Your health plan will be paid from your personal injury claim

[MillCreek]

http://www.npr.org/sections/health-shots/2016/04/27/475768061/ruling-may-help-patients-keep-more-of-the-winnings-when-they-sue?utm_medium=RSS&utm_campaign=science

I have seen this a lot in my career: both plaintiffs and plaintiff attorneys are surprised when the plaintiff's health insurance plan swoops in and demands reimbursement for the medical bills they have paid in a personal injury claim.  This often means that the plaintiff's settlement or award ends up being essentially nothing, or that the plaintiff may still owe money to the insurance plan.

The decision by SCOTUS discussed in the article does not really meaningfully limit the ability of the health insurance plan to do this, so these sort of cases will continue.  Any plaintiff attorney who is unaware of this or who fails to plan for it is committing malpractice, in my view.  I have testified against plaintiff counsel in some of the subsequent malpractice claims against them. 

[RevDisk]

Understandable, but still lovely. I get why the insurance company wants to swoop in at the last second to 'appropriate' a victim's settlement, because the opponent doesn't care and the victim is usually economically vulnerable. I suspect the personal injury lawyer lobby will make sure their percent isn't touched. That'll leave the victim fighting his opposition, his insurance and essentially his own lawyer. I can see it easily happening.

[MillCreek]

Plaintiff counsel contingency fee still comes off the top.

[T.O.M.]

I'm surprised by this as well.  Not that it happens, but that anyone doesn't know about it.  First one with their hands out is always .gov.  If it was a Medicare case, .gov gets their cut right up front, no matter who is paying the injured party.  And, in all honesty, I'm not all that upset that the insurance companies recoup some of their expenses in this manner.  Most personal injury suits cover medical expenses, lost income, and actual losses before they get into things like pain and suffering, loss of consortium, etc.  Why should an injured party get theior medical bills covered by their insurance, then recover money in a personal injury suit to cover medical expenses, and get to pocket that money?

[RevDisk]

I'm surprised by this as well.  Not that it happens, but that anyone doesn't know about it.  First one with their hands out is always .gov.  If it was a Medicare case, .gov gets their cut right up front, no matter who is paying the injured party.  And, in all honesty, I'm not all that upset that the insurance companies recoup some of their expenses in this manner.  Most personal injury suits cover medical expenses, lost income, and actual losses before they get into things like pain and suffering, loss of consortium, etc.  Why should an injured party get theior medical bills covered by their insurance, then recover money in a personal injury suit to cover medical expenses, and get to pocket that money?

The insurance company should have to be involved in the entire process rather than swoop in at the last second. If they don't want to put in the work, they shouldn't get a bloody dime. I do concur that the money should be split appropriately. If an injury took a $100k to fix, the victim paid $10k out of pocket, both should get the appropriate split and that should be after legal fees at a minimum. Making the victim foot the bill for the lawyers and letting the insurance company skate off the victim's lawyers rather than their own, that should be taken into account during the split.

Either it's a joint settlement, or the insurance company needs to have their own lawsuit. I'm hardly shocked that the insurance company wants the victim to pay for the entire settlement process. Doesn't mean it's right or should be allowed. If it was me and my insurance company tried it, I'd send them an invoice. Probably wouldn't fly, obviously.

[MillCreek]

https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/Overview.html

If I make a liability settlement or in some cases, a fee writeoff or refund to a Medicare beneficiary, I have to report it to the Feds so they can get their share.

[lupinus]

The insurance company should have to be involved in the entire process rather than swoop in at the last second. If they don't want to put in the work, they shouldn't get a bloody dime. I do concur that the money should be split appropriately. If an injury took a $100k to fix, the victim paid $10k out of pocket, both should get the appropriate split and that should be after legal fees at a minimum. Making the victim foot the bill for the lawyers and letting the insurance company skate off the victim's lawyers rather than their own, that should be taken into account during the split.

Either it's a joint settlement, or the insurance company needs to have their own lawsuit. I'm hardly shocked that the insurance company wants the victim to pay for the entire settlement process. Doesn't mean it's right or should be allowed. If it was me and my insurance company tried it, I'd send them an invoice. Probably wouldn't fly, obviously.

Agreed. If the ins company wants to recover their expenditure they should initiate their own lawsuit. On the flip side if the plaintiff was only out of pocket, say, 7500 for a deductible or some such that should be the max awarded for their actual medical expenses. Or it should be filed jointly with an appropriate split.

[KD5NRH]

The insurance company should have to be involved in the entire process rather than swoop in at the last second.

This.  Heck, I've carried various types of insurance from time to time primarily for the knowledge that the insurance company would handle the "going to court to recover damages" part.  Not because I thought potential damages were likely to be particularly difficult to collect, but because I have better things to do than deal with the whole process.

At the very least, dock them for what they would have paid their own attorneys had they been involved from the start.

[Hawkmoon]

Why should an injured party get theior medical bills covered by their insurance, then recover money in a personal injury suit to cover medical expenses, and get to pocket that money?

Are the laws or the courts that different in your state and mine? Around here, any claim for reimbursement of medical expenses means "how much did YOU pay, out of your pocket, Mr. Plaintiff?" Amounts paid for by insurance I have never seen included as part of claimed damages.

[T.O.M.]

