Why is subrogation allowed to exist?

[ElFenix]

Originally posted by: Eli

Huh. But if I sue him and win, what does that have to do with them? Can't they sue him too?

I guess a car hitting your home is a bad example.. I'm more worried about bodily harm.

OK. If someone gets into a car accident with me and causes me great, long lasting bodily harm... I can sue them for emotional distress, etc, right? Wouldn't that be a separate suit from the insurance aspect?

If I won that suit, how would the insurance company be entitled to anything from that?

Maybe the confusion is that I'm talking about a civil suit, not an insurance related suite? I dunno.

the insurance company can only sue the tortfeasor by stepping into your shoes. the suit would actually be in your name and you would be the named plaintiff, not the insurance company.

for negligence and lower the law generally doesn't allow for more than being made whole. in your situation, you'd get a double recovery because you'd have both insurance money and the tortfeasor's money. you'd have a windfall.

if your insurance didn't compensate you for emotional damages, but did for physical injuries, and then you sued the tortfeasor for both and won both, the insurance company would be entitled under both your insurance contract and the principles of equity to be reimbursed out of the physical recovery. they would have no right to the emotional damages recovery.

 

[MotionMan]

Originally posted by: Eli

Originally posted by: Bignate603

Originally posted by: Eli

Originally posted by: mugs

Originally posted by: Eli
I'm totally confused.

Yes.

So explain? How is my scenario wrong? If I'm paying for homeowners insurance and file a claim, that is their problem.

If I then decide to sue the party that caused the damage and win, how do you figure they are entitled to any of that money? I won. Not them.

??????

You're legally entitled to be made whole again, basically your home should be restored to how it was before. You aren't within your rights to get your homeowners insurance to pay for it and then sue for the same damages, effectively getting paid double for the same thing, without giving money back to your homeowner's insurance that paid for the damages in the first place.

Insurance is supposed to protect you from loss, not to be a way to make money.

Huh. But if I sue him and win, what does that have to do with them? Can't they sue him too?

I guess a car hitting your home is a bad example.. I'm more worried about bodily harm.

OK. If someone gets into a car accident with me and causes me great, long lasting bodily harm... I can sue them for emotional distress, etc, right? Wouldn't that be a separate suit from the insurance aspect?

If I won that suit, how would the insurance company be entitled to anything from that?

Maybe the confusion is that I'm talking about a civil suit, not an insurance related suite? I dunno.

You ARE confused

The insurance company can only seek reimbursement (subrogation) for funds that it expended on your behalf for things like medical bills, car repair and the like.

MotionMan

 

[Eli]

Originally posted by: ElFenix

Originally posted by: Eli

Huh. But if I sue him and win, what does that have to do with them? Can't they sue him too?

I guess a car hitting your home is a bad example.. I'm more worried about bodily harm.

OK. If someone gets into a car accident with me and causes me great, long lasting bodily harm... I can sue them for emotional distress, etc, right? Wouldn't that be a separate suit from the insurance aspect?

If I won that suit, how would the insurance company be entitled to anything from that?

Maybe the confusion is that I'm talking about a civil suit, not an insurance related suite? I dunno.

the insurance company can only sue the tortfeasor by stepping into your shoes. the suit would actually be in your name and you would be the named plaintiff, not the insurance company.

for negligence and lower the law generally doesn't allow for more than being made whole. in your situation, you'd get a double recovery because you'd have both insurance money and the tortfeasor's money. you'd have a windfall.

if your insurance didn't compensate you for emotional damages, but did for physical injuries, and then you sued the tortfeasor for both and won both, the insurance company would be entitled under both your insurance contract and the principles of equity to be reimbursed out of the physical recovery. they would have no right to the emotional damages recovery.

I see! Very interesting.

Hey, at least I'm learning guys... Edumacate me!

 

[Born2bwire]

Originally posted by: Eli

Originally posted by: ElFenix

Originally posted by: Eli

Huh. But if I sue him and win, what does that have to do with them? Can't they sue him too?

I guess a car hitting your home is a bad example.. I'm more worried about bodily harm.

OK. If someone gets into a car accident with me and causes me great, long lasting bodily harm... I can sue them for emotional distress, etc, right? Wouldn't that be a separate suit from the insurance aspect?

If I won that suit, how would the insurance company be entitled to anything from that?

Maybe the confusion is that I'm talking about a civil suit, not an insurance related suite? I dunno.

the insurance company can only sue the tortfeasor by stepping into your shoes. the suit would actually be in your name and you would be the named plaintiff, not the insurance company.

for negligence and lower the law generally doesn't allow for more than being made whole. in your situation, you'd get a double recovery because you'd have both insurance money and the tortfeasor's money. you'd have a windfall.

if your insurance didn't compensate you for emotional damages, but did for physical injuries, and then you sued the tortfeasor for both and won both, the insurance company would be entitled under both your insurance contract and the principles of equity to be reimbursed out of the physical recovery. they would have no right to the emotional damages recovery.

