This is a legally loaded term, so we are going to focus on how subrogation works in personal injury claim. Subrogation occurs when an insurance company or a health plan pays benefits to its insured for losses caused by a third party (someone other than the insurance company and the insured). The insurance company has a subrogation interest in the injured person's claim because that injured person is going to claim losses already paid by a health plan or PIP carrier. An example is probably the best way to illustrate this concept.
I am injured in an auto collision as a result of being rear ended by Careless Driver. My insurance pays my medical bills and a disability benefit. I have been injured. My insurance company and I are in the same boat in that we each suffered a loss. I lost my health, and my insurance company lost money, all as a result of Careless Driver's behavior.
I can make a claim against Careless Driver for all my losses, even if my insurance company covered some of those losses. However, my insurance company, by state law or contract, probably has a subrogation interest. This means that I am required, if I make any recovery, to reimburse my insurance company for the benefits that it provided me.
There are a lot of issues with subrogation, however. If I hire an attorney and incur attorney fees and other expenses to make a recovery, shouldn't my insurance company share in that expense? Also, what if I am partially at fault, say by 20%, and my recovery is reduced by that amount? Does that mean I only have to pay 80% of what my insurance company provided?
A lot of these questions are answered by statute, or by case law decisions, but it gets pretty tricky with federally regulated health plans, or situations where an insurance policy is issued in one state, and an auto collision occurs in another state.
If you have a claim, and you are facing issues about subrogation, or claims for reimbursement from a health care plan, call us at 503-325-8600. We sort these issues out for our clients all the time.
