The Interplay Between Your Health Insurance and Personal Injury Recovery

In a previous article, I explained why a plaintiff’s claims for medical expenses in a personal injury suit is not limited to actual out-of-pocket expenditures for medical care. In other words, a plaintiff’s recovery in the lawsuit is not reduced by the amount of the medical expenses paid by the plaintiff’s health insurer instead of the plaintiff himself. However, can the plaintiff’s health insurer force the plaintiff to provide reimbursement for health care costs the insurer pays on the plaintiff’s behalf? The short (and lawyerly) answer is: “It depends.”

The answer depends on the outcome of the elaborate and mind-numbing interplay between federal and state law (i.e., “federal preemption”) governing health care reimbursement claims. Georgia state law generally provides that a health insurer cannot obtain reimbursement out of its insured’s personal injury recovery unless the insured has been fully compensated for all economic (e.g., medical costs and lost wages) and noneconomic (e.g., pain and suffering) losses. That is, the injured insured must be “made whole” before the health insurance company can recoup any of its payments. But federal law preempts or overrides this Georgia rule for some health care plans—typically group health plans issued by large companies who “self-fund” the medical payments out of their own reserves.

Without wading into the details of the preemption analysis, here is a very basic summary of the general rules:

• If you have an individual health insurance plan, your health plan generally cannot obtain reimbursement until you are fully compensated for your injuries;

• If you have a group health plan issued by an insurance company through your employer (i.e., it is not “self-funded” by the employer), your health plan cannot obtain reimbursement until you are fully compensated for your injuries; and

• If you have a group health plan issued by an employer which funds the plan itself (typically large companies), your health plan can obtain full reimbursement, regardless of whether you have been fully compensated for your injuries, as long as the health plan documents provide for such a right of reimbursement (and they usually will).

The take-away from all of this is that competent legal counsel should be retained to review your health plan and related plan documents, and to maximize the amount of compensation you are able to retain from your personal injury recovery. Health insurers, in an attempt to confiscate large portions of a plaintiff’s settlement or judgment, will typically claim that the plaintiff has been “made whole” even when that’s not the case. Good legal counsel can protect you from these tactics.