Auto claim settlement | How to negotiate this accident?

by Sharon

Hello, I recently read some responses on the internet and one person
indicated that since his major medical insurance paid his medical
bills they had a lien on his personal injury settlement from an auto accident.

I'm waiting for a settlement from the at-fault party and haven't hired an attorney. Can my medical carrier put a lien on my settlement?

I would think that they subrogate directly with the auto carrier to recoup what they paid out.

The Collateral Source rule indicates that the tortfeaser should not get out of paying just because their is medical insurance and sometimes dual recovery is acceptable.


Answer:

Hello Sharon,

The collateral source rule applies only in some states. Even thought the collateral source rule is often applied in tort cases, it really is a rule of evidence.

What the collateral source rule does (if in effect) is: it bars evidence of insurance payments from being heard by a jury. It does not affect settlement negotiations.

The policy behind the rule is to avoid having the jury "think" that an injured party has already been paid by an insurance company (by their own insurance company) and leave the tortfeasor "off the hook." Some states do not apply the collateral source rule.

On the facts above, the collateral source rule does not have any application. The health insurance company can (and probably will) put a lien against the settlement.

They have rights of subrogation and the collateral source rule will only "hide" the evidence if in front of a jury, but it does not mean that the health insurance provider lose those rights. Again, this rule only applies to juries, therefore, in settlement negotiations everything goes.

Some states do not allow for subrogation of rights clauses. Montana and Arizona are examples. The insurance companies would be barred from putting a lien in settlements, therefore you would be entitled to double or even triple recovery (one from the health insurance, one from the Personal Injury Protection or Medical Payment coverage of your auto insurance, and one from the tortfeasor).

It is entirely up to state law, but if the health insurance knows of the pending settlement negotiations and puts a lien, the insurance company settling must send them a separate check directly, and send you only the remanding.

Good Luck
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