What is Subrogation?
According to Black's Law Dictionary, the definition of subrogation is “the principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party concerning any loss covered by the policy.”
An insurance carrier or the federal or state government agency will require reimbursement for any medical payment that they have paid out as a result of another’s negligence. In other words, if the negligent person had not injured you, the insurance carrier or federal or state governmental agency would not have had to pay for any of your medical treatment. Thus, they have the right to recover the medical costs they paid out.
Who has the right to subrogation?
Private health insurance policies. Depending on the terms of conditions of the insurance policy, most insurance carriers have a right of subrogation. Insurance carriers must have subrogation language in their policies to collect the medical costs that they have paid out. It is also important to determine what type of health insurance policy you are dealing with. A health insurance policy may be a self-funded or non-self-funded ERISA policy. If it is self-funded, the payment of medical bills is paid out of the funds from the company and not directly from an insurance policy. These are generally large corporations. If it is determined that the policy is self-funded, federal law will apply when determining subrogation rights. If the policy is not self-funded (a company pays an insurance premium) then Colorado state law would apply. This is important because according to CRS 10-1-135 there are situations in which you may not have to pay back any subrogation meaning you would not have to pay back the medical bills.
Medpay: This is medical coverage you pay for out of your auto insurance. There is no subrogation right for medpay. This means that you don’t have to pay your auto insurance back for the medical bills they paid on your behalf as a result of a negligent party.
Medicare: Medicare has a right of subrogation. You will have to pay back Medicare for the medical bills that they have they have paid out on your behalf due to the negligent parties’ actions.
Medicaid: Medicaid has a right of subrogation. You will have to pay back Medicaid for the medical bills that they have they have paid on your behalf due to negligent parties’ actions.
VA: The VA has the right to subrogation. You will have to pay back Medicaid for the medical bills that they have paid on your behalf as a result of a negligent party
Workers’ compensation: If you are injured on the job and the person or company that is responsible for your injury you may have a right to file a third-party claim and receive damages for your harms and losses. However, under the Colorado Workers Compensation Act, the workers’ compensation carrier has a right to subrogation for most of what they have paid out in the claim. This may go beyond what they have paid for medical bills but, for what they have paid in temporary, permanent, and total disability benefits.
Dealing with subrogation issues can be very difficult and confusing. In almost every injury case you will be dealing with some type of subrogation issue. This is why you need an attorney who understands this complex legal arena.