Your Health Insurer Wants Their Money Back
Often times, insurance policies contain enforceable provisions that may dramatically differ from one’s expectations, especially if the insured has not reviewed th policy in detail. For instance, many health insurance policies contain “subrogation clauses” which provide the insurer the ability to be reimbursed for medical expenses paid pursuant to the insurance policy if the insured also recovers in a separate legal action against the party responsible for the insured’s injuries. Subrogation clauses can, in some instances, be limited by a common law principal called the “make whole” doctrine. Under the make whole doctrine, the health insurer would not be able to recover medical expenses unless the insured had been “made whole,” in other words, unless the insured had been compensated fully. Across the country, courts are split on the applicability of the make whole doctrine in the ERISA context.
The oft-stated purpose of the subrogation clause is to avoid double recovery to an insured; however, the practical effect is that many people are unable to be fully compensated for their losses. (more…)