Insider Tips for Texas Personal Injury Subrogation
Written by Greg on April 24, 2018
In the vast majority of Texas personal injury cases, a subrogation claim is made. Often, handling the subrogation is an essential part of a personal injury attorney’s involvement in the case for their clients. And the outcome of a subrogation negotiation can make a big difference in what the client receives in their pocket for compensation of the personal injury case.
Subrogation is a situation where someone who has paid medical bills seeks to be paid back those medical bills out of a personal injury settlement. The subrogation interest can arise by contract or by operation of law or both. With a car accident claim or an 18-wheeler accident, subrogation could occur by a health insurance company paying medical bills for the personal injury victim and then seeking to be repaid out of the insurance proceeds from the defendant driver.
The vast majority of health insurance companies and other entities who pay medical bills such as Medicare and Medicaid have various rights to subrogation or repayment for bills of them paid on behalf of the injury victim.
Personal Injury Victims Must Know About Subrogation
Most personal injury victims don’t care about the gross settlement of their case but care genuinely about the net proceeds after attorney’s fees and expenses. Subrogation claims often are substantial, as the medical bills typically have been increasing with the rising cost of medical care.
If a subrogation claim is made, the claim should be addressed as soon as possible. Negotiation of the subrogation interest can have a very positive effect on the bottom line proceeds of the personal injury victim.
It is essential that the injury victim select an attorney who is skilled in the negotiation of subrogation interests when they have had their medical bills paid by a health insurance company or others.
When Health Insurance Pays the Medical Bills
In Texas how the subrogation is handled depends upon whether or not the health insurance policy is one covered by the Employee Retirement Income Security Act of 1974 also known as ERISA or not.
If the policy is one that is self-funded by the employer and not a situation where the employer is simply paying for health insurance, the policy most likely will be an ERISA policy. Federal law will be applied, and it is not favorable to injured people.
Nevertheless, with some negotiations, even ERISA policies will work with victims and their attorneys on the subrogation payback.
New Texas Subrogation Law- CPRC Section 140.005 Payors’ Recovery Limited
Surprisingly, Texas has managed to pass a law that helps personal injury victims when faced with onerous subrogation claims from a non-ERISA health insurance policy.
Now, private health insurance is limited in their subrogation payback to the lesser of 1. One half of the gross recovery less attorney’s fees and costs; or 2. The total cost of benefits paid, provided or assumed by the health insurance company less attorney’s fees and costs.
The law also limits health insurance subrogation claims against their auto insurance as long as the injured person or their family paid the premiums for the automobile insurance coverage.
Practice tip: If the health insurance company claims ERISA status, obtain the Summary Plan Description.
Practice tip: Reductions from non-ERISA policies include proportionate costs.
Medicare and Medicaid
The subrogation procedure can take some time if Medicare or Medicaid is involved in making payments on behalf of the injury victim. The process of obtaining payouts and negotiation with the subrogation claim can be very complicated particularly with Medicaid.
Other subrogation claims can include worker’s compensation if the injury occurred on the job and the employer carried worker’s compensation insurance to pay the medical bills, but another party was responsible for causing the accident or injury.
Attaining a positive result for an accident victim often requires negotiation of the subrogation claims of a third party. If you have been injured in an accident and received a letter from your insurance carrier or other entity that paid medical bills in your behalf, consider speaking with a reputable and experienced injury attorney soon as possible and before any settlement.
Practice tip: Medicare subrogation includes both PIP and Medical Payments benefits under your policy
Practice tip: Medicaid can reduce its subrogation claim depending on the needs of the injured person, and they are likely to consider the attorneys’ fees necessary to recover the money.
On-the-job injuries frequently are covered by worker’s compensation. When worker’s compensation in Texas pays benefits for medical care or wages, the worker’s compensation carrier will have a claim against any third-party recovery.
In other words, the injured worker covered by Worker’s Compensation will have medical expenses paid and obtain some portion of their lost wages and the insurance carrier will seek to recover that money if another person or company caused the damages and the injured person collects money from those people.
Practice tip: Worker’s Compensation carriers will take into consideration the need for an attorney to collect the third-party settlement and will reduce their subrogation claim for the attorneys who generated the settlement.
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At the Baumgartner Law Firm, we are committed to maximizing our client’s monetary recovery not only in the total amount of settlement but also, the net proceeds to the client. Call us at 281.587.1111.