Why is subrogation allowed to exist?

Oct 19, 2000
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My wife was in a pretty bad car accident last year, and racked up a pretty hefty sum in hospital bills (around $80k-$100k total). Our health insurance covered a great deal of it, although a much lower rate than if we would have had to pay out of pocket. Now that we've completed our settlement case against the at-fault insurance company, our health insurance gets to subrogate and take over a 3rd of our settlement to get back what they paid in. Considering the lawyer gets almost a 3rd cut as well, we barely made out with more money than the lawyer and subrogation. Had the lawyer not actually reduced his fee from the standard 33.3%, both parties would have gotten more than we got, and it's my wife who has the life-long injury to deal with for the next 40 or 50 years.

Why is it that I pay for health coverage out of every single check, and I FINALLY have to use it, only for the health insurance company be able to claim they are owed money back just because my wife and I got a settlement out of it? It's complete bullshit. Not only do they pay MUCH less to the hospital than what I would have had to pay had I not had insurance (the hospital wouldn't have let me pay half of the bill and walk away), but then they get their money back from what is supposed to help my wife and I cope with future complications. I should be able to ask for a significant portion of my premiums back if I don't use my coverage at the end of the year, that's only fair, right?

One thing I've learned over the past year, and this is a HUGE FYI to everyone reading this, if you don't have underinsured coverage on your own auto policy, get it. For the love of god, get it, even if it's an extra $10/month. Underinsured will give you access to more money from your own insurance if the at-fault insurance isn't covered for enough. Don't just sign up for insurance and get the lowest payment possible. Unfortunately, I was never properly taught to respect insurance and not to fuck around with it. In my case, it takes something like this to teach me.

/rant
 

RKS

Diamond Member
Oct 9, 1999
6,824
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We always cut our fees to make sure we don't get more than the client but subro can be a bitch. I have worked with insurance companies that are great in reducing their claims as well. Medicare and Medicaid are different; they'll come after a few dollars even if it is years later. You are absolutely correct as far as Uninsured/Underinsured coverage.
 

nerp

Diamond Member
Dec 31, 2005
9,866
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Insurance companies make health care more efficient! Stop complaining!
 
Oct 19, 2000
17,861
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Originally posted by: RKS
We always cut our fees to make sure we don't get more than the client but subro can be a bitch.

Our particular subrogation oppressor gave us a 10% discount, which is better than nothing I guess. Without that 10%, we would have right at the same amount of cash-in-hand than went to subrogation.
 

waggy

No Lifer
Dec 14, 2000
68,145
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Originally posted by: nerp
Insurance companies make health care more efficient! Stop complaining!

yeah instead of him getting a little money if he didnt have insurance he would owe $80-100k. damn them insurance company! they just saved him 100k! fuckerS!


i agree subrogation is a pain.
 

mugs

Lifer
Apr 29, 2003
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Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.
 
Oct 19, 2000
17,861
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Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

But I pay the health insurance to take care of those bills for me. Why am I paying for health insurance if in the end I have to pay for the bills anyway?
 

waggy

No Lifer
Dec 14, 2000
68,145
10
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Originally posted by: peritusONE
Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

But I pay the health insurance to take care of those bills for me. Why am I paying for health insurance if in the end I have to pay for the bills anyway?

why should you get to keep the money for something someone else paid? this is nto a windfall.


cancell insurance then. then next time you get into a accident have fun paying the 100k.
 

FelixDeCat

Lifer
Aug 4, 2000
29,156
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I found out about this crappy practice back in 2007. I had United Healthcare. I crushed my finger in a car door. I received treatment. A few months later I get letter and phone call from the subrogation company (some slick outfit using an Indian call center) trying to get me to file a claim on my auto insurance so they could be reimbursed. I told them to go to Hell. After a few more calls and letters they gave up. Bastards.

