Unfair Things that Happen in Personal Injury Cases – Liens
Another unfair thing that can happen in a Pennsylvania Personal Injury Case is the imposition of a Subrogation Lien at the end of the case which can reduce or eliminate the recovery of the injured person.
What is a Subrogation Lien?
Subrogation is the legal right of an insurance company to recover money that it paid on behalf of the injured person from any recovery obtained from the person or entity that caused the accident in the first place.
In the context of a Pennsylvania Personal Injury case, Subrogation allows an insurance provider, like Worker’s Compensation, Health Insurance or Medicare/Medicaid, to demand reimbursement from the accident victim from any lawsuit recovery, either a settlement or a verdict.
Accident victims and lawyers need to investigate, quantify and take these liens into account when deciding whether to settle a case and for how much because part of the accident claim proceeds may have to be paid back rather than be kept by the victim.
How Does Subrogation Work?
Subrogation works like this:
An accident victim is injured and an insurance company pays for medical bills or lost wages, like Health Insurance, Disability Insurance, Worker’s Compensation or Medicare/Medicaid.
Then, the accident victim decides to make a legal claim against the party responsible for causing the accident.
Early on in the case, the victim’s attorney should research the Subrogation issue to determine whether anyone will have a Lien (right to reimbursement) out of any lawsuit recovery.
For Health Insurance or Disability Insurance, the Subrogation right will be written into the insurance contract. In a Pennsylvania Car Accident or Medical Malpractice case, there are rules about types of plans that can and cannot assert a right of Subrogation.
For Worker’s Compensation and Medicare/Medicaid, the right of Subrogation is statutory, meaning that it is written into State or Federal law.
During the case, the victim’s lawyer will need to keep track of the amount of the Lien and make sure to include the Lien in any claim for damages at Trial or any Settlement Demand.
When settlement is being discussed, the accident lawyer should try to negotiate to have the Lien reduced in order to increase the victim’s net recovery.
At the end of the case, the Lien needs to be paid out of the recovery to avoid the victim getting pursued by the insurance company or the government for failing to comply with the relevant Subrogation rules.
Why is Subrogation Unfair to Accident Victims?
Subrogation can be unfair to accident victims because it can result in the victim receiving less than full compensation for accident related injuries.
If insurance coverage of the Defendant who caused the accident is limited or if the case is risky so it needs to be settled to avoid the risk of loss or a low verdict, Subrogation can result in the Insurance Company receiving a disproportionate amount of the settlement compared to what the Plaintiff receives.
Subrogation also is somewhat of a windfall for the insurance company. Had the injury not been cause by an accident, then there would have been no right of reimbursement.
In Medicare/Medicaid cases, the government is required to reduce its Lien to account for attorney fees and expenses. It recognizes that the lawyer was working to recover the Lien so it should share in the expenses.
Liens in Pennsylvania Worker’s Compensation situations can be particularly unfair because of an absolute right to reimbursement. This can produce very unfair results in which the Worker’s Compensation insurance company might receive all or most of a settlement or verdict depending on the amount of the Lien and the amount of the recovery.
In Health Insurance Lien situations, the ultimate results for the victim vary. Many Health Insurance companies are writing aggressive insurance contacts requiring full reimbursement with no reduction for attorney fees and costs, while others are willing to negotiate a reasonable reduction of the Lien.
The bottom line is that Subrogation Liens can be unfair to accident victims. In order to maximize the amount of net recovery to the accident victim, it’s important to have a Personal Injury Lawyer who is well-versed in the laws relating to Liens and committed to attempting to negotiate to have Liens reduced.
Tim Rayne is a Personal Injury Lawyer who helps accident victims understand their legal rights and receive fair compensation from insurance companies. Tim has law offices in Kennett Square and West Chester Pennsylvania and also meets with clients at their homes or virtually via Zoom or Facebook. Contact Tim for a Free Consultation at 6108400124 or [email protected] or check out his website at TimRayneLaw.com.