Some individuals who never use their health insurance or have auto accidents, for example, may think that having such coverage is a waste. Others who incur big medical bills or have costly crashes may view insurance companies as altruistic or generous, considering how small of a monthly premium they pay compared to the costs of their bills. That is, there’s a filing of a subrogation claim against their personal injury settlement. Don’t know what is a subrogation claim? We’ll explain below.
Table of Contents
Understanding What a Subrogation Claim Is
Subrogation claims aid insurance companies in recovering expenses they pay out when they’re not liable for damages. An example of this is a health insurance company attempting to recover expenditures it’s paid after a policy holder suffered car crash injuries for which they received a personal injury settlement.
From the perspective of an insurer, filing a subrogation claim minimizes the chances of a car crash victim enjoying unjust enrichment or receiving an unfair financial benefit when the case settles.
Subrogation claims can apply to a wide range of personal injury cases our Chicago attorneys handle, including:
- Workplace injuries
- Auto accidents, including car crashes, truck collisions, and motorcycle wrecks
- Premises liability cases (injuries on others’ properties)
Understanding the Illinois Subrogation Laws
Illinois’ subrogation laws are codified in the Illinois Compiled Statutes (ILCS). To this end, 770 ILCS 23/50 describes how any proceeds received by a party filing a claim of benefits for a personal injury event or wrongful death may be reduced by a non-at-fault party’s filing of a subrogation claim. Examples given in the state statute of when this might occur include:
- When there is comparative fault
- When there’s limited liability insurance, rendering proceeds uncollectible
This same law states that unless interested parties agree on a subrogation amount, comparative fault and the associated value of the claim must be determined by the Court. The statute further states that after these determinations are made, the parties asserting their subrogation rights will be responsible for covering a “pro rata share” of the claimant’s attorney fees. There are, however, exceptions to this rule. Most notably, it exempts lien holders protected under the Workers’ Occupational Diseases Act, Workers’ Compensation Act, and others like hospitals, physicians, and some long-term care facilities.
Another state statute, 735 ILCS 5/2-403, describes who subrogation claimants (plaintiffs) can be. This includes an owner or their assignee. This same section of the law also details the handling of wage claims, especially as far as the assignment of responsibility in paying them is concerned. That same code further emphasizes how a judgment regarding the subrogation claim should not be taken as a determination of how meritorious a case may be or its value.
Which Insurance Companies Can Assert Subrogation Rights?
Really any insurer who has made either full or partial payments that isn’t directly liable for them can assert their subrogation rights. This includes the following insurers:
- Private or marketplace health plans
- Auto insurers
- State health care programs like Illinois Medicaid or Medicare
- Workers’ compensation carriers
- The U.S. Department of Veterans Affairs
Do Insurance Companies Always File Subrogation Claims?
Insurers don’t always subrogate as part of the car accident or another not-at-fault claims process. However, you can expect them to notify you if they plan to do so.
State law varies as to when insurance companies have subrogation rights. As an example, there are certain costs that insurers can’t recover by filing a subrogation claim.
Is the Subrogation Process Avoidable?
If there is a waiver of subrogation in place with your insurer, then this prevents them from attempting to seek reimbursement of expenses from an at-fault party. Direct negotiations between you and a property owner, for example, can minimize the chances of an insurer asserting their subrogation rights in a premises liability case.
How Subrogation Claims Affect Personal Injury Settlements
There are some cases in which multiple parties may be able to assert subrogation rights. This may chip away at how much of a judgment or settlement you end up with in the end.
In cases like these, you can expect the money owed to an insurer pursuant to a subrogation claim to be deducted from any settlement you may be entitled to before you receive your check. So, this means that if your health insurance company paid $25,000 toward your medical bills following a car accident and the settlement with the at-fault party was $100,000, then the amount payable to you would be reduced by $25,000 (along with reductions for legal fees and any other costs). That deduction could increase from $25,000 to much higher depending on how many parties paid claims on your behalf and retain subrogation rights.
Can Subrogation Claims Be Negotiated Down?
As you’ve probably figured since we’re posing the question, you can negotiate a subrogation claim. In fact, this is one of the incentives in working with a car accident attorney who is familiar in dealing with auto insurers and responding to the tactics they employ. And, if you suffered some other type of personal injury incident, our lawyers have experience responding to subrogation claims in those instances as well.
Your legal counsel will know exactly where to look to reduce your financial responsibility or advise you of the circumstances that may result in it being eliminated altogether. And you can expect your attorney to know when negotiating or pursuing a waiver is warranted.
One such scenario that may result in you not having any responsibility is a situation whereby the value of your case approximates insurance policy limits. In situations like these, there’s less of a likelihood that the party with subrogation rights will be able to stake a claim to a portion of your award in situations like these. The reason why a financial recovery is unlikely to occur in these instances is that, generally, a portion of the recovery has to go to compensate an injury victim for their losses.
Also, negotiating a subrogation claim comes down to identifying overpayment opportunities. This may include situations where a hospital, for example, overbilled for services. If these scenarios can be brought to a medical provider’s attention, it may result in a reduction in their bill. Our lawyers are quite familiar with assessing health care bills to identify billing issues.
Get Experienced Help in Navigating Prospective Subrogation Claims
It’s always recommended to call the police to make a report after a crash, to seek medical care, and then call an attorney. Why? Health care is expensive, and insurance companies are for-profit businesses. Unless you build a strong case to recover maximum compensation for your injuries, a subrogation claim could easily wipe out any award you secure in your case.
The good news is that each attorney on our team at Thomas Law Offices has extensive experience handling subrogation claims. We can help you minimize your financial burden to others to ensure you get to keep as much of your settlement as possible for what you’ve been through. Meet with a lawyer for a free initial consultation today to discuss what your next steps should be in your case.