Subrogation is a word you’re pretty much guaranteed to hear during the injury claims process. It’s a complex legal issue even for lawyers, so what does this word mean in layman’s terms to your injury claim?
Here’s what you need to know.
What does subrogation mean?
A literal interpretation of the word subrogation means to stand in the shoes of someone else.
Practically speaking, subrogation refers to a situation where some third party pays part of the expenses you incur as a result of the accident, and because of that payment that third party is now entitled to reimbursement from the defendant who caused your injury. Thus, to the extent that the third party pays some of the accident-related expenses, they have stepped into your shoes as the injured party. Subrogation is most common when an insurance policy pays medical or other expenses as a result of an accident.
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What is the purpose of subrogation?
The purpose of subrogation is to prevent “double-recovery,” or profiting off an accident.
In other words, the underlying principle is that if your health insurance paid a medical bill for which the defendant was liable, you should not be able to profit from the fact that your policy paid that bill. Subrogation ensures that accident victims only recover for their actual expenses.
What is a collateral source?
If you’re talking about subrogation, it’s common to also hear the phrase “collateral source.” Essentially, a collateral source is any third party that pays an accident related expense on your behalf. These collateral sources have now stepped into your shoes in making the injury claim, but only to the extent that they paid.
Common Examples of Subrogation
Subrogation frequently comes up in some of the following situations:
- Health Insurance. For example, if your health insurer pays for an emergency room visit after an automobile accident, your insurance policy grants the insurance company subrogation rights to recover the cost of that visit from the adverse party.
- Medicare, Medicaid, Veterans’ Benefits. Like health insurance, when these government programs pay for expenses related to an accident for which someone else is liable, they will be considered a collateral source.
Workers Compensation. If your employer is not fully responsible for your on-the-job injury but they are paying workers compensation benefits on your behalf, they are subrogated to your claim against the liable party for the amount of those benefits.
- Contractors after natural disasters. Often contractors will begin to work on a house after a storm without requiring up front payment by asking homeowners to sign a subrogation contract. Depending on the language of the contract and the insurance policy, this agreement gives the contractor all the rights the homeowner had to make a claim on the insurance policy.
How can subrogation affect my injury claim?
Simply stated, subrogation brings more people to the table who have to be involved in settlement negotiations.
Collateral sources are subject to the same defenses as the injured party and thus, their recovery could be reduced if the accident victim was found to be partially at fault. Sometimes this means that collateral sources will be allies in fighting for a claim, but on the other hand if settlement means that not everyone will be paid, working to get the consent of all collateral sources can often stall negotiations.
Do you have questions about what subrogation means to your injury claim?
Subrogation is a complex legal issue and failing to understand who must be reimbursed for medical bills can sometimes result in personal liability for accident victims. If you’ve been injured in an accident and have questions about how subrogation might affect your claim, give us a call. An experienced personal injury attorney at Morris Bart will talk to you about your case. Initial consultations are free. We have office locations throughout Louisiana, Mississippi, Alabama, and Arkansas. Call us at 1-800-537-8185 today.