Childers, Schlueter & Smith is NOT taking any subrogation (medical lien) only cases. This information is for educational use only. If you have a personal injury case that has not been settled and you are not represented by another attorney already, we may be able to help you. If you are represented already please contact your existing attorney for further information.
You paid your health insurance premiums. Your insurance helped cover your medical treatment. Now that your personal injury case is approaching settlement, your health plan wants some of that money back. This is often called subrogation or reimbursement rights.
It is understandable to ask: “Why should I have to repay my health insurance company when I paid for that coverage?”
The answer depends on your coverage, the language of your health plan, and the law that applies. Some health plans have enforceable repayment rights. Others face significant restrictions. A demand for reimbursement should be reviewed carefully before anyone assumes the amount is owed.
This article is for general informational purposes only. Childers, Schlueter & Smith, LLC does not accept matters limited solely to resolving health insurance subrogation or medical liens. In fact, we do not claim to be specialists in this area of law either. We simply are trying to help those in need understand generally what subrogation is and how it may affect you. If you already have an attorney, direct questions about your case to that attorney.
What Are Subrogation and Reimbursement?
These terms are often used together, although they describe different rights.
Subrogation generally allows an insurer or health plan that paid benefits to pursue recovery from the party responsible for the injury.
Reimbursement generally means the insurer or plan seeks repayment from money the injured person recovers through a settlement or judgment, for treatment directly related to the injuries claimed in the lawsuit or action.
For most clients, the practical concern is the same: Can my health plan claim part of my recovery, and if so, how much?
People sometimes refer to these claims as “health insurance liens.” Whether a particular claim creates an enforceable lien or repayment obligation requires a closer look at the applicable law and plan documents.
Why Does My Health Plan Want Its Money Back?
Many health plans contain contract provisions requiring repayment if the plan pays injury-related medical expenses and the covered person later recovers money from another party for that injury.
Paying premiums does not necessarily eliminate those provisions. Premiums provide coverage under the terms of the policy or plan, which may include reimbursement obligations.
However, a repayment provision does not answer every question. Its enforceability and scope depend on the governing law, the plan’s wording, and the circumstances of the recovery.
Does Georgia Law Protect My Settlement?
Georgia law provides important protections when it governs the reimbursement claim.
Under O.C.G.A. § 33-24-56.1, reimbursement is subject to requirements concerning full compensation for the injured person’s losses and a proportional reduction for attorney’s fees and litigation expenses. These protections are commonly discussed as Georgia’s “made-whole” rule.
In practical terms, a settlement that does not fully compensate someone for the losses caused by the injury may prevent reimbursement under this statute. The analysis includes economic and noneconomic losses—not simply whether the settlement exceeds the medical bills.
The statute also distinguishes reimbursement from direct subrogation against the at-fault party and contains notice requirements that can affect enforcement.
But for most, these Georgia protections do not govern most health plans. Federal law usually does for most plans, making identification of the coverage essential. [1]
Why Does the Type of Health Plan Matter?
Two people can carry insurance cards displaying the same company’s name and have very different reimbursement obligations.
For employer-sponsored coverage, an important distinction is whether the plan is fully insured or self-funded:
- Fully insured plans: An insurance company bears the financial responsibility for covered claims. Applicable state insurance protections may limit reimbursement, even when the employer’s benefit plan is also governed by ERISA.
- Self-funded ERISA plans: The employer or plan bears the financial responsibility for covered claims. Federal law generally prevents states from applying their insurance restrictions directly to these plans.
A familiar insurance company may administer a self-funded plan without actually insuring its benefits. The name on the card alone does not establish which rules apply. [2]
ERISA stands for the Employee Retirement Income Security Act of 1974, a federal law governing many private employer benefit plans. For an enforceable ERISA reimbursement claim, clear plan terms can control even when repayment leaves the injured person less than fully compensated.
The wording also matters when determining whether the plan must contribute toward attorney’s fees. In US Airways, Inc. v. McCutchen, the Supreme Court explained that equitable rules cannot override controlling reimbursement terms, but the common-fund rule can fill a gap when the plan is silent about allocating attorney’s fees. A reduction therefore should not be assumed—or ruled out—without reviewing the documents. [3]
Is the Claim Based on What the Doctor Billed or What Insurance Paid?
A provider’s original bill and the health plan’s actual payment can differ substantially.