United Healthcare is an insurance company. They make money by taking a risk that your claims wont exceed your premiums. If you file a claim and they lose money, tough shit! Tough freaking shit. If you cant make money by taking a risk, price your policies correctly so you do and reinsure all you can to mitigate your business risk to further insure you MAKE A PROFIT and can stay in business by taking RISK. Its a risky freaking business, but if you think you can do it, go for it. But if you fook up and take a loss by paying my medical bills thats your tough shit! You knew what you were in for from the beginning.

The nerve of those bastards to take money that was supposed to be used to care for someone for pain and suffering and lifelong maintenance to RECOUP THEIR LOSSES BECAUSE OF THE RISK *THEY* TOOK to make a damn buck is sick.

Their argument is, "Well, we should be entitled to recovery so bills arent paid twice, so on and so forth." Bullshit. This is just some stupid scheme cooked up by some stupid "consultants" and sold to the insurance companies as a way to cheat in the insurance business.

Wouldnt you like to collect premiums if you knew you didnt have to pay anything in claims because you could subrogate YOUR losses? Please. Its a crock of shit.
 

xSauronx

Lifer
Jul 14, 2000
19,586
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Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

this.

OP, if your wife is going to have a medical condition to deal with for 40 or 50 years, is your insurance still going to be covering the costs of that for the foreseeable future?

also ive never heard of "underinsured" coverage. im a broke-ass college student with only liability. anyone know if thats something they typically let you add-on without any other kind of insurance?
 

mugs

Lifer
Apr 29, 2003
48,924
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Originally posted by: peritusONE
Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

But I pay the health insurance to take care of those bills for me. Why am I paying for health insurance if in the end I have to pay for the bills anyway?

Because your health insurance will cover you when there is no one to recover damages from.

Take the long-term injuries out of the situation - suppose someone crashed their car into your house and did $50k damage. Your homeowners insurance pays you $50k to fix your house. Then you sue the driver and their insurance pays $50k. Why should two companies compensate you for the same damages?

The situation is the same here - two companies would be compensating you for the same damages - the expense of the initial health care. The problem here isn't really that the insurance company is getting their money back, the problem is that the settlement is apparently insufficient to cover both the initial medical care and the long-term damage. And from the OP it sounds like that's because you hit the limits of the other person's car insurance. It's unfortunate, because with the cost of major medical care it doesn't take much to hit the limits of most people's insurance coverage. Same thing happened to my roommate in college. He had a car turn in front of him while he was on his motorcycle, he spent weeks in the hospital, months in a wheelchair, and has injuries that will never heal. Ended up with $40k after the lawyer and health insurance got their cut.
 
Feb 24, 2001
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Originally posted by: xSauronx
Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

this.

OP, if your wife is going to have a medical condition to deal with for 40 or 50 years, is your insurance still going to be covering the costs of that for the foreseeable future?

also ive never heard of "underinsured" coverage. im a broke-ass college student with only liability. anyone know if thats something they typically let you add-on without any other kind of insurance?

Yes, underinsured/uninsured are easy clauses to add. They cost very little.

What if you are hit by an illegal alien? You would be on your own.
 

MotionMan

Lifer
Jan 11, 2006
17,312
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I would guess that the right to subrogation is in your contract with the insurance company.

Seems to me that your attorney should have dealt with this in a more proactive way prior to allowing you to settle the case.

MotionMan
 

waggy

No Lifer
Dec 14, 2000
68,145
10
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Originally posted by: BrunoPuntzJones
Originally posted by: xSauronx
Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

this.

OP, if your wife is going to have a medical condition to deal with for 40 or 50 years, is your insurance still going to be covering the costs of that for the foreseeable future?

also ive never heard of "underinsured" coverage. im a broke-ass college student with only liability. anyone know if thats something they typically let you add-on without any other kind of insurance?

Yes, underinsured/uninsured are easy clauses to add. They cost very little.

What if you are hit by an illegal alien? You would be on your own.

yeap. i have underinsured/uninsured on my cars. great extra coverage to have and i think it only cost me like $2 a month extra
 

daniel1113

Diamond Member
Jun 6, 2003
6,448
0
0
"Why is subrogation allowed to exist?"

