Do I Have to Repay My Medical Insurance Company After I Receive a Settlement from My Car Insurance Company?

WrittenJames Hirbyand Fact Checked by The Law Dictionary Staff  

If you were recently involved in a serious car accident, you probably had to endure weeks or months of acute medical care and rehabilitation. The total value of your medical expenses probably approached $50,000. If you required reconstructive surgery or suffered a life-altering injury that demanded a host of expensive treatments and therapies, your expenses could still be growing. After such accidents, many victims must make ongoing medical outlays simply to maintain the lifestyles to which they've become accustomed.

After your accident, you probably billed your health insurance company for your medical expenses. This is standard procedure: When you're discharged from the hospital, you must present proof of insurance in order to settle your debts. However, your auto insurer was technically responsible for paying your bills. This is because your auto insurance policy contains "personal injury" provisions that are designed to protect motorists who lack health insurance from exposure to ruinous medical bills. If you were at fault for the accident, your auto insurance company can probably be held liable for your medical expenses. If another driver was at fault for the accident, his or her auto insurance company can certainly be held liable for your bills.

However, hospitals typically don't directly bill auto insurance companies for such expenses. Even if they did, these providers might not agree to pay. This is because auto insurance companies must thoroughly investigate the circumstances surrounding every serious accident in which their policyholders are involved. The outcome of these investigations may determine the total amount that they're willing to pay out to their injured policyholders.

As such, the responsibility for settling your bill will fall to your health insurance provider. After you're discharged from the hospital and begin your recovery, you'll probably "lean" on your auto insurance company to ensure that your claim is being processed in a timely fashion. Your health insurer may put pressure on your auto insurer as well.

If the matter goes to court, your health insurer will remain closely interested in the proceedings. In fact, it will place a lien on the settlement that you stand to receive. In other words, your health insurance company will become a secured creditor of your auto insurance company. Once your auto insurer agrees to pay out on your claim, your health insurer will be able to recover all of the payments that it made to cover the cost of your medical expenses. This is a perfectly legal process known as "subrogation."

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