Subrogation is a legal right that allows an insurance company to make a payment that is actually owed by another party, typically another insurance company. Once the payment is made, the insurance company can seek reimbursement from the other party. This situation happens often after a car accident. Many times, a driver involved in an accident must rely on their own insurance policy to cover the damage to their car, medical payments for personal injury, and uninsured motorist coverage for when the other driver does not have enough insurance coverage. Property damage can cost an insurance company a lot of money in repairs, but medical payments can take the cake.
While a driver can choose to purchase a policy with a high limit of medical coverage, Pennsylvania law only requires a drive to cover $5,000 worth of coverage. In many cases, the policy limits are exhausted very quickly. Once the limits are reached, an individual could end up in a very precarious position.
Pennsylvania’s Motor Vehicle Financial Responsibility Law requires an individual’s auto insurance policy to cover medical costs up until the limit is reached. Once an individual exhausts this limit, their health insurance would pay the remaining medical expenses. In situations when the individual receives a settlement related to the accident, it is more than likely that they will be responsible for reimbursing their HMO for any money that was paid for medical expenses.
The Court’s View on Subrogation
Because of the huge impact this has had on individual settlements related to car accidents, many cases have found their way to court to litigate this issue. In Pennsylvania, courts have ruled that HMOs have the right to assert a subrogation claim against payments made to an individual for medical expenses. This ruling requires individuals to dip into their settlements and repay the insurance companies for the money they put out to cover these expenses.
The legal reasoning behind this ruling comes straight from Pennsylvania law. Pennsylvania’s law on subrogation states that in an action arising out of the maintenance or use of a motor vehicle, there is no right of subrogation or reimbursement from recovery with respect to workers’ compensation benefits, required benefits, availability of benefits, or availability of adequate limits. The court ruled that HMOs are exempt from complying with this law because the statute specifically leaves out any mention of HMOs. As a result of this ruling, HMOs now have a stake in the individual’s settlement.
To complicate matters even further, an individual is likely to incur additional medical expenses that are not covered by medical insurance. Deductibles, co-pays, and other expenses add up quickly. While you are likely to be reimbursed for these expenses, you will have to wait until your settlement is reached to receive these funds.
Medical coverage and subrogation can become a very tricky and complicated process. If you have been involved in a car accident and sustained injuries, it is important to contact an experienced Philadelphia personal injury lawyer to help you through the claims process.