I see! Very interesting.

Hey, at least I'm learning guys... Edumacate me!

It seems that the OP is in the unfortunate situation of having been inadequately insured by his auto policy for this situation. I would imagine that if he had not gone ahead with a lawsuit, his own insurance would have done so but then the OP would not have gained any money for future medical needs. Still, the insurance company paid the large hospital bills, negotiated a smaller payment for the bills, and now is being compensated for all or a percentage of what they have paid. So the OP is still much better off than if he had paid the bills himself. The real problem here was the limited amount of compensation that the OP could get from the defendant will be inadequate for future medical problems. Hopefully their medical insurance can help cover them.

Would the OP's coverage be affected in any way if he won compensation for future medical problems?

 

[1sikbITCH]

Originally posted by: Born2bwire

Originally posted by: Eli

Originally posted by: ElFenix

Originally posted by: Eli

Huh. But if I sue him and win, what does that have to do with them? Can't they sue him too?

I guess a car hitting your home is a bad example.. I'm more worried about bodily harm.

OK. If someone gets into a car accident with me and causes me great, long lasting bodily harm... I can sue them for emotional distress, etc, right? Wouldn't that be a separate suit from the insurance aspect?

If I won that suit, how would the insurance company be entitled to anything from that?

Maybe the confusion is that I'm talking about a civil suit, not an insurance related suite? I dunno.

the insurance company can only sue the tortfeasor by stepping into your shoes. the suit would actually be in your name and you would be the named plaintiff, not the insurance company.

for negligence and lower the law generally doesn't allow for more than being made whole. in your situation, you'd get a double recovery because you'd have both insurance money and the tortfeasor's money. you'd have a windfall.

if your insurance didn't compensate you for emotional damages, but did for physical injuries, and then you sued the tortfeasor for both and won both, the insurance company would be entitled under both your insurance contract and the principles of equity to be reimbursed out of the physical recovery. they would have no right to the emotional damages recovery.

I see! Very interesting.

Hey, at least I'm learning guys... Edumacate me!

Again, the reason the law allows you to sue someone is to recoup your losses incurred in the accident. You can sue for money to pay your medical bills, replace your lost wages, pay your legal expenses, some extra for pain and suffering, and if they have refused to pay your property damage you can sue for that as well.

Since you are getting money to pay your medical bills out of the settlement or award, the insurance company has the right to be reimbursed. The at fault party should pay those bills, not your insurance company.

If health insurance companies could not subrogate, they would just raise your premiums up and up and up and get that money back from you anyway.

 

[Jumpem]

I agree with insurance company.

 

[PlasmaBomb]

Originally posted by: Safeway
Eli, your situation is double recovery. You file a claim with your insurance for your damage. That is what your premiums bought you.

When you then sue whoever caused the damage, you have already recovered for the damage. The insurance company felt the burden of the accident, so they are legally able to recover from the defendant. Rather than suing the defendant directly, they can tack on to your claim and get money. Twisted, I know.

Edit: mugs said it better. I'm still in training.

Essentially it boils down to you can't sue if there are no damages, and because you have already been reimbursed by your home insurance there are no damages.

Right?

I am not going to attempt the hospital one, since it is different over here...

 

[JEDI]

Originally posted by: peritusONE
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

explain more about the hospital bill.

why are they even touching your claim $?

what is subrogation ?

and how much was the settlement?

what if u told the hospital u didnt have any $? then would u get more $ back?
(normally, settlements are 3x hospital payout. 1/3 for hospital, 1/3 for lawyer, 1/3 for you)

ie:
hospital bill was $100k. health insurance paid $75k.

settlement was $75k. 25k for lawyer, 25k for hospital, 25k for you.

but if u didnt use your health insurance, then settlement would have been $300k?
$100k to hospital, $100k to lawyer, $100k for you :Q

 

[JEDI]

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. 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.

what does Uninsured/Underinsured car coverage do?

 

[JEDI]

Originally posted by: lupi
you don't sue for bills already handled and payed for by insurance. this should have been the lesson from that walmart case.

esplain

 

[Bignate603]

Originally posted by: JEDI

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. 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.

what does Uninsured/Underinsured car coverage do?

If you get in an accident where someone else is at fault but has no insurance or not enough insurance to cover everything your insurance will foot the bill.

 

[PlasmaBomb]

Originally posted by: JEDI

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. 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.

what does Uninsured/Underinsured car coverage do?

I guess it makes the insurance company liable for any gap between the settlement and the maximum the other party is insured for eg.

Driver X insured for $250k

You have $100k hospital bill and are awarded $200k damages by the court.

