Subrogation Interest: What happens when the wrong insurance pays for my treatment?

Personal injury and workers’ compensation claims are often a mess of conflicting insurance policies. Depending on your circumstances, you may be protected by multiple layers of insurance coverage. 

Luckily, Minnesota law provides guidance on which insurance company is supposed to pay medical bills–depending on the type of accident and what you were doing at the time.

Auto Accidents

As part of the personal injury claim process, if you were injured in an auto accident, your personal auto insurance must provide insurance coverage and pay the first $20,000 of medical bills related to that accident. Any medical costs beyond that are the responsibility of the at-fault party. If you don’t have your own auto policy, Minnesota’s No-Fault system will determine who is responsible for the first $20,000 of bills.

Work Injuries

In a similar fashion, if you were injured on the job, then your employer and/or their insurance company must pay any bills resulting from your reasonable medical treatment related to the work injury.

In both cases, all medical bills should be sent to and paid for by the company that has the highest priority to pay. But that doesn’t always happen.

Subrogation

Sometimes, medical bills from an auto accident or a work injury are sent to your own personal health insurance, like a Blue Cross Blue Shield or state-sponsored Medicaid policy.

When your personal health insurer pays bills that were supposed to be paid by an insurer with a higher priority, (like worker’s compensation insurance) then your personal health insurer gains a legal right to recover the funds that they paid. This right is called subrogation.

In a practical sense, an insurer with a right of subrogation is part of your injury claim–whether you want them to be or not. They are, in effect, “piggybacking” on your claim for damages against at-fault parties or for payment of workers’ compensation benefits. 

A subrogation claim simply includes the amount of money that was paid toward your medical bills. This amount is also called the “subrogation interest.” It simply means the amount for which the insurer is “interested” in getting reimbursed. If an insurer is claiming they have a subrogation interest in your claim, the insurer must be notified of any settlement so that their claim can be addressed. 

A subrogation interest cannot be ignored and must be addressed before your claim is completed. Fortunately, insurers with a subrogation right are usually willing to negotiate. If an insurer’s subrogation interest is overlooked or ignored, the insurer can seek legal recourse against you and/or your attorney.

To avoid these issues, make sure to inform your attorney about any personal health insurance coverage you have while undergoing treatment for a personal injury or workers’ compensation claim. 

Even if your doctor’s office knows which insurance to bill, they still might mistakenly submit the bills to the wrong insurer. Your attorney will make sure that the health insurer is aware of your claim, so that any potential subrogation interest can be addressed, and settlement of your claim goes smoothly.

Subrogation and insurance priority can quickly cause complications in an otherwise straightforward claim. If you have questions about this, or any other aspect of your case, call Aaron Ferguson Law today to schedule a free consultation with one of our experienced attorneys.