Saturday, February 21, 2009

Paying It Forward? Insurance Comapnies Call It "Paying It Back"

"Why do I have to pay back (my health insurer) (my auto insurance company) (Medicare) (Medicaid) out of my injury case?" It is one of our clients' most frequently asked questions. Short answer? Because the law basically allows it. Let's take private insurers, like your health or auto insurance companies, first. Almost all states allow private insurers to insert a fine print clause, buried in your health or auto policy, demanding that you reimburse them out of any settlement or verdict if they pay any bills that are due to your injury. This is known as "subrogation.".

If it seems unfair that your own company can get back what it paid out of your settlement, despite the fact that you already pay premiums for this coverage, it's only because it is. In fact, a minority of states prohibit subrogation. But most states, including Ohio, allow it. Sometimes the amount of the reimbursement can be negotiated if there are compelling circumstances. But courtesy of a recent Ohio Supreme Court decision, a health insurance company is entitled to confiscate every penny of your settlement as reimbursement for bills it paid, even if it leaves you with nothing, as I've written about before.

What's more, under federal law, Medicare is entitled to be reimbursed as well if it paid any bills due to an injury and if you obtain a settlment or verdict. Dealing with Medicare to figure out what they paid, and how much they are requesting as reimbursement, is the equivalent of slamming your head against a concrete wall--repeatedly. Frequently, we settle our clients' claims, only to have to wait for months for Medicare to tell us how much they're claiming as reimbursement.

The truth is that we as plaintiffs' attorneys put back millions (and probably more accurately billions) every year into the Medicare coffers as a result of successfully pursuing injury claims. Although I and my clients would prefer not to have to do this, at least with respect to Medicare it serves the purpose of putting money back into a government program that serves society.

But when private insurance companies are getting millions back from their own insureds, who pay premuims for this coverage, or have earned it as a benefit through their employment, the only "benefit" is the abstract, company line insurance industry argument that recovering this money "keeps premiums and costs down."

To that I say "meadow muffins" (syn; see "horse hockey," "crap," "b.s."). If that's the case, why aren't our health insurance premuims going down? As small business owners who provide health care coverage for our employees, our health care premuims have NEVER gone down, and in fact, increase every year. And I'm sure I speak for everyone else on the planet on that score.

"Decreasing health insurance premuims." File that one with "jumbo shrimp," hot water heater," and countless other oxymorons...

1 comment:

Joe Dunson said...

I agree with your analysis on public and private subrogation rights. State and Federal agency subrogation furthers the legitimate social policy of using public funds to generate the most value added for the most people. However, private subrogation does not effectuate any such policy. Private insurers engage in risk analysis before writing policies, and insureds pay premiums in exchange for coverage based on that analysis. Insureds pay for coverage and insurers bet that providing coverage will be cheaper than paying claims (and they can make money on the market). Why should insureds pay on the back end when insurers already realized their gain on the front end?
Keep up the good work and keep posting!