Georgia residents, when you are involved in a personal injury case, you will come across many different, complicated terms that you might have never heard. At Silver Dollar Financial, we recognize that it can get overwhelming to get all this terminology thrown at you while you’re already dealing with physical or mental pain.
It is important to know what subrogation is because it is something that occurs in the majority of personal injury cases. Subrogation provides a legal right to the insurance company to collect the funds on behalf of the injured party.
How Does Subrogation Work?
When you are involved in a personal injury claim and go to the emergency room, you typically submit your medical bills to your insurance company after all is said and done. Sometimes, you will receive a call from your insurance company after you pay to ask you for more details on your case, such as how it happened. You might wonder why they would call you when you have already submitted everything necessary.
Subrogation occurs when the collateral source, usually the insurance company, stands for the injured party. When the insurance company calls you, they are trying to figure out who is the one that caused the accident that led to the injuries. When there is a third party involved, depending on other factors, that third party may be accountable for paying for your injuries. The insurance company wants to take over and ensure that the injured party is not paid twice for the same case/injury.
To provide an example, say that from the bill you submitted from your hospital to your insurance company, they cover $2,000. Now, assume the responsible party also pays $2,000 for your injuries; you receive double the payment for the same injury and treatment. Your insurance company will step in and be the one to receive their part of the payment.
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The Good Thing About Subrogation
The idea of subrogation may seem unfair, but it is in place for a reason. Why would you want another person stealing the money you were awarded from your hard-earned fight in your injury case? If subrogation did not exist, you would get paid twice. It’s a way of ensuring every party gets their fair share of the case.
There is a good part to this, though. Health insurance will often pay far less than the medical providers expect the injured to pay out of their pocket. This means that there are overall lower coverage costs for everyone, and the payment towards the injured party becomes expedited through them.
If you still see this as unfair, think about it this way. If insurance companies were not allowed to carry out subrogation, they would be obligated to raise their premiums for everyone involved to cover the losses. So, in the long run, this may turn out worse for you.
When Does Subrogation Apply in a Personal Injury Case?
Insurance companies are not the only ones that can stand in for the injured party and take the third party’s payments for your treatment. There are a few governmental agencies and organizations that can seek subrogation, too. State assistance programs, veteran’s programs, Medicare and medical assistance, and federal worker’s compensation are more groups that can conduct subrogation.
When it’s dealing with worker’s compensation, the third party is the one that needs to be at fault. The employer has two choices: stand by the employee’s side in court or take the employee’s place. In these cases, subrogation applies the same: the employee will not be reimbursed twice, and the employer will receive those funds for injury and wage losses.
How Does MedPay Work in Subrogation?
Sometimes, even some automobile insurance companies can go after subrogation if a vehicle is involved in a personal injury case. In Georgia, this is referred to as MedPay, a type of health insurance that applies only after the accident. This is an optional form of coverage, but if you have it, just keep in mind that if subrogation arises and a vehicle is involved, they may stand in for you and claim the payments.
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Are There Any Limits on Subrogation?
As in everything, insurance companies are not allowed complete freedom to do whatever they please in a situation involving subrogation. They are limited in how much money they can receive from the responsible party for your medical treatments. There are two limitations: the made whole doctrine and the common fund doctrine.
The made whole doctrine is a principle that states that a policyholder must be “made whole” before the insurance company can take the funds. The injured party has to be given a chance to recover from their entire debt before the insurance company can step in.
The common fund doctrine protects the injured party from bearing the entire cost of legal fees without the insurance company’s assistance. Essentially, the injured party’s attorney won the settlement and created a “common fund” from which the attorney and the insurance company could collect their funds. This helps ensure the victim does not have to pay the insurance company in full.
Can Subrogation Rights Be Waived?
A waiver of subrogation occurs when an insured waives the right of their insurance company to pursue compensation on their behalf. This is a rare occurrence, and the insurance company will raise the premium on the insured to do so.
This is typically done when construction contracts are in play because it minimizes the chances of lawsuits arising from the loss that might occur during a construction project. They can help prevent prolonged litigation and save some business relationships.
Sometimes, the at-fault party and the victim settle the case without involving the victim’s carrier to avoid the subrogation demand. The insurance company must be aware of this agreement first, although they don’t always agree to it. This could eventually lead to the insurance company filing a lawsuit against the victim to recuperate its money.
Silver Dollar Financial Will Help You Every Step of the Way
We know that sometimes these explanations can lead to even more questions. You can call our office or send us a message through our contact form if you have any questions or concerns. We will be here every step of the way to help you with your injury claim.