The Adjuster Says We Can Work It Out – Part 2

In the second part of this series, I want to discuss health insurance and how it plays into the settlement of your injury claim in a car collision. The overwhelming majority of Americans who have health insurance get it through their employment. Most of these policies are covered by a Federal law known as ERISA. Suffice it to say that ERISA is generally not good for the consumer. Let’s say that your health insurance provider has paid $15,000 in medical expenses. Your carrier has sent you a letter telling you that they want to get their money back if you make a recovery from the driver who ran the red light. You are concerned because you have found out that this driver only has $25,000 in insurance limits.

The first issue is whether ERISA even covers this claim. If you work for a state or Federal government (or one of its subdivisions) or a church, it is not. If you own your own company, it may not be. ERISA may or may not apply based on how the plan is funded and who pays the premiums. In short, this is a minefield for the unwary.

Next, whether the plan is covered by ERISA or not, you need to determine how much your health insurance carrier may recover. In many instances, they will have to pay your attorney the same rate that you are paying for the recovery. Using our example, if you had hired your lawyer on a 1/3 contingency fee contract, you would only have to repay the carrier $10,000 of the $15,000. In some cases, the "make whole" doctrine will apply and your repayment to the carrier will be diminished, or even erased. Again, using our example, the fact that the at fault driver only has $25,000 in liability limits may bring this doctrine into play. The basic idea is that the Judge on your case can limit the carrier’s recovery if it is found that you won’t be made whole otherwise.

Whether the "made whole" doctrine applies is another question that only an attorney experienced in personal injury cases can determine and negotiate. In the next, and last, installment in this series, I will wrap things up and give you a few tips on what to do if you decide to represent yourself.