Personal Injury Claims and Health Plans: Issues of Reimbursement

If you have suffered an injury as a result of someone else's careless behavior, you have a claim against that person and their insurance company for your losses. Part of the claim involves recovery of medical expenses. However, the reality is that often times, another insurance company or health plan will step in and pay medical benefits before you have resolved your claim against the responsible party's insurance carrier.

In most cases, you will be faced with reimbursing your insurance company or health plan out of any recovery you make against the responsible party's insurance company. Whether and how much you must repay your insurance company or health plan could depend on the kind of health plan involved, and where you live.

Let's start out with a typical auto injury claim.  If the car you were driving or riding in is insured in the Oregon, then you have personal injury protection benefits included in your auto policy, which pay medical expenses up to the applicable policy limits, or the coverage period (usually one year after the date of the collision). In Washington, you may have similar coverage, depending on whether you elected to include that coverage in your insurance policy.

In Oregon, if you make a personal injury claim against another insurance company and its insured, your auto insurance company has three options on how it is reimbursed for benefits provided. Most insurance companies will elect to seek direct reimbursement from the liability insurance company (the negligent driver's insurance company). However, the insurer can also file a lien on your claim, or seek reimbursement from you after the claim is resolved either by settlement or verdict.

Washington law is a bit different. Under a case decision in Washington, the personal injury protection carrier (your auto insurance company) must share in the attorney fees and costs that you incurred in making and concluding your claim. Typically, a Washington auto insurance will calculate its fair share of the attorney fees and costs that you incurred in resolving the case. The Washington auto carrier then reduces by that amount, which results in additional recovery for you.

Health insurance is much different. In more serious injury claims where medical expenses exceed the available personal injury protection limits, or in cases not involving auto collisions, a private health plan may pay medical benefits.   Some health plans are not an "insurance company" in the technical sense, which is a big deal, because the law regarding insurance companies is generally a matter of state law, whereas the law governing a health plan is generally federal law.

Again, in a very general sense, the health plans have more flexibility in determining how to handle how it is reimbursed for medical expenses it paid when its plan member (you) recovers money against a negligent party's insurance company.  Because the recovery is against someone other than you and your health plan, the claim sis often referred to as a third party claim. 

Some health plans will allow for a discounted reimbursement, based on attorney fees. For example, if the medical expenses the health plan paid represents one third of the overall recovery, then the plan will often accept what it paid in medical expenses discounted down one third to share in the attorney fee. However, other plans may argue that an injured plan member making a claim against another party should reimburse the plan for 100% of medical expenses.

A key factor in determining your obligation to a private health plan is the actual language in the health plan document. When we encounter a serious injury case with a health plan involved, we often request a copy of the health plan's language regarding reimbursement of medical benefits provided.

If you have a serious injury claim, and your health plan has paid significant benefits, contact us at 503-325-8600. We can give you a general idea of how reimbursement provisions can affect your case.