- Medical Expenses - Subrogation Interests and Admissibility
- August 20, 2013
- Law Firm: Feldstein Grinberg Lang McKee P.C. - Pittsburgh Office
- COMMON LAW
The common law is simple, and makes sense. All elements of damage are recoverable against the tort feasor, including all medical expenses which are paid from any source, or are owed. Unfortunately, only slip-and-fall cases and products liability matters can be analyzed using common law principles.
If the client has first-party medical benefits, his or her automobile insurer has no right to subrogation for those bills which have been paid. Moreover, any medical expenses which exceed the amount of the limits of the client's first-party medical benefits must be reduced to the Act 6 value. This means that even if the client's medical insurer must pay excess bills the medical provider can only charge the insurer for the amount to which the first-party automobile carrier would be entitled under Act 6.
In the instance where the client has no first-party benefits or medical bills exceed the first-party benefits, the medical insurer has no right of subrogation unless the health insurer is ERISA-qualified. In that circumstance, medical expenses paid by the health insurer are admissible as damages at trial, and the health insurer has a legitimate subrogation interest.
Medical expenses paid by Medicaid or Medicare are likewise subrogable and admissible at trial. Of course, any out-of-pocket medical expenses are admissible.
The original intent of the legislature, as embodied in the most recent medical malpractice statute, was to permit medical expenses which were paid by an insurer to be admitted for purposes of guiding the jury with respect to pain and suffering, but the insurer which paid the medical expenses was not to have a subrogation interest. However, because federal law supersedes state law, similarly to automobile accident matters, ERISA-qualified health insurers have a legitimate subrogation interest. As federal programs, Medicare and Medicaid have a right of subrogation.
The bottom line: In medical malpractice cases, all medical expenses can be presented to the jury, but only expenses paid by an ERISA-qualified health insurer and/or by Medicare and Medicaid, or are unpaid and owed (out-of-pocket) are recoverable, and consequently subrogable.
Products liability matters remain subject to the common law. Therefore, all medical expenses are admissible, and any health insurer, regardless of ERISA status, retains a right of subrogation.
DUTY TO INFORM OF SUBROGATION INTEREST
In the case of Medicare and Medicaid, statutory law requires Plaintiff's counsel to inform Medicare or Medicaid of a pending claim, and to resolve that claim if the matter is successfully concluded. Currently, federal law makes Plaintiff's counsel, Defense counsel and the Defendant's insurer liable for any subrogation interest which is not protected.
With respect to private health insurance, the best course in automobile accident and medical negligence cases is to determine if the client's health insurer is ERISA-qualified. Obviously, where that is true, the amount of "special damages" becomes a component of any demand.
With respect to private medical insurers generally, and particularly in slip and fall and products liability matters, the question of the consequences of settlement of a case without placing the private insurer on notice of a potential subrogation claim remains open. Years ago, it was common practice among Plaintiff's attorneys to settle cases without making an effort to advise a private insurer of its subrogation interest, because settlement was easier without paying out a portion of the settlement to a health insurance provider. This still occurs, especially in slip and fall and products liability matters; however, doing so places your client at potential risk.
Health insurance policies typically require the insured (not the attorney, who is not a party to the contract) to place the insurer "on notice" of its potential subrogation interest. Failure to do so does subject the insured to a potential claim by the insurer. Lawsuits against insureds who have settled personal injury matters but have not informed the insurer of subrogation rights are not common, but where settlements have been substantial, such suits have been filed. It is probably best to inform the client of the potential of a lawsuit against the client by the health insurer if a case is settled without placing the health insurer "on notice" of its subrogation rights or ignoring those rights.