Don’t be surprised when – after your personal injury case is over – your health insurance company demands a portion of your settlement.
This is called a health insurance lien – an important aspect of your personal injury case.
Most people are not aware that if they settle a personal injury claim, their health insurance carrier – either a private or government-based plan – has the right to demand reimbursement. Buried deep down in every health insurance policy contract – something you have more than likely never read or even received – there is a section says that if you recover a settlement for injuries and health insurance paid for the related medical treatment, the health insurance company is entitled to reimbursement. This can come as a very unwelcome surprise to personal injury plaintiffs when their net settlement is reduced in order to reimburse to insurers.
Generally, the health insurance carriers negotiate reimbursement and do not collect 100% of what they paid for your medical treatment, except if you have a “self-insured” healthcare policy, which is most commonly found in very large private company health insurance plans. In California, most private or employer-based health insurance plans are limited to one-third of your settlement under California Civil Code Section 3040(c)(2) – if you retain an attorney – or one-half if you represent yourself. Depending on the plan language and case specific facts, there may be other ways that an attorney can negotiate with the health insurance company to reduce the amount you must repay. It is best to find out early what type of health insurance plan you have, so you understand your options for negotiating when the case settles.
If you receive health insurance through the government, such as Medi-Cal or Medicare, there are very strict rules about notifying them of the pending injury claim and repayment once there is a settlement. The general rule: if the government paid for any portion of your medical care, they have a right to get paid back if you later recover money for your injuries.
There can be serious consequences to avoiding repaying your health insurance carrier, and these are spelled out in your policy. For example, if you are still actively insured with the same health insurance carrier, the company can withhold future benefits to offset what they believe you owe them – or you may be personally liable to reimburse the health plan. It is always best to address the health insurance reimbursements early in your case when you have the most opportunity to successfully negotiate.
And this is the operative word – negotiate. It is important to remember that it is typically possible to get the lien holder to accept less than the amount they paid.
In order to maximize your net recovery in your case, it is optimal to hire a reputable attorney with experience in negotiating with health insurance companies of all types.