your injuries. Of course, this reimbursement is limited to what the health insurance company actually paid out in treatment.
The health insurance industry will certainly contend that it counts on these reimbursements in order to keep health insurance premiums lower for all of its members.
Now, there is some good news for you. You will not have to use all of your recovery to pay back the health insurance company but that depends on the type of health insurance plan you are participating in.
California Civil Code section 3040 limits a private health insurance company from receiving a full reimbursement. You should consult with an attorney to calculate the reductions as there are different factors that must be taken into consideration. An attorney can also make some equitable arguments to a health insurer in order to reduce the reimbursement obligation.
You should know that Medi-Cal, Medicare, and employer-sponsored health plans, commonly known as ERISA plans, have separate rules that govern their reimbursement rights.
Fortunately, the personal injury attorneys at Curtis Legal Group can help you prosecute your case and then help you negotiate with your health insurance company once you receive a recovery.