If you are in an accident, and your private health insurance company pays your medical bills, a common question asked is whether you need to pay back that money out of your settlement proceeds.
Often times, personal injury lawyers are put on notice of a lien or subrogation right being made by their client’s health insurance provider. Once your case settles, most lawyers will inform their client that the lien needs to be paid back out of their proceeds of the settlement.
However, it is important to understand that in New York, there are limits against lien reimbursement and subrogation claims made by your private health insurance carriers.
What Does New York Law Say?
New York General Obligations Law § 5-335 prohibits private health insurers and other benefit providers from seeking reimbursement from the proceeds of your personal injury settlement.
Your personal injury settlement will typically cover your losses related to pain and suffering, medical costs, and wages. However, when it comes to reimbursing your insurance carrier, the law now presumes that your settlement proceeds went towards your pain and suffering damages only. This prevents any double recovery and eliminates any right of reimbursement by your health insurer.
In the past, reimbursement claims by private health insurance carriers sometimes made it very difficult to settle a personal injury case. Think, for example, of a case where the medical costs were extraordinary and there is a limited insurance policy available from the wrongdoer. The medical costs alone could wipe out the entire available insurance policy.
Now, with the protection afforded by the General Obligations Law, all of the available settlement money will go to the injured party.
Hire an Attorney Who Understands the Law
It’s important to understand the distinction between the rights afforded under the General Obligations law and statutory rights of reimbursement such as those under the Workers’ Compensation, Social Services, and federal ERISA laws. You want to be sure the attorneys you hire are not only familiar with all these nuances in the law, but have the resources to fight against the insurance companies when they claim rights of reimbursement.
The attorneys at Schwartzapfel Lawyers have an unmatched track records of success and routinely educate lawyers around the state on these topics.