Why Do I Have to Repay My Own Health Insurance Company After an Accident?

Caduceus symbol and dollar signWhen you settle an injury case, Florida law requires you to reimburse health insurance companies, Medicare, Medicaid, and disability insurance companies who paid accident-related benefits on your behalf. There is no way around it.

You have probably never read the terms of your health insurance or disability benefits agreements; those contracts typically include a "right of subrogation" (a right to be repaid for the benefits they pay on your behalf). This right only kicks in after a settlement or a jury verdict in your favor on an injury claim. It functions like a lien on your personal injury case. As your lawyer, I am obligated to make sure these liens are reimbursed on your behalf.

What is the Purpose of Insurance if I Need to Pay it Back?

Many people feel it is unfair to have to reimburse their health and/or disability insurance company out of the settlement. However, the amount paid by any health or disability insurance company (along with other unpaid medical expenses) becomes part of your claim against the person who caused your injury; therefore, any amounts you are required to pay back is built into the settlement and makes your claim more valuable. At the end of your case, we will do our best to negotiate a reduction of any health insurance or disability liens with your insurance companies in order to reduce what comes out of your settlement.

Medical expenses are a critical part of valuing your claim. The defense understands they must be repaid. The good news is you will never be required to pay your insurance company beyond the limits of your award. Further, if you never recover any money because your claim does not settle, or if you lose at trial, you will not have to repay your insurance company for any benefits paid on your behalf.

How Do I Get treatment without Medical Insurance?

For people who are injured and do not have health insurance, your attorney may be able to issue a letter of protection (LOP) on your behalf. This is an agreement signed by you and your lawyer, pledging to pay the medical provider out of your settlement proceeds. LOP's are a fact of life for people needing medical treatment who do not have health insurance, Medicare or Medicaid. In that sense, they are vital for someone’s treatment and recovery. They also have a downside. An LOP functions similarly to your health insurance; it acts as a lien on your claim that does not get paid unless you win or settle your case, but once settled or won, must be repaid.

Since your medical provider will not be paid if the case does not win, it can be argued the doctor or provider has an inherent bias, knowing he or she will only be paid when your case settles. The defense uses this argument to suggest to jurors they should discount the credibility of that provider’s testimony.

Doctors who treat patients on an LOP basis must wait until the claim is settled to be paid, sometimes years after treatment is completed, so they often expect more money than they would receive from a health insurance provider to compensate them for the delay in payment. It is not a perfect system, but it allows people without health insurance to get needed treatment after an accident.

If an LOP is not an option with your medical provider, you may pay for treatment on your own and keep track of your expenses to be reimbursed as part of your lump sum settlement or verdict.

Note: If you were involved in an accident involving an automobile, your No-Fault/Personal Injury Protection(PIP) will provide up to $10,000 in coverage for medical expenses and/or wage loss benefits. PIP pays 80% of your accident-related medical bills and 60% of your wage loss for the time you were unable to work. Both medical bills and wage loss benefits are paid from the same $10,000.  If you do not carry Medical Payments (MP) coverage, which would cover the other 20% of your medical bills, most providers will request an LOP for the 20% balance. Once PIP benefits are exhausted, your provider will bill your health insurance company, if you have one. Please remember, if health insurance is billed, any payment would be subject to your usual co-payments and deductibles.

Michele Ross
Attorney, English instructor and adventurer dedicated to helping others.