I just read through the decision:

http://www.supremecourt.gov/opinions/15pdf/14-723_1bn2.pdf

Long story short, the case is about the contract between the insured and his company.  This really won't have much impact beyond this case.  In short, the injured party here had injuries that required surgery to the tune of approx $1120K in medical expenses, paid by his insurance company.  He sued and was awarded around $500K.  His lawyer took around half.  His insurance company, consistent with the policy, issued a demand for their $120K to their client.  He refused, and hired another lawyer to work the case and try to settle with the insurance company.  (Note that the $250K was being held in escrow at this point.) This lawyer negotiated, gave the insurance company a deadline to respond, and when they didn't respond, he turned the funds over to the insured.  Company then sought to collect again.  Insured said the money is gone, paying the second lawyer and for life expenses.  So, the insurance company sought to attach all of the insured's assets and personal property for their reimbursement claim.  Case went through the courts, and SCOTUS has said that under ERISA -  Employee Retirement Income Security Act of 1974 - the insurance company can only attach the funds from the PI case, but not all of the insured's assets.  This is in no way anything new.  One commentator said this opinion would win the award for the "case that breaks the least new ground." 

Takeaways?  First, it doesn't mean that insurance companies can't pursue a claim to recover, it only means that the pool of assets available for that recovery attempt is limited to the award itself, and not the insured's general assets.  And, this seems like common sense to me, but common sense and the law don't always agree.

Second, you've got to know your policy.  It is, after all, a contract with the insurance company.  If it says that they can take some of what you recover in a PI suit, then you're stuck with that.  While Rev has a point about the insurance company riding on the back of the insured to seek recovery, if the contract doesn't say so, then you're out of luck.  Yeah, you could hire a lawyer to fight/negotiate, but that may end up being counterproductive. 

Third, some insurance companies do seek to get involved, real early in the process.  I know that a few years back, I fell at home and broke my hand.  Got it treated, and then got a call from my medical insurance company a week or so later.  They wanted details as to when and how the injury occurred.  In the course of the conversation, the claim specialist told me that they were looking for liability on the part of someone other than me or my wife to seek recovery of expenses. 

Fourth, and this may just be me, but it seems like in the case upon which the OP is based, the lawyers were the big winners here, and that surprised me.  The case resulted in around $500K being awarded to the victim.  Half of that went to the PI lawyers.  When he then fought the insurance company (the first time), he ended up paying another lawyer a big chunk from the settlement.  He then paid another lawyer fee for the fight all the way to SCOTUS.  I'm guessing here, but I'd imagine that this fight cost him well beyond the $500K he was awarded.  My surprise?  Well, I guess I'm ignorant to the costs of civil litigation, but I had a hard time believing that half (actually 52%) was earned by the trial lawyers.  Second, I can't fathom how the second lawyer ate up more than a few thousand to make some phone calls and write letters to the medical insurance company.  Again, I'm ignorant to civil litigation expenses.  But the real shame here, at least for me as a lawyer, is to see this injured guy end up paying more than he took in just to exercise his rights to seek compensation.  I know tort reform is a hot button topic, but maybe lawyer fees need to come up in that discussion.

[MillCreek]

^^^In my area, typical plaintiff counsel medmal contingency fees are either 40 or 50 percent: 40% of the settlement if the case is settled prior to trial, arbitration or mediation; 50% of the settlement, award or verdict if the case goes to trial, arbitration or mediation and results in a payment. 

Costs of the case, that plaintiff counsel advanced as the case progressed, are then deducted from the settlement, award or verdict.  In a two-week medmal case, plaintiff counsel costs are likely in excess of $ 100,000 in consideration of travel, depositions, copies of records, expert witnesses and the like.  So say that two-week case goes to trial and the plaintiff is awarded $ 1 million.  Plaintiff counsel fee is $ 500,000 and costs are $ 100,000, leaving the plaintiff with $ 400,000. 

In states without tort reform or caps on damages or fees, I tell people that when they read about big verdicts in the paper, the plaintiff, or the actual injured party, probably collected around 40-45% of the actual verdict.  I know many plaintiff counsel who will give their clients a break on the fee to maximize the recovery to the client. 

Of course, plaintiff counsel are paid only if they win.  Defense counsel get paid win or lose. 

[T.O.M.]

Full disclosure, I'm a career government lawyer.  My civil experience was representing various governmental agencies.  Most of my experience is criminal law as a prosecutor, and now from the bench.  I've never billed for my time.  And, I've taken part in some significant criminal cases and trials, but nothing that has taken more than a week of trial (longest case was a double murder case...trial lasted four days, deliberation was around 2 hours on the fifth day).  So I have no idea what all is involved in prepping such a case, other than listening to SWMBO talk about it from the perspective of an insurance lawyer working with trial counsel defending people in civil suits, or from friends who do civil work.  Maybe $250K is reasonable for a civil PI case.  I don't know.  But it just seems odd to me that in a PI case with a significant award that the lawyer walks away with more than the actual victim.

[MillCreek]

^^^My longest medmal case was in trial six weeks and resulted in a $ 14 million verdict.  It was an anesthesia catastrophe case and we had the orthopedic surgeon, not the anesthesiologist. The various physicians, the hospital and the manufacturer of the anesthesia equipment were all defendants.  I am certain that total defense costs for all the defendants were well into the millions of dollars. 

[Hawkmoon]

But it just seems odd to me that in a PI case with a significant award that the lawyer walks away with more than the actual victim.

Welcome to Amurika.

[KD5NRH]

But it just seems odd to me that in a PI case with a significant award that the lawyer walks away with more than the actual victim.

Easy way to fix it; before collecting, the lawyer has to take on 50% of the injuries the victim suffered.