Driver X insurance company give you $250k and you lose $50k, or have to try and get X to pay it.

Underinsured coverage makes up that $50k...

(I guess)

 

[zerocool1]

Originally posted by: Bignate603

Originally posted by: JEDI

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. 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.

what does Uninsured/Underinsured car coverage do?

If you get in an accident where someone else is at fault but has no insurance or not enough insurance to cover everything your insurance will foot the bill.

this

 

[Turin39789]

Originally posted by: zerocool1

Originally posted by: Bignate603

Originally posted by: JEDI

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. 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.

what does Uninsured/Underinsured car coverage do?

If you get in an accident where someone else is at fault but has no insurance or not enough insurance to cover everything your insurance will foot the bill.

this

This thread is now about why the hell you bumped a month old thread

 

[Joemonkey]

Why is this thread allowed to exist?

 

[CountZero]

Originally posted by: mugs

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.

Your medical insurance should be suing the driver, that is the issue. In your house case your insurance company would go after the driver. It doesn't operate in a way that makes sense to anyone and blindsides people when they are looking at lifetime costs of care to have their own insurance company come around calling for cash. I don't remember fault having anything to do with having medical insurance.

Let me ask this, because I don't know the answer, if I or someone that lives in my house is injured in my house does the medical insurance company go after me to get back their costs? I doubt it because it'd be stupid, they are there to pay for medical expenses not dole out fault.

 

[Bignate603]

Originally posted by: CountZero
Your medical insurance should be suing the driver, that is the issue. In your house case your insurance company would go after the driver. It doesn't operate in a way that makes sense to anyone and blindsides people when they are looking at lifetime costs of care to have their own insurance company come around calling for cash. I don't remember fault having anything to do with having medical insurance.

Let me ask this, because I don't know the answer, if I or someone that lives in my house is injured in my house does the medical insurance company go after me to get back their costs? I doubt it because it'd be stupid, they are there to pay for medical expenses not dole out fault.

Somebody can correct me if I'm wrong but from what I understand the insurance company cannot go after the driver if you do. When insurance sues the driver to recoup their costs they are doing it on your behalf. Basically if you sue for damages it prevents them from suing for damages. Any decent lawyer should understand this and adjust the damages that they are suing for to account for the money that will be taken out of the settlement. If the lawyer wasn't expecting this they're a lousy one.

 

[1sikbITCH]

Originally posted by: Bignate603

Originally posted by: CountZero
Your medical insurance should be suing the driver, that is the issue. In your house case your insurance company would go after the driver. It doesn't operate in a way that makes sense to anyone and blindsides people when they are looking at lifetime costs of care to have their own insurance company come around calling for cash. I don't remember fault having anything to do with having medical insurance.

Let me ask this, because I don't know the answer, if I or someone that lives in my house is injured in my house does the medical insurance company go after me to get back their costs? I doubt it because it'd be stupid, they are there to pay for medical expenses not dole out fault.

Somebody can correct me if I'm wrong but from what I understand the insurance company cannot go after the driver if you do. When insurance sues the driver to recoup their costs they are doing it on your behalf. Basically if you sue for damages it prevents them from suing for damages. Any decent lawyer should understand this and adjust the damages that they are suing for to account for the money that will be taken out of the settlement. If the lawyer wasn't expecting this they're a lousy one.

Not sure why you guys are dredging up a month and a half old thread, but in response to the quoted posts; the same applies whether you are injured by someone's negligence while driving or by their negligence while on their property.
Whoever injured you is responsible for your medical bills, not your own insurance.
Your own insurance is only for when it's your fault or nobody's fault.

As a matter of fact, some homeowners insurance policies come with built-in medical insurance exactly to prevent subrogation from having to take place at all. It's called med-pay. If you are hurt in most major retail stores (Walmart, Safeway, etc) they also will usually have med-pay coverage; which is similar to PIP coverage in that it is No-Fault. They will pay your bills up to the limit of the coverage whether they believe it was their fault or just you being stupid.

 

[chusteczka]

Originally posted by: peritusONE
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? ...

Insurance is based on the Principle of Indemnity. This principle states:

... that the insured should not profit from a loss or damage but should be returned (as near as possible) to the same financial position that existed before the loss or damage occurred.

The basic idea is to "make whole" or return the insured to the original state before the loss or accident occurred.



Subrogation is intended to recover costs paid for you by your insurance company. These costs are typically recovered from the insurer covering the at-fault party.

Originally posted by: MotionMan
The insurance company can only seek reimbursement (subrogation) for funds that it expended on your behalf for things like medical bills, car repair and the like.

http://en.wikipedia.org/wiki/Subrogation

Your wife was not at-fault but she incurred medical costs that needed to be recovered from the at-fault party. Your insurance paid your medical costs and then recovered these costs from the insurance company that insures the at-fault party.

