Few things are more frustrating than the moment you have to explain the concept of a health insurance lien to a personal injury client. Having not read or understood the legalese in the fine print of their insurance policies, the usual and natural reaction is, “What do you mean I have to pay them back?” With some restraint, my response is always the same: “I’m equally thrown by it, but that’s just the way it works.”
Health insurance liens are based on the legal concept of subrogation—meaning your insurance company has the right to “step into your shoes” and recover the money it paid for your medical care from the judgment or settlement you receive from the third party found to be liable for your injury. Although certain medical liens such as those asserted by health care providers can be justified, there are a multitude of reasons why health insurance liens in particular are illogical in the theory and practice of personal injury cases. The main reason is simple: it’s not fair. When an individual who suffers personal injury due to the negligence of a third party has his medical expenses paid by his insurance provider and later obtains recovery from the tortfeasor, it’s not a windfall.
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