Injury In Idaho

Subrogation and Liens in Car Accident Cases

Sometimes boring subjects can be very important. Mention ‘liens’ and ‘subrogation’ rights, and people’s eyes start to glaze over. But liens and subrogated interests can substantially reduce the amount of money an injured person receives in a car accident case or any other type of lawsuit arising out of injuries caused by the negligence and carelessness of others.

Definitions

Although liens and subrogation rights are similar but technically different terms, they have one thing in common – the right of a health insurance company or some other entity to obtain part of a settlement of a injured person’s lawsuit.

First the Good News

Liens and subrogation rights are based on the very fair notion that a person should not be paid twice for a single item of damage. For example, assume that Coeur d’Alene Health Insurance Company pays a $500 medical bill for treatment administered to a person injured in a car wreck. When the case finally settles, and among the damages recovered in the case is $500 for the medical treatment in question, it seems only reasonable that the money be returned to Coeur d’Alene Health and not retained by the injured person. Otherwise, the injured person will have been paid $1000 for $500 worth of medical care.

Now the Not So Good News

As the saying goes, “the devil is in the details.” Likewise, the hazard posed by liens and subrogation rights arise in the manner in which the holder of the lien or subrogation interest demands payment. To illustrate this, consider the following two examples:

1. Mary Smith is injured in a car wreck due to the negligence of the other driver. Her medical bills total $10,000 (paid by Coeur d’Alene Health Insurance Company) and her wage loss is $5000. When adding an amount for her pain and suffering, the insurance company for the at-fault driver settles the case by paying Mary $30,000. Like most personal injury attorneys, Mary’s attorney works on a one third contingent fee basis. His fee for recovering $30,000 is $10,000. Coeur d’Alene Health Insurance Company recognizes that the recovery of its health care expenses was due to the efforts of Mary’s attorney, and thereby tells Mary that it will accept 2/3 of the $10,000 as part of the settlement. This is a fair result.

2. Assume the same facts as above, but Coeur d’Alene Health Insurance Company instead refuses to pay any portion of the attorney fees incurred to obtain a settlement from the at-fault driver. In such a situation Mary and her attorney have gone to bat for the health insurance company and yet the company refuses to share any of the costs incurred in doing so.

Why would any client agree to the harsh terms of example # 2? The reason is that in some instances the law that applies to the case mandates that result. First, there is the impact of ERISA, a pension and health care reform law passed in 1974. If the injured person’s health insurance is an ERISA plan, the insurer is not required to make any reduction in the amount of reimbursement it receives. Second, the law in some states does not force the health insurer to reduce the amount of reimbursement it receives. In this regard, Washington law favors the injured person but Idaho law favors the health insurance company.

Fortunately, even in difficult situations, an experienced personal injury attorney can often negotiate a settlement within even the most intransigent of health insurance companies.

Contact James Bendell if you need help or have questions about your injury claim at or by filling out the contact form.

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