Reimbursing Your Insurance Company for Medical Expenses When You Win a Malpractice Settlement

2 February 2016
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When the unthinkable happens and you sustain injuries due to your doctor's negligence or omission, you may consider filing a medical malpractice suit. This requires the assistance of an attorney who will work with you to determine the financial amount of the claim. It is only natural to assume that if you win your case you will receive the full amount of the award minus the fees for your attorney. You may be surprised to learn that a portion of your award is subject to subrogation.

What is subrogation?

Your medical insurance company has the right to be reimbursed for any payments it made in connection with your injury. The insurance company typically files a lien of subrogation with your attorney. This requires your attorney to reimburse the insurance company for its expenses related to your injury before any of the money is disbursed to you if you win your settlement.

Isn't the insurance company required to pay my medical bills anyway?

Yes and no. Your medical insurance company is required to pay your medical bills, but your policy typically includes a clause on subrogation. That means you have already agreed to reimburse the insurance company if you receive monetary compensation for an injury. The rationale for this clause is that the insurance company would not have needed to expend its resources on your injury if your doctor had not been negligent and therefore has a right to recoup those expenses from your malpractice claim.

Can you just pay back the insurance company on your own?

No. Your attorney is obligated to make the necessary payments to the medical insurance carrier before you receive your portion of the settlement. 

Can you negotiate the subrogation amount?

Yes. Your attorney can negotiate the amount you are required to repay to your medical insurance company. Your attorney can argue that without his efforts to win the case the insurance company would not have received any compensation. How much the insurance company is willing to reduce the amount owed depends on the insurance company and the negotiation skills of your attorney. Your attorney may charge a fee for negotiating the amount you are required to reimburse the insurance company. Always ask about any additional fees.

How will the insurance company know if I received a settlement?

Under the terms of your medical insurance you have already agreed to notify the insurance company if you file a malpractice suit or seek monetary compensation for your injuries. You will also be required to submit medical expenses to the court, so your medical insurance will be on record. Your attorney will notify the insurance company of your claim. Trying to avoid notifying the insurance company is considered fraud and comes with stiff penalties.

Why doesn't the court award the insurance company a separate amount?

The amount of your medical bills is part of your claim. It was used to help calculate the appropriate amount of compensation due to you. Because the insurance company has already paid for medical expenses on your behalf, you are expected to reimburse the insurance company from the funds from the final settlement.

Do you need to repay all the medical expenses your medical insurance has made since the injury?

No. Only medical payments made for treatment related to the injury is subject to repayment. If you have had medical treatment for other conditions or unrelated injuries since the incident, make sure your attorney knows which expenses are not related to the medical malpractice suit. These payments are not subject to repayment.

Good communication and accurate record keeping is must when it comes to handling your malpractice case. Talk to your attorney honestly about your concerns and keep him or her abreast of any changes. If you don't currently have a personal injury lawyer, find one through a website like