If you ever had a claim against an insurance company — yours or another person’s — it’s possible that the company discussed subrogation with you. While they may never have used that exact term, if they questioned how you were injured and who was responsible, that was actually what they were determining.
The concept of subrogation emerges when someone gets hurt and a person or entity (like the injured person’s insurance company) pays for treatment or damages that another at-fault party caused. The not-at-fault party that covers the medical or treatment bills is the collateral source, and as such, takes that person’s place in order to assert a claim for subrogation. Yet this claim cannot be greater than that of the intended recipient of those benefits.
This can be a confusing concept, so think of it like this: It is not fair that a person collects a settlement or judgment for the portion of payments made on one’s behalf for one’s medical care. That’s considered to be “double recovery.” Injured parties have a right to recover the actual damages they incurred, but can’t profit from the loss.
If your insurance company paid $10,000 to the hospital and doctor that treated your injuries, that sum is owed not to you, but to those health care providers. Subrogation claims extend to programs that offer government benefits, too, like Medicaid, Medicare, Veterans’ benefits and indigent patient programs.
Because subrogation rights can affect the amount of the settlement or judgment you receive, it’s important that you have a clear understanding of how it works. Ask your personal injury attorney to clarify any unclear points to you before agreeing to any terms.