Understanding Subrogated Claims: Why You are Required to Repay Health Insurance Benefits from your Settlement

When you are injured in an accident you may need to use your private health plan to cover medical and treatment expenses. In some cases, short or long-term disability may cover lost wages. When you bring a personal injury claim against the person responsible for your injuries, your private insurer also brings a claim, through you, to recover the amounts they have paid on your behalf as a result of the accident. This is called a “subrogated claim”.

Understanding Subrogated Claims

Subrogation refers to the right insurance companies hold under your policy to request reimbursement from the at-fault party for the claims they have paid. This allows an insurer (eg., Blue Cross or Sunlife) to step into the shoes of the injured person (their insured) and pursue reimbursement from the party responsible for the injury and related costs. Many private insurance policies contain a subrogation clause which gives this right to the insurer.

The Role of Private Health Insurers in Injury Claims

Private health insurers, such as Blue Cross or Sunlife, play a role in personal injury cases by providing coverage for medical expenses, or lost wages (short- or long-term disability claims) resulting from accidents or injuries.

Medical coverage is available for car accident injuries under Section B of all Nova Scotia automobile policies.  For injuries that are considered soft tissue (whiplash, strain, or sprain) the Diagnostic and Treatment Protocols provide funding for an initial 10-21 treatment sessions within 90 days. After this timeframe/number of sessions or for injuries that are not soft tissue, treatment expenses must be submitted to your own private health insurer before they are considered under the Accident Benefits/Section B Policy of your Auto Insurer. Accident-related treatment that is not covered by your private health insurer can be submitted to your own auto insurer under the Accident Benefits/Section B claim for reimbursement (see our Blog, I’ve Been Injured In A Car Accident What Do I Do Now? For more information about Section B benefits).

The requirement to use your private health plan first is not popular among injured people because often their coverage is maxed out treating car accident injuries and they are left without benefits for non-accident-related health issues. Unfortunately, the Insurance Act is clear that an injured person must use all other insurance coverage available to them prior to claiming these expenses under their Accident Benefits/Section B policy through their own auto insurer.

Subrogation in Action

Imagine Sarah is in a car accident caused by another driver running a red light. She sustains a broken arm requiring surgery and extensive medical treatment. Sarah has a Blue Cross policy through her teaching job. When Sarah attends physiotherapy, her Blue Cross policy covers the costs. Once Sarah reaches her Blue Cross policy maximum for physiotherapy of $1,500 she submits the additional treatment expenses through her Accident Benefits/Section B policy until her Blue Cross coverage renews in the New Year. Once her Blue Coverage renews, she must submit her ongoing physiotherapy expenses through her Blue Cross Policy until she maxes out the coverage for that calendar year. Sarah requires 2 years of physiotherapy and in total Blue Cross covered $3,000 of Sarah’s physiotherapy expenses.

Sarah pursued a personal injury claim against the at-fault driver to seek compensation for her medical expenses, pain and suffering, and other damages. As part of the claim process, Blue Cross asserts its right of subrogation, seeking reimbursement of the $3,000 it paid from any settlement or judgment Sarah obtains in her injury claim. When Sarah negotiates a settlement with the at-fault party (or their insurer), she must include Blue Cross’ $3,000 subrogated claim, and repay this money to Blue Cross when she settles her personal injury claim.

If the injured person retained a lawyer, the private insurer typically pays legal fees on their subrogated claim. Also, the private insurer may negotiate on the total amount of its subrogated claim if the injured person must compromise the full value of their claim in order to settle, due to causation or other issues.

Subrogated claims apply not only to claims for medical expenses but many claims for short- and long-term disability benefits.

It is critical to understand whether your insurer is presenting a subrogated claim. If you do not protect the insurance company’s interest by asserting its subrogated claim when negotiating with the at-fault party, your insurance company may look to you for reimbursement, regardless of whether you recovered the subrogated claim amount from the at-fault party.

Conclusion

Subrogated claims by private health insurers like Blue Cross serve as a mechanism for the insurer to recover the costs incurred for providing medical coverage to injured policyholders.

It is crucial to understand whether your private insurer is presenting a subrogated claim in your personal injury claim.

If you have questions about a subrogated claim or injury claims in general, please get in touch with us for a free consultation.

Carter Simpson has prepared this document for information only. It is not legal advice. You should consult Carter Simpson about your unique circumstances before acting on this information. Carter Simpson excludes all liability for anything contained in this document and any use you make of it.