Why does my health insurance say they have a lien against my "recovery" in my accident case settlement?

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Dear Donahoe Kearney:

Okay, I'll be honest. I'm not one of those people who reads all the fine print. When I was in a serious accident last year I went to the hospital, and from there I had to follow up with a surgeon to repair my torn rotator cuff - it actually ended up being two surgeries. The guy literally plowed into me on the highway in Washington, DC going 55 miles per hour and my shoulder just went nuts.

I spoke to the insurance company of the guy that crushed my car, and they said they would cover my hospital bills when I was done healing. I said "great," and went along my way. A friend told me I should probably speak to an attorney especially since I was going to be out of work for a long time, but I don't really like lawyers and I'm not the suing kind. I figured I could take care of it on my own.

That was almost a year ago and I'm almost done with physical therapy. I had to be out of work for six months (I am a police officer) which means I had to borrow against my pension to keep current on my bills. But I got a letter in the mail this week from my insurance company (my health insurance -- not my auto insurance) stating that they have a 'lien' in the amount of $100,000.00 against my "recovery."

What are they talking about? And the letter says something about subrogation. What is that?

And what recovery? The insurance company has not given me one red cent as of yet.

So, I went back to that friend to see if he had any advice to give me and he said "call a lawyer -- like today." 

Can you help me?

From, Concerned Police Officer 


Dear Concerned Police Officer:

We can help! Don't worry, your situation is not abnormal. A lot of people don't know that they are entitled to lost wages after a serious auto accident, and they don't know that their health insurance can assert a lien (which is basically a legal right to recover what they spent on you in medical treatment from a lawsuit -- it sucks, but it's true). The lien is the dollar amount they spent on your medical treatment, and the practice of asserting that dollar amount is called subrogation.

The only way to deal with  subrogation (basically they would take $100,000.00 out of what the insurance company pays you) is to 1) keep very careful track of your bills and medical records, making sure everything they assert was related to the accident, 2) negotiate a settlement that will cover your bills, your medical treatment going forward, and your lost wages.

If it's a small case we often encourage people to handle these things on their own (and we have a DIY worksheet we can send you to help you along). But it sounds like you have a big case, and you will probably need assistance negotiating with the insurance company. See, it's the job of the insurance adjusters to pay you as little as possible, and if you don't know your rights and you don't have practice negotiating or understanding the insurance company you will want a practiced attorney to advocate on your behalf (and get you back those dollars you lost borrowing against your pension). And the insurance company will only pay out once (at the end of your claim) so you want to be sure you didn't miss anything that should be covered in your settlement.

Also - if you live or work in Virginia, your health insurance may not be able to assert a lien (depends on a couple of factors, so call us for a specific analysis of that).

Don't take my word for it - check out what other people have said about working with Donahoe Kearney and if you are comfortable after that, give us a call at 202-393-3320. We would be happy to review your case for no cost or obligation - we don't get paid unless you get paid.

Thanks so much for contacting us.

Best Regards,

Donahoe Kearney