If you are injured, and insurance covers it (say insurance pays for medical expenses as well as lost pay, and say there is no deductible involved), and then you sue the person responsible for your injury, and you win exactlly the amount for medical expenses and lost pay, then who gets that money?
I assume the insurance company does. But I want to confirm that assumption.
-FrL-
Your insurance company is able to recoup the costs for the services that they provided. And they will, if they find out about it.
In fact, if you sustain a reasonably expensive injury, you’ll probably get a call from your medical insurance company afterwards asking for lots of details, so they can decide if there’s anyone they can sue to get their money back. Luckily for me however, it appears they can’t sue the insured himself if the injury was due to his own stupidity (safety features are there for a reason. Don’t bypass them.)
In most cases, a first-party insurer (health, property, automobile collision and comprehensive) has subrogation rights and can collect any portion of a judgment or settlement that covers damages for which the company has paid. This gets complicated and there are sometimes procedural requirements imposed on insurers that wish to collect. In most cases, this kind of subrogation comes from a clause in the insurance policy that also permits the insurer to sue the defendant to recover for payments it has made.
For a while, it was possible to settle a case for “general damages only,” which purported to leave the special damages (doctor bills, car repair bills) out of the settlement. This approach has become more complicated in many jurisdictions. There are some other related doctrines that make the whole thing even more complicated, but I don’t have time to explain them right now.
Right. Every time I’ve injured myself in a way that required my seeing a doctor such as an orthopedist, within a few weeks I got a form from the insurance company asking for all kinds of information about where the injury occurred, etc. It’s clear they’re looking to see if anyone might be sued.
Ed
Or at least who to send their subrogation letter to. 
I never understood this about insurance companies. I always looked at them as legalized bookies, making risk assessments, playing odds.
Why should they be allowed to sue anyone? The very nature of their business is taking risks. If they have no risks then this is like a guaranteed money maker. No company should be deemed guaranteed.
This is like a bookie suing a footbal team because they didn’t cover the spread and he now has to pay out more than he took in because he didn’t balance his risk correctly.
Exactly. Which is why insurance companies are not like bookies: they’re worse.
No, it’s like a bookie suing a boxer for taking a dive. Insurance covers things that you do to yourself on accident, not things other people do to you. For example, if I rear-end you, should your insurance have to pay for it just because you have it, or should I be responsible?
I don’t see the issue. They might be gamblers, but the cost to them is that they assume my damages, if I have any. Therefore, if there is a legal recourse to claim tort from somebody else, they have also assumed the opportunity to sue, at their own cost.
I don’t have a problem with that concept. (Of course, as it happens, I don’t really have much insurance, even the renter’s coverage that I admit I probably should have.)
It was decades ago, but I was hit by a car and sued the driver; my insurance company started hounding me to sign a right to subrogation form. We told our personal injury attorney, who told us not to sign anything and tell them to call his office (Why would they need for us to sign anything if they already had the right to subrogation?) They called him, and he poked enough holes in their claim that they audited the hospital instead and then gave up and paid the bills.
That doesn’t make sense to me. Was the insurance company trying to avoid paying you? If the insurance company paid you, they will have the right to collect that money from another party who was at fault. Their payment of the claim should really have little to do with subrogation. If the insurance company doesn’t pay you and they are obliged to, you sue the insurance company for breach of contract. Subrogation allows them to collect from the driver. If YOU sue the driver, the insurance company won’t compensate you, because you’ve already been paid by the driver. You can’t collect multiple times for the same damage. I think your lawyer wanted a fee rather than letting the insurance company use their own in-house counsel.
You forget the cost/premium structure is built around the insurance company collecting damages wherever possible. If you want a system where the insurance company never sues the at-fault person or collects won damages from the victim then that is possible, but expect your premiums to soar.
I think this was the concept at the center of that big Wal-Mart scandal a while back. The only real “scandal” was that it publicized what a crappy policy it is in a very human and personal way.
Early last summer I was physically assaulted by an acquaintance, resulting in costly physical and emotional trauma. Before my insurer (provided by my union) would pay for the physical injuries (exam, x-rays, lab work, and subsequent treatment) they sent me a form letter asking for specifics of the injuries, exactly how and when it happened. I answered honestly and explained that my injuries were caused by assault and battery. The next letter I got asked for a copy of the police report – which was never made due to some pretty sensitive issues surrounding the assault. Shortly thereafter I began to develop symptoms of PTSD that grew unbearable and I was required to take a leave of absence from work until I could get my head together.
Short Term Disability and health insurance are both handled by my union. Since I was adamant about not filing a police report (it would have caused more emotional trauma for me) they refused to pay any of my claims, including weekly STD payments. I was out of work for three months without receiving any benefits at all while my medical bills piled up because they wouldn’t pay them until I supplied a police report and signed a notarized subrogation form. Finally, at the point where I’d reached my psychological worst, I knew that I needed to check myself into a psych hospital or face the business end of a shotgun. I called the union rep with whom I’d been fighting all summer and finally gave in, told her I’d do whatever I had to do, even if it meant hurting many more people than myself by going to the police. I’d sign the fucking subrogation form, I’d file a police report, but just please approve my admission to the hospital because I’d reached the end of my line, maybe the end of my life.
She put me on hold and spoke to her supervisor. The final outcome was that my payments, which had been withheld for nearly three months at this point, would be paid if I would at least sign the subrogation agreement. If, at some later date, I decided to press charges and received any kind of monetary compensation by civil suit, they would have the right to recoup their money from any judgment I received. I don’t know if they were being assholes by pushing me to report the assault for the remote chance of recouping their losses, or if I was in such a fucked up state of mind that I didn’t understand exactly what they were asking of me, but a week after signing the damn form every one of my medical providers (including my therapist, who was also being denied payments because my diagnosis was acute PTSD) was paid exactly what they were owed.
And I received a large STD check that was three months late, putting me in three months of poverty. Fucking bastards. I hate insurance companies.
There’s more to it then that. If you mention that it happend at work, they’ll make you turn it into a workers comp claim so they don’t have to cover it.
It was the lawyers from my health plan who were crying for subrogation, not my auto policy. The case was for the state required minimum liability amount. I wouldn’t have received anything if they had taken the case. Sorry, I should have been more clear.
According to my lawyer (and yes, his contingency fee was on the line), the laws in my state did not provide an automatic right to subrogation, and the policy’s wording with respect to subrogation was vauge. Lawyers aside, if they had the right to the money then why were they calling day and night to get us to sign away a right that they already had?
Sure, it was expensive for the insurance company–the hospital bills were about equal to one year’s pay. But we were responsible for part of it; I was in the hospital for a month and disabled for five more, my family had to make accommodations for getting me to physical therapy and doctors visits, and quite frankly I do think that there can be such a thing as monetary compensation for pain and suffering when someone gets drunk and nearly takes your leg off. In the end, we just refused to be bullied out of our money.