Two sides of subrogation
Subrogation lets an insurer that paid a loss step into its customer's shoes and pursue the person responsible. Reimbursement is the related claim an insurer or health plan makes to be repaid out of a recovery its customer obtains. In property and auto claims, subrogation often runs in the background, though it can affect your deductible and your own claim against the at-fault party. In personal injury cases, reimbursement claims, often called liens, can take a large share of a settlement if they are not addressed early.
Why the type of plan matters
New York has a statute that limits many insurers' reimbursement and subrogation claims against personal injury settlements, but its reach depends on the kind of coverage. Self-funded employer plans governed by federal benefits law often fall outside state limits and enforce the terms of their plan documents, while Medicare and Medicaid have their own federal recovery rules and procedures. Workers' compensation carriers also hold liens of their own. Identifying exactly what kind of plan paid your bills is the first step, and it often requires requesting the plan documents rather than relying on a collection letter.
Settling with the liens in view
A settlement that ignores a valid lien can leave you, or your lawyer, responsible for repaying it, and Medicare's interest in particular should be resolved before funds are distributed. Liens can often be reduced, because some charges are unrelated to the injury, because the plan's rights are limited, or through negotiation that accounts for the cost of obtaining the recovery. Gather your explanation of benefits statements, insurance cards, plan documents, and any lien notices you have received. We review each claim for validity and amount before a settlement is finalized, and we discuss how the remaining funds will be protected.
