Can My Health Insurance Company Take Part of My Personal Injury Settlement?

Yes.  When meeting potential clients for the first time, they are often surprised to learn that if they receive a settlement they must pay back their health insurance for any medical services that were paid for by their insurance company.  This right is called “subrogation.”   Whether you know it or not, all health insurance companies have this contractual language hidden inside their policies.

In normal circumstances, you pay a health insurance premium to protect you in the event you are injured or sick, and owe nothing more than these monthly dues and co-pays.  However, if a third party injures you, your health insurance will cover you, but will assert that the at-fault party’s insurance policy should cover the cost of your medical treatment. Since your personal injury claim entitles you to having your medical bills paid for by the at-fault party, your health insurance provider will assert a lien on your settlement in order to be reimbursed for their expenses that were paid in connection with your medical treatment.  The theory behind this is that a person should not have their medical bills paid twice, once by their health insurance and again in the form of a settlement by the at-fault person’s liability policy.

Do I Have to Pay Back the Entire Amount?

If you hire a good lawyer, no.  A little-known benefit that hiring an experienced San Francisco personal injury lawyer can provide is to reduce your health insurance lien amount so that you net more of your settlement.  The theory behind this is that due to you having to hire a lawyer (they receive a percentage of your settlement) in order to secure a settlement, your health insurance should not be able to benefit freely from your incurred costs and receive the full amount they are after.  Put simply, if you have to incur a cost to get money (attorney’s fees), then they must as well.  This concept is referred to as the “cost of procurement.”  Thus, having a lawyer in place enables you to receive a significant reduction of your lien amount with your health insurance provider, which ultimately results in keeping more of your settlement in your hands.

What If I Have Medicare or Medi-Cal?

Reducing Medicare and Medi-Cal health insurance liens operate under the same principles as the private health insurance liens described above.  However, since both programs are government funded, there is a completely different process in place to get them reduced.  In addition to the government’s health insurance lien, they will also be looking to take part of your settlement and allocate it for any related, future treatment that they think might arise after you settle your personal injury claim.  This is called a “set-aside.”  Having an experienced personal injury lawyer who has dealt with the Medicare/Medi-Cal lien process is necessary in ensuring that you receive the largest reduction possible and that the government does not overreach in determining your set-aside amount, if any.


For any questions about health insurance subrogation claims,  give us a call at (415) 345-4282 or submit an online inquiry and we are happy to answer your questions.  All our consultations are free.