The financial buckets for Auto Liability claims are broken down into the following:

• Medical - Medical payments to the hospital,
• Indemnity - Liability payments to the injured person,
• Expenses - Costs associated with the claim,
• Legal Expenses - More than just a sub-category of Expenses,
• Recovery - Costs the insurance company recovers, this includes subrogation.

It was the responsibility of your insurance company to recover the medical costs and expenses they paid for your claim.

It was your responsibility to recover your indemnity payment. The indemnity payment to your wife takes into account the following costs that are commonly known as "damages":

• expenses paid by you and your wife as a result of this accident, this includes legal costs,
• pain and suffering,
• wages lost during the time of recovery, and
• an estimate of future income that will never be realized due to the permanence of the injury.

Your insurance company is responsible for the legal costs it incurs to recover its medical costs and expenses. You hired your personal attorney to regain your indemnity payment for "damages". A good insurance company will often pay the legal fees for their insured to regain the indemnity payment since the legal costs are closely associated.

It seems that a few errors were made.

1. Your personal attorney did not explain the basic concepts to you and your wife.
2. You may not have received the correct amount of indemnity payments to cover your personal damages.
3. You paid the attorney fees for your insurance company to regain what they paid of your medical costs.
4. The money to cover the medical payments by your insurance company was paid directly to you instead of to the entity that actually paid your medical costs, your wife's health insurer. This gave you the impression that it was part of your indemnity settlement and provided a larger total settlement for your attorney to receive a portion of.

It was the primary responsibility of your attorney to ensure your wife's interests were protected. That comprises ensuring that the medical costs were paid by one of the insurance companies and to ensure that you received an appropriate amount of indemnity (damages) payment to make the situation for your wife whole again.

Originally posted by: MotionMan
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.

:thumbsup:

Originally posted by: peritusONE

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.

If your "nice chunk of money" covers your Indemnity losses (damages) as described above, then you have been "made whole" again and the principle of indemnity has done its job. If this is true, then your attorney has also done his job, with the exception of proactively managing his client's expectations by properly educating you and your wife.

Originally posted by: SunnyD
The insurance company should then be responsible for half of the legal bill as well - since YOUR lawyer did all the work for them.

Good call! :thumbsup:

Originally posted by: 1sikbITCH
Your attorney must not have explained the law to you properly if you have to ask this question. If someone else caused your injuries, THEIR insurance should have paid, not yours. So when you negotiate your settlement with their insurance company, part of that is the medical bills that they owe. Since you were lucky enough to have health insurance cover it while you negotiate the settlement, you did not have to face a year or more of bill collectors and lawsuits from the hospitals and doctors trying to get paid while you wait to settle your claim. Consider it a blessing; your credit could have been ruined and you could have been slapped with several judgments against you instead.

:thumbsup:


And then several of Mugs posts are worthy. :thumbsup:

 

[chusteczka]

Originally posted by: hanoverphist

Originally posted by: daniel1113

Originally posted by: peritusONE

Originally posted by: 1sikbITCH
Your attorney must not have explained the law to you properly if you have to ask this question. If someone else caused your injuries, THEIR insurance should have paid, not yours. So when you negotiate your settlement with their insurance company, part of that is the medical bills that they owe. Since you were lucky enough to have health insurance cover it while you negotiate the settlement, you did not have to face a year or more of bill collectors and lawsuits from the hospitals and doctors trying to get paid while you wait to settle your claim. Consider it a blessing; your credit could have been ruined and you could have been slapped with several judgments against you instead.

This makes the most sense to me, thanks for explaining it that way. My lawyer didn't really explain subrogation to me because I never asked. I just assumed it was a greedy health insurance company wanting a piece of the pie. But the way you explain it makes it a little easier to swallow.

Yeah, that is a better way of saying it. Basically, your insurance company loaned you the money necessary to pay all of your medical bills so you wouldn't have to wait for the settlement which could take months or even years. Of course, this is assuming the other person had insurance. If the other party didn't have insurance, your insurance provider would accept the loss and pay your medical bills (of course, this probably depends on the terms of your insurance policy).

I do agree that it may not be the best method of collecting and distributing a settlement, but it does keep the number of lawsuits and court cases to a minimum by combining everything into one settlement. The alternative would be for both you and your insurance company to file separate claims/suits against the other person and his/her insurance company, which would probably take more time while accomplishing the same ends.

so in that situation, do they collect back what their actual cost was, or the "retail" cost that the general public would have been expected to pay? im all for them getting their cash back, but damn, if they are paying a discount rate and recovering more its bs.

Subrogation is meant to recover the actual costs paid. This often includes other expenses incurred while handling the claim. Risk management can be costly.