|
SUBROGATION
LAW
Health insurance companies are not entitled to be reimbursed unless
the victim is fully compensated.
In many cases the medical bills you incur for the treatment of injuries
sustained in an accident are paid by your health insurance company
or HMO. Most insurance policies and HMO contracts require reimbursement
if you receive compensation from another source, such as liability
insurance. This is known as the right of subrogation and is enforceable
in many states, including Tennessee.
A health
insurance company's subrogation claim can be a problem when your injuries
are serious and your medical bills are substantial but there is
a limited amount of liability insurance to compensate you for your
injuries. If you are required to reimburse your health insurance
company or HMO you might receive little or no compensation for your
injuries. Such a result would be fundamentally unfair.
The Tennessee Supreme Court
has recognized this problem and has ruled
that health insurance companies are not entitled to be reimbursed
unless the injured person is fully compensated for his injuries.
This is known as the "made-whole" doctrine. In York
v. Blue Cross-Blue Shield of Tennessee the Tennessee Supreme
Court held that Blue Cross was not entitled to reimbursement even
though the insurance policy stated otherwise. The Court said that
the right of subrogation was not dependent upon the language contained
in the insurance policy but on principles of natural justice.
There are exceptions to the made-whole doctrine. If the health benefits are paid by TennCare or Medicare the made-whole doctrine generally does not apply. Subject to some limitations, TennCare and Medicare are entitled to reimbursement for the medical bills that they pay on behalf of accident victims even if the victim has not been fully compensated by liability insurance. However, in certain situations the amount that must be repaid to TennCare or Medicare may be reduced . TennCare and Medicare may also be required to pay for a pro-rate share of the attorney's fees and expenses incurred by the accident victim.
The made-whole doctrine may
not apply when the health insurance plan or HMO is subject to federal
law. Some employer health care plans and HMOs are governed by a
federal law known as the Employee Retirement Income and Security
Act (ERISA). If your employer's health care plan is subject
to ERISA you may be required to reimburse the healthcare plan for
the medical bills it paid on your behalf even if you are not fully
compensated by liability insurance. The application of the federal
law and its relationship with the made-whole doctrine can often
be a complex issue. We generally recommend that you hire an attorney
to handle these issues. |
