What is a subrogation lien and do I have to pay it?
The Following blog on California Accident & Injury News is a guest post from the Georgia personal injury law firm Smith, Welch & Brittain, LLP.
One issue that is confusing to most people injured in negligence cases is the issue of subrogation liens. Most health insurance policies contain language that says if you are injured due to the fault of someone else and your health insurance plan pays your medical bills associated with that injury, it has a right to be reimbursed. However, it does not have a claim against any compensation you receive for your noneconomic damages such as pain and suffering. Furthermore, in Georgia, depending on the type of policy, it does not have a claim to the extent you are not made whole for all of your personal injuries in Georgia including pain and suffering.
This is what is referred to as the "made whole doctrine". Here is the scenario: You were injured in a car wreck when a drunk driver rear ends your vehicle. Your injury includes herniated discs in your lower back. You receive several painful epidural injections and months of physical therapy to manage the pain, but realize that ultimately you will need surgery. Your medical bills to date are $30,000.00 and the drunk driver only has $50,000.00 in liability insurance. You have $25,000.00 stackable underinsured motorist coverage so your maximum recovery is $75,000.00. Your health insurance is claiming a $20,000.00 lien. Your attorney gets the $75,000.00 from the two insurance companies. Do you have to pay the lien?
Unless it is a specific type such as Medicare, Medicaid, or certain types of Erisa policies, then the answer is no. Here is the reason. Your pain and suffering, lost enjoyment of life and permanent impairment are worth way more than $75,000.00 so you haven't been made whole and your health insurance provider can't prove otherwise. Even if the insurance provider says that it is not subject to Georgia's made whole doctrine, there are often other ways to reduce the lien. A court approved settlement that apportions the recovery amount between medical bills and pain and suffering is one possible option among many.
