When an individual gets hurt in an accident (other than automobile), their medical bills are paid through their own medical insurance policy or Medicare/Medicaid. The health insurance policies, (most of them) give the insurance company who paid your bills, a right of subrogation (to recover what they paid out). These medical insurance companies claim a lien or right of subrogation if you (the injured party) collects by settlement or verdict from another party (the person who caused your injuries). The result is that the injured party has to repay from their personal injury lawsuit the health insurance company who paid their medical bills. These liens or rights of subrogation in some cases are higher than the value of the injured party’s case.
The irony is that you pay health insurance premiums so the health insurance companies pays your medical bills and if you are injured, you have to pay back (what you paid a premium for) to the health insurance company. The New York Legislature and attorneys who represent injured parties, lobbied through the New York State Trial Lawyers Association (NYSTLA) to have the law changed so the injured party does not have to repay their health insurance company. In November, 2009, the New York Legislature passed a bill under the General Obligations Law §5-335. The law bars any benefit provider (health insurance company) from seeking any reimbursement or subrogation from any settling party to a personal injury or wrongful death action. The exceptions are Medicare/Medicaid and Worker’s Compensation. Any money paid out for medical benefits becomes by operation of law, a lien against personal injury recovery.
As with any new law, the providers are trying to recover what they paid out tried and succeeded in still collecting medicals paid out if the injury party collects. They used a Federal Law ERISA to claim the State law did not apply (basically wiping out the New York State Law). As a result of one case where the insurance company sued for the return of its payout for medical from the injured party the result was all the insurance companies started claiming their right of subrogation or lien.
Thankfully the New York State Legislator and Governor Cuomo passed a new law entitled “Anti-Subrogation Bill” amending the General Obligations Law §5-335. The Legislature made it clear that insurers (medical) will not be able to claim or access any monies paid in settlement of a tort claim (personal injury claim) whether by lien or reimbursement claim, subrogation or otherwise. So that the burden or payment of health care services, disability payments, lost wage payments or any other benefit for the victims of torts will be borne by the insurance company (medical) and not any party to a settlement, such as victims in tort claims.
The new law signed by Governor Cuomo on January 13, 2013 is effective immediately and applies to all settlements entered into on or after November, 2009. (The date of the original General Obligations Law §5-335).
Injured party attorney’s can now stop fighting with health care insurance companies to reduce liens so the injured party gets the settlement money, not their health insurance company. The new Law is made to specifically apply to insurance and thus, saved by the ERISA savings clause that allows States (not the Federal Government) to regulate the insurance industry. The new law also makes it clear that the only liens that apply to reimbursement in tort cases are Medicare/Medicaid and Worker’s Compensation.
The end result is that if your medical bills are paid by a health insurance company, that company no longer gets part of the victim’s settlement. The injured party gets to keep all of its recovery for their injuries.
Thanks to the New York State Legislature and Governor Cuomo and NYSTLA for protecting injured parties rights.