If you have suffered a personal injury and are ready to settle with the insurance company, you may be breathing a sigh of relief, thinking you can finally put the incident behind you. Then imagine your surprise when you open your mail to find a confusing letter from your health insurance company informing you they have a right to “reimbursement and/or subrogation” from any financial compensation you receive from a settlement
If your health insurance company has paid claims for services you have received, they have the legal right to seek reimbursement from the at-fault party or their insurer. Understanding Oregon personal injury and insurance laws is key to maximizing your settlement and preventing insurance companies from taking more than their fair share.
What Is Subrogation and How Does It Work in a Personal Injury Claim?
You may be asking yourself what subrogation is and how it will affect your personal injury claim.
In Oregon, subrogation occurs when your insurance company pays your claim and then pursues repayment from the at-fault party or their insurer. Subrogation exists to ensure that the at-fault party does not escape their financial obligations, as well as to prevent a “double recovery” by the injured party.
For example, suppose your health insurance provider pays for your accident-related medical bills. After you reach a settlement or verdict with the at-fault party’s insurer, your health insurance company has the right to demand $50,000 from your financial recovery. The insurer may pursue a subrogation lien against your personal injury settlement, which may significantly reduce the final amount you ultimately receive.
Types of Subrogation in Oregon Personal Injury Cases
The subrogation you may need to address will depend on the type of insurer seeking repayment. Some of the most common types of subrogation issues include:
Health Insurance Subrogation
Private health insurance companies and self-funded employer plans (ERISA plans) often assert their right to reimbursement after paying a claim. Because ERISA plans are subject to federal oversight, they typically have extensive subrogation rights that often require skilled legal guidance.
Even so, state law (ORS 742.534) adheres to the “made whole” doctrine, which dictates that Oregon-regulated health insurers may not recover more than the amount remaining after legal fees and expenses.
Medicare and Medicaid Subrogation
Federal law provides Medicare and Medicaid programs with strong subrogation rights. The Medicare Secondary Payer Act (42 USC 1395y) creates a top-priority lien that must be satisfied before an injured party can receive a financial recovery. If the lien is not properly resolved, both the individual and their attorney may be held personally liable.
PIP (Personal Injury Protection) Subrogation
Oregon PIP insurers also have subrogation rights and may seek reimbursement from the at-fault party’s insurance provider. Even so, PIP insurers must adhere to the state’s “made whole” doctrine as far as the amount of reimbursement they may recover after paying claims.
Workers’ Compensation Subrogation
If you suffered on-the-job injuries caused by a third party, Oregon workers’ comp can assert its subrogation rights under ORS 656.578-656.593. For example, suppose you drive a delivery truck and are hit by a careless driver while on the job. Under the law, workers’ comp can seek to recover the amount of compensation you were paid due to your injuries from the responsible third party.
Oregon’s “Made Whole” Doctrine and How It Protects You
Even though insurers are afforded strong legal protections under state and federal law, Oregon’s “made whole” doctrine protects injured parties. In Oregon, insurers who are regulated by the state cannot exercise their subrogation rights unless the injured party has been fully compensated. But Medicare, Medicaid, and ERISA self-funded plans are not subject to the state’s made-whole doctrine.
An Oregon injury attorney can assist you in determining which subrogation claims are exempt from the state’s “made whole” protections.
How Subrogation Affects the Size of Your Settlement
Subrogation can significantly affect your financial recovery. If your settlement is $150,000, you might expect about 95,000 after $49,500 in attorney fees and $5,000 in costs. But a $40,000 subrogation lien from your health insurer could reduce your net recovery to just $55,500.
Without having an Oregon personal injury lawyer on your side who can negotiate a subrogation lien, you may receive far less than you anticipated. A skilled attorney can often work with the insurance provider and negotiate a lien reduction of 30 to 50% or more, depending on the case.
Can You Negotiate a Subrogation Lien and What If You Ignore It?
One of the most essential legal services that an Oregon personal injury attorney can provide to clients is assistance with negotiating a subrogation lien. Ignoring a subrogation lien will not make it go away and ultimately result in you receiving a settlement worth far less than if you allow your attorney to advocate on your behalf.
One of the most frequently used negotiation strategies involves your legal representative arguing that the insurance provider should share attorney fees since their work led to a financial settlement. Your attorney may choose to argue that you were not fully compensated for your damages, and your subrogation should be reduced. Your attorney could also choose to try to negotiate a percentage reduction of the settlement if the policy limits or liability were disputed.
Cases involving ERISA plans or Medicare are more challenging to navigate and are best handled by a knowledgeable Portland personal injury attorney. Because your insurer can file a lawsuit against you to recover the money they paid out in claims, deny future claims, or cancel your policy, it is imperative that you seek legal assistance as soon as possible.
Tillman Law is a Portland area law firm that negotiates subrogation liens as part of every case we handle. Contact our law firm at (855) 503-5035 to schedule a consultation.
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