Can Your Health Insurance Require Repayment from Your Settlement After You’re Seriously Injured in a Crash in D.C., Virginia or Maryland?

The issue of federal versus state sovereignty is something with which our country has been struggling since our founding fathers signed the constitution. Whose jurisdiction carries more weight: the state or the federal government? Are there any circumstances in which the state’s decisions cannot be superseded by the federal government? What happens if I have a contract with my state? Can the federal government void that contract?

These issues are being once again explored in a case called Coventry Health Care of Missouri v. Nevils. The premise of the case may sound complicated, but it’s really pretty simple.

Subrogation is a process by which a health  insurance company has a right to money won in a lawsuit. Basically, if you were in a car accident and used your own personal insurance to pay for your medical treatment, and then you sue the person who caused the accident and your injuries, your health insurance may have a right to recover what they spent for your medical care on you. It’s like your insurance company says “yes, I’ll pay for your treatment, but it’s only a loan.”

Subrogation varies from state to state. Some states, like Virginia, greatly restrict the ability of health insurers to subrogate (but your health insurance company will never tell you that) Other states, like D.C. and Maryland, typically do allow it. (March Newsletter, Donahoe Kearney LLP)

The problem that arises with subrogation is that the practice is dubious: your health insurance carrier is supposed to pay for your treatment no matter what. You have paid for that health insurance coverage after all and no, they don’t refund your premiums.  Allowing them to decide when and how they will foot the bill for your treatment gives just a bit too much autonomy to the carrier.

In some states, like Virginia, or Missouri in this case, health insurance company subrogation rights are restricted when it comes to personal injury claims like auto accidents. The problem comes when  a federal employee is seriously hurt in a car accident.  Federal benefits programs are administered by the Office of Personnel Management (OPM) who contracts with private insurance carries and requires subrogation. The Federal Employee Health Benefits Act states that any federal benefits program policy supersedes that of state.

Once again, federal versus state jurisdiction comes to a head.

Coventry Health Care of Missouri v. Nevils, is a  case about whether states can restrict subrogation rights and whether this federal requirement “pre empts” the states’ ability to do so.  The Supreme Court of the United States of America has granted certiorari (review) of this case and the decision will set the standard for subrogation practices nationwide. It could even affect your case.

Oral arguments are scheduled for March, with decision expected in June. If you have any questions about health insurance subrogation and your case, we have more info and answers to Frequently Asked Questions https://www.donahoekearney.com/search-result.cfm?q=subrogation%20.

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