Subrogation is the right of an insurance company or other entity that paid for your expenses to be reimbursed from your personal injury recovery. If your health insurer paid $40,000 for surgery related to a car accident, and you then settle with the at-fault driver for $200,000, your health insurer has a subrogation claim against the settlement — it wants its $40,000 back. Understanding how subrogation works, when it applies, and how to reduce the amount owed is essential because the subrogation lien directly affects how much money you take home from your settlement.
How subrogation works in New York
When a third party causes your injury, the at-fault party’s insurance is ultimately responsible for your damages. But in the meantime, your own insurance — health insurance, PIP, workers’ compensation, Medicaid, or Medicare — pays for your treatment. Those entities did not cause your injury. They paid because they were contractually or legally obligated to. Subrogation allows them to recover what they paid from the at-fault party’s settlement or verdict.
In New York, the subrogation rights of different entities are governed by different rules. Workers’ compensation carriers have a statutory lien under Section 29 of the Workers’ Compensation Law. Health insurers may have contractual subrogation rights under the terms of the policy. Medicare and Medicaid have federal statutory rights that supersede state law. Each type of lien has different rules for how it is calculated and whether it can be reduced.
The workers’ compensation Section 29 lien
If you received workers’ compensation benefits and then recover from a third party, the workers’ comp carrier’s lien is calculated as the total benefits paid minus the carrier’s proportionate share of your attorney’s fees and litigation costs. The carrier also receives a credit against future benefits. This lien is statutory and cannot be eliminated, but the fee reduction typically reduces it by roughly one-third.
Health insurance subrogation
Private health insurance subrogation in New York is governed by the terms of the insurance contract. Some policies include subrogation clauses; others do not. ERISA-governed employer plans (most employer-provided health insurance) have strong subrogation rights that are enforceable under federal law. New York State-regulated health plans are subject to the “made whole” doctrine in some circumstances, which means the insurer cannot recover until the injured person has been fully compensated. The distinction between ERISA and state-regulated plans is critical and depends on the specific policy.
Medicare and Medicaid liens
Medicare has a statutory right to recover conditional payments it made for treatment related to an injury caused by a third party. The Medicare Secondary Payer Act requires that Medicare’s interest be protected in any settlement. If you are a Medicare beneficiary and you settle a personal injury case without resolving Medicare’s lien, Medicare can refuse to pay for future treatment related to the injury. Medicaid has similar recovery rights under both federal and New York State law.
How to reduce subrogation liens
Subrogation liens are negotiable in many cases. The workers’ compensation Section 29 lien is automatically reduced by the carrier’s share of attorney’s fees. Health insurance liens may be reduced through negotiation, particularly if the settlement does not fully compensate the injured person for their damages. Medicare liens can be reduced through the formal Medicare appeals process or through negotiation with the Medicare Secondary Payer Recovery Contractor. Every dollar reduced from a subrogation lien is a dollar that goes to the injured person.
How Schwartzapfel Holbrook handles subrogation
At Schwartzapfel Holbrook, we identify every subrogation lien in every case and negotiate each one to reduce the amount owed. Lien resolution is not an afterthought — it is a core part of the settlement process that directly affects how much money the client takes home. We review the legal basis of each lien, apply the applicable reduction formulas, and negotiate the lowest amount the lien holder will accept.
Schwartzapfel Holbrook / Fighting For You