Plaintiffs in personal injury lawsuits often seek monetary compensation for medical bills and other healthcare costs associated with their injuries. But getting compensated for medical bills in a personal injury lawsuit is not always straightforward. For instance, what happens if the plaintiff’s medical bills have already been paid by insurance? If so, is it fair for the plaintiff to be paid double the amount of the cost of treating his or her injuries (paid once by the insurance company and once again by the defendant)? And where does the insurance company stand in all this?
See below for answers to these questions concerning how medical insurance payouts affect personal injury settlements and court awards.
Lien Subrogation Right: The Insurance Company Is Paid Out of Damages
What happens in cases like these is that insurance companies often place a lien on any award for damages you may receive. A lien means that the insurance company is in line to be paid from any damages awarded and is in line to be paid before the plaintiff.
It’s easiest to see this through an example. Say Catherine is injured in an automobile accident. She was stopped at a red light and rear-ended by another vehicle. The injury was severe enough to necessitate surgery and months of physical therapy.
Catherine takes the other driver to court to pay for her injuries and the damage to her vehicle. The jury finds the other driver responsible for the accident, and therefore Catherine’s injuries.
The jury awards her $100,000 total; $75,000 is for medical bills. All of the medical bills were paid out of Catherine’s insurance.
As a result, the $75,000 will not go to Catherine. It will be paid to the insurance company because of the lien.
Most insurance companies mandate lien subrogation rights in their contracts. That means, if medical bills are ultimately paid for by a court award from another party, an insurance company is entitled to be compensated from that award for the bills it has paid.
Insurance holders should be aware of the lien subrogation rights so they don’t receive a shock when an award is made. On the other hand, if an injured person did pay their medical bills (a deductible amount or an amount over what the insurance company paid), they would be entitled to receive that amount from damages.
Medicare and Veterans Administration Treatment
Injured parties insured under Medicare or eligible for treatment through the Veterans Administration (VA) should know that both of these organizations also have lien subrogation rights.
The VA is entitled to be paid before other lien-holders are paid.