To keep people from doubling-up on the money collected from multiple parties in a settlement. Without it, insurance rates would likely be even higher.
 

mugs

Lifer
Apr 29, 2003
48,924
45
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Originally posted by: daniel1113
"Why is subrogation allowed to exist?"

To keep people from doubling-up on the money collected from multiple parties in a settlement. Without it, insurance rates would likely be even higher.

While that is true, you're just inviting all sorts of fallacious arguments about insurance rates already being too high.

See: nerp
 

rudder

Lifer
Nov 9, 2000
19,441
85
91
Originally posted by: mugs
Because the damages you were being compensated for in the settlement include the initial medical care. The insurance company already paid for the initial medical care. The settlement compensated you for something that the insurance company paid for.

Interesting but is this a state level law or something? I sued someone in Alabama to get their insurance to pay for medical treatment after an accident. My insurance company which paid for the bulk of the treatments sued the other insurance company directly. My court settlement was for the money I paid out of pocket, time of work, lawyers cut, etc,
 

SunnyD

Belgian Waffler
Jan 2, 2001
32,674
145
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www.neftastic.com
The insurance company should then be responsible for half of the legal bill as well - since YOUR lawyer did all the work for them.
 

lupi

Lifer
Apr 8, 2001
32,539
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you don't sue for bills already handled and payed for by insurance. this should have been the lesson from that walmart case.
 
Oct 19, 2000
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Originally posted by: daniel1113
"Why is subrogation allowed to exist?"

To keep people from doubling-up on the money collected from multiple parties in a settlement. Without it, insurance rates would likely be even higher.

But I'm not doubling up on money. I pay for health insurance, and they paid what they were supposed to pay. The settlement we got from the at-fault insurance company should be for my out-of-pocket expenses, pain/suffering, and future medical complications from the wreck (which there will be).

I guess the law sees it differently than common sense sees it.
 

Turin39789

Lifer
Nov 21, 2000
12,219
8
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When there is an accident the medical bills are the responsiblity of your car insurance.

The settlement would have been less if there hadn't been the medical bills to pay. Those damages were part of setting the settlement amount.
 

mugs

Lifer
Apr 29, 2003
48,924
45
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Originally posted by: Turin39789

When there is an accident the medical bills are the responsiblity of your car insurance.

The settlement would have been less if there hadn't been the medical bills to pay. Those damages were part of setting the settlement amount.

It could have been, but it sounds like the settlement was limited by the fact that he hit the max on the other person's insurance. So maybe the settlement would have been less, maybe it wouldn't have been. The person he should be angry at is the person who caused an accident, injured his wife, and had insufficient insurance coverage to pay for the damage.
 
Oct 19, 2000
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Originally posted by: mugs
The person he should be angry at is the person who caused an accident, injured his wife, and had insufficient insurance coverage to pay for the damage.

Ultimately, this is how it is. We still got a nice chunk of money. Subrogation pisses me off, but I understand it better now that I know how the law looks at it. Nothing I can do about it but go on with our lives and be thankful the at-fault driver had more than minimum coverage. It could've been MUCH worse.

Our lawyer was pretty good, but he ended up with a ton of money for simply having his paralegal take a few phone calls and mail some documents.

Thanks for the conversation guys.
 

Joemonkey

Diamond Member
Mar 3, 2001
8,862
2
0
this is exactly why I lawyered up after a bad accident and didn't involve my health insurance at all. I told all the hospitals/doctors to not file a claim with my health insurance company and gave all the medical bills to my lawyer, never had to pay anything on them since the auto insurance company was responsible, and my health insurance company never even saw any of the bills.

Why would you even involve your health insurance company when it was the at-fault driver's auto insurance company's bills to pay? (or if you're really unlucky your own insurance company's uninsured/underinsured clause bills)

If i was your health insurance company i'd be pissed i had to do all the extra paperwork when I shouldn't have even seen a bill in the first place