For example, suppose a provider bills $2,000, but the health plan pays $1,200 and the provider accepts that payment under its network agreement, subject to any applicable patient responsibility. The provider’s $2,000 charge does not establish that the plan paid—or can recover—$2,000.
An itemized payment history helps identify what the plan actually paid. Any reimbursement review should also examine whether the listed treatment relates to the injuries involved in the claim and whether payments were later reversed or refunded.
This example addresses the plan’s repayment claim. Deductibles, copayments, coinsurance, and other legitimate provider balances are separate questions.
Can the Repayment Amount Be Reduced?
Sometimes. Depending on the coverage and governing law, a claim may be challenged, reduced, negotiated, or eliminated.
A careful review may include:
- Confirming that the plan has an enforceable reimbursement right.
- Obtaining the governing policy or plan documents.
- Checking the payment history for unrelated treatment, duplicate entries, or incorrect amounts.
- Evaluating applicable made-whole protections and contributions toward attorney’s fees and expenses.
- Requesting a negotiated compromise when appropriate.
There is no universal reduction percentage. The result depends on the legal rights involved, the documents, and the facts of the case. Lien resolution teams and companies also play a vital role in negotiating these interests. Generally speaking, they are the experts, we are simply trying to explain general concepts in very broad terms to promote basic understandings of ‘subrogation’.
What About Medicare or Other Government Coverage?
Medicare has its own recovery process. When it makes certain injury-related payments while a liability claim is pending, those payments are considered “conditional” because repayment may be required when a settlement or other recovery occurs.
An initial Medicare conditional-payment figure is not necessarily the final demand. The payment history can be reviewed, unrelated charges can be disputed, and Medicare provides procedures concerning repayment, waivers, and appeals. These issues should be addressed during settlement planning. [4–5]
Medicare Advantage, Medicaid, and other government-related coverage require separate review. Do not assume the rules for a private health insurance policy apply to those benefits.
Can Reimbursement Issues Delay My Settlement Payment?
They can and often do despite best efforts and advanced planning. Agreeing on a settlement amount and determining how much can be distributed are separate steps.
Counsel may need time to obtain payment records, evaluate a repayment demand, resolve disputed charges, and document the final amount. Depending on the circumstances and applicable professional obligations, some settlement funds may need to remain in trust while a claim is resolved.
That does not necessarily mean every dollar must be held until every issue is finished. Your attorney or hired lien resolution team can explain whether an undisputed portion may be distributed and what must remain reserved.
What Should I Do if I Receive a Repayment Letter?
Send the letter promptly to the attorney or hired lien resolution team handling your injury claim. Include any questionnaires, payment summaries, deadlines, or proposed agreements.
Provide information about all health coverage that paid for treatment, including coverage that changed during the case. Keep copies of correspondence, and consult your attorney before signing a repayment agreement or paying a demand.
A repayment letter is a reason to investigate the claim. It does not, by itself, establish that every dollar requested is legally owed.
Understanding Your Net Recovery?
The settlement amount is only one part of the financial picture. Attorney’s fees, case expenses, valid reimbursement obligations, and any outstanding medical balances can affect what you ultimately receive.
Ask your attorney or hired lien resolution team to explain the proposed distribution, which claims remain unresolved, and whether the figures are estimates or final amounts. Understanding those issues early can help prevent surprises as the case concludes.
This article provides general information and is not legal advice. Reading it or contacting the firm does not create an attorney-client relationship. Reimbursement rights vary by coverage, plan language, jurisdiction, and case circumstances, and the law may change. No particular result or reduction is guaranteed.
Childers, Schlueter & Smith, LLC does not accept subrogation-only or medical-lien-only matters. If you are already represented, please contact your existing attorney about your case.
Sources for Editorial Review
The numbered references correspond to the source markers in the draft. They may be retained as links or removed from the published article after editorial review.
- O.C.G.A. § 33-24-56.1
https://law.justia.com/codes/georgia/title-33/chapter-24/article-1/section-33-24-56-1/
- FMC Corp. v. Holliday, 498 U.S. 52 (1990)
https://www.law.cornell.edu/supremecourt/text/498/52
- US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013)
https://www.law.cornell.edu/supremecourt/text/11-1285
- CMS — Conditional Payment Information
- CMS — Medicare’s Recovery Process
https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process
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