Most people who make
personal injury claims think their case is over when they reach a settlement or a jury
returns a verdict. That remains true in some cases. Unfortunately, other
cases remain complicated even after the primary claim is resolved. That's
because injured people must sometimes contend with health insurers, providers
of employee benefits, and others demanding reimbursement out of their
settlement or verdict money.
The basis for these demands is the concept of reimbursement ("subrogation"
in industry terminology). Health insurers and other providers of benefits
will typically pay for an injured person's medical care or wages up
front. Months or even years down the road, the injured person recovers
those same expenses as damages from the at-fault party. The provider of
benefits then asks to be repaid some of the money it advanced for the
Many people who have health insurance or other benefits are less than thrilled
about this reality. It simply does not occur to most people that they
might have to give up some of their hard-fought settlement money. They
feel like receiving premium payments for a long time should be enough
for the people who provide benefits to them. Nevertheless, these rights
of reimbursement do exist.
Historically, plaintiff's lawyers and benefit providers worked together
reasonably well to resolve these claims. Benefit providers would agree
to reduce their claims when the settlement was low, such as in cases where
the insurance available was limited. Because the plaintiff's attorney
was essentially working for them too, they would also agree to reduce
their claim to account for the attorney's fees and costs paid by the
More recently, benefit providers have become increasingly aggressive and
greedy. Buoyed by favorable decisions from certain federal courts, many
providers have begun writing fine print provisions into their benefit
plans. These provisions stack the deck against injured people who receive benefits.
For example, newer provisions often demand full reimbursement regardless
of the circumstances. They also allow the benefit provider to piggyback
for free on the efforts of the injured person's lawyer. Some even
demand that the injured person get permission from them before settling
a claim against the person or organization who caused their injuries.
Relying on this type of one-sided language, benefit providers may simply
refuse to negotiate regardless of the situation.
Compounding the problem is a dizzying array of conflicting but sometimes
overlapping federal and state laws governing this issue. Plaintiffs and
benefit providers often can't even agree on which law governs the
dispute. Even if they do, conflicting court decisions can still give either
side "talking points" and prevent agreement on the amount to
This is an area of law badly in need of reform. While benefit providers
should retain their right to reasonable reimbursement, they should not
be able to take all the money in all the cases. Federal and state lawmakers
need to pass laws to ensure that this process is fair to all involved.
This would not require anyone to reinvent the wheel; the Florida worker's
compensation law already requires adjustment of reimbursement recoveries
based on basic fairness. This established law could easily be applied
to other types of reimbursement claims.
In the meantime, the best thing plaintiffs lawyers and their clients can
do is start thinking about these issues before a settlement ever occurs.
They may also need to be ready to fight or negotiate some more even after
a case is over in the usual sense.