When Insurance is a Loan

The average person believes that a payout from an at-fault driver is theirs to keep, but that isn’t always the case. If you’re injured, you may be required to reimburse your own insurance back for any money your own insurance paid on your behalf. An attorney can inform you of your rights, help you maximize your recovery, and possibly reduce your own insurance company’s claim.

Understand the fine print 

A recent South Dakota news story reads:
"Have you ever read the fine print in your health insurance policy? You may be surprised by some of the terms, especially if you get seriously hurt and expect an insurance settlement. A South Dakota motorcyclist found that out the hard way." 

It’s a common misconception: many clients don’t know insurance payments for medical bills are actually a loan when another party is at fault. This is true of:

  • Private health insurance
  • Auto medical payments and personal injury protection coverage
  • Medicare
  • Medicaid
  • VA
  • IHS
  • Tricare
  • Worker's Compensation

When situations like this arise, people inevitably ask why they pay an insurance premium if they can’t keep the money they’re given in a settlement or recovery against the at-fault driver. It can seem as though the insurance company is acting as a lender instead of insurance, and they feel betrayed. 

The situation is even more shocking when their insurance company demands to be repaid a significant portion — if not all of — the recovery. You wouldn’t be wrong to be shocked, and the subject is the source of legal controversy. 
Some of the worst situations our firm has encountered are when people call after having settled a case on their own, only to discover they owe an insurer money.

When insurance becomes a loan

When an insured person is injured in an accident, their own health insurance has an obligation to pay covered medical bills. However, when the injured person receives a settlement or verdict, they may have to pay back what was paid on their behalf by their own health insurer. Insurance companies use legal principles called subrogation and reimbursement to define when and how you are responsible for paying them back.
Subrogation is, generally, a contractual principle that allows a third party that has paid for an expense to "stand in the shoes" of the injured party. Any recovery for the bills that were paid legally belong to the subrogated third party. Similarly, statutes provide a right of reimbursement to most, if not all, governmental third party payors. For example, in the case of Medicaid, statute describes Medicaid as a "secondary payor" when another party is at fault for the injury. These statutes require reimbursement to the governmental payor for amounts paid and can carry stiff penalties for failure to do so.

How we can help

When you’ve been involved in an accident, it can be life-changing in many ways. What you don’t want to worry about is battling with your insurance company when you should focus on healing. 
Yates & Shubeck Law can optimize your recovery insurance situations. Per a South Dakota state law known as the Bowen rule, private health insurers must contribute their share of the cost of recovery, including attorney's fees. Medicare and Medicaid must also contribute to the cost of recovery under state and federal statute

Employer sponsored health plans and some government health providers are more complicated. In these situations, the governing contract and statutes must be closely examined. Skilled negotiation may also be required to optimize the amount of recovery.

If you have been injured, call Yates & Shubeck to solve these complex issues and optimize your recovery. Contact our office today to schedule a free consultation. We can advise on whether your insurer may have an obligation to help pay for your attorney, or we may be able to reduce their claim. Discussing your case is not a guarantee of legal representation.
DISCLAIMER: Discussion of past results does not constitute a guarantee, warranty or prediction regarding the outcome of your legal matter.  Each case is unique to its own facts and laws are constantly changing, past results do not guarantee or predict future results.