Many accidents result in medical expenses for the victim. In most cases, the victim will need to pay for medical treatment long before he or she receives a settlement from the at-fault party. It could take months or a year to receive financial compensation from a defendant. The hospital will demand payment for medical bills much sooner than this. The victim’s insurance company often pays the medical bills initially. Then, through California’s subrogation laws, the insurance company will recover the money it spent from the party that caused the injury.
Subrogation refers to reimbursement. California subrogation law recognizes an insurance company’s right to receive reimbursement from the at-fault party for the amount it pays on behalf of the insured. Since the insurance company did not cause the injuries, it should not have to pay. The insurance company can expect repayment for these expenses from the defendant after a successful settlement or jury verdict.
California’s subrogation law goes hand in hand with the Made Whole Doctrine. This is another California law that states that the injured party must receive compensation for his or her losses before the victim’s insurance company can take part of a settlement for subrogation. The settlement must first make the victim whole before reimbursing the insurance company. Applying the Made Whole Doctrine protects the victim by preventing the insurance company from taking the victim’s entire settlement award.
Subrogation does not occur automatically. Instead, it is up to you and your attorney to negotiate subrogation in a way that will ensure you receive your fair share before the insurance company receives its reimbursement. Your lawyer can enforce the Made Whole Doctrine to ensure the initial settlement or verdict supports your lost wages, property damage repairs, pain and suffering, and other damages. Only once you receive compensation for your losses may an insurance company file a subrogation claim.
The insurer’s subrogation claim will seek a portion of your settlement to cover the expenses the company paid for your medical bills. Limits exist, however, to what the insurance company may claim. You and your lawyer may be able to minimize the amount your insurance company takes from your settlement in California. Your San Jose personal injury lawyer will first look at the subrogation clause within your insurance policy. Every health insurance policy has such a clause. Your lawyer will determine how much of your settlement the insurance company can legally claim.
If your settlement award comes directly from the party that caused your accident, your health insurance policy’s subrogation clause will not come into effect. The law only permits a subrogation claim if the victim receives money from a third-party insurer. The same is true if your own auto insurance company is paying the settlement (such as during an uninsured/underinsured motorist claim). If your own auto insurer is paying the settlement, your health insurance company may not claim subrogation.
Your attorney can help establish the limits of subrogation to maximize your financial payout. The law in California limits subrogation to a maximum of one-third of your total settlement if you hired an injury attorney, or one-half of the settlement if you do not have an attorney. The insurance company may receive even less than this portion of your settlement if your lawyer can negotiate with the health insurance provider. An attorney can eliminate claimed medical bills that do not relate to your care, for example, or deduct his or her fees from the subrogation claim. Hiring an attorney to handle subrogation can help you take home the highest possible compensation award.