What Is Subrogation in a Personal Injury Claim?
In the case of accidental injury, it may be necessary to go to the emergency room or receive treatment. Most of us will submit our bills to our insurance companies following medical treatment. However, after paying (or even sometimes before you pay), your insurer may contact you, asking for more details about your injury and how it occurred.
In these cases, an insurer is likely trying to determine who is at fault for the injuries. In cases where a third party is entirely or partially responsible for the injury, the third party may be responsible for paying for your injuries, thus taking away some of the financial responsibility from your insurer. By determining the situation, the insurance company is determining if they can conduct subrogation.
Basically, subrogation refers to one party standing in for another. For injury claim cases, the responsible party for the injury may be responsible for paying for all or some of the damage caused by the injury. Subrogation then occurs when collateral source (often the insurance company) stands in for the injured party.
This occurs to prevent situations where the injured party receives greater compensation for their injury than is necessary. For example, you may become injured due to an accident and require medical care. You submit the bill to your insurance company, who pays the $5,000 for your treatment. However, someone else was at fault for your injuries and pays the $5,000 amount for your treatment as well.
Since you cannot recover from the same injury twice, you do not need the money paid by the party that caused your injury to recover. This is where subrogation comes in – your insurance company will then receive the responsible party’s payment of $5,000, either from the at-fault party or yourself. While it would be nice to have that bonus money, subrogation is meant to help reduce insurance rates in return.
Rights Within Subrogation
While subrogation means that your insurance company has a right to the at-fault party’s payment, the company does not have a greater entitlement than you, the party who received the initial benefits.
Subrogation can also work against the insurance company or collateral source, since the company is subject to any evidence that the case may place against you.
When Does Subrogation Apply?
Insurance companies can assert subrogation rights if a third-party is responsible for your injuries and has paid all or part of your medical fees. However, insurance companies are not the only ones who can do so.
Government benefit programs can also assert subrogation rights if they help pay for your initial medical fees. Often the laws that create government programs include statutory provisions, which require reimbursement through subrogation. Some organizations and programs that will pursue subrogation are:
- Federal workers’ compensation
- Medical assistance
- State assistance programs
- Veteran’s benefits
If a case is eligible for workers’ compensation, subrogation can take place, so long as a third party is at fault for the accident. The employer may either substitute into the injured employee’s place or participate alongside the employee in court. Subrogation once again prevents the injured employee from receiving twice the compensation for injury and wage loss, instead reimbursing the employer.
Settlement and Subrogation
Subrogation can cause issues when parties reach a settlement of a lawsuit with the responsible third party, regardless of whether you or your insurance company or both completes the settlement. In some cases, you may face restricted benefits, or your insurance company may have different responsibilities to pay your benefits.
If you become injured and receive contact from parties attempting to assert their subrogation rights, you should consult an attorney who understands specific subrogation laws. A Birmingham personal injury attorney can help determine who has the right to subrogation and how it will affect your circumstances.