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Is My Health Insurance Company Entitled to Part of My Settlement?

Clients of mine will often receive what are called “subrogation” letters from their health insurance company. These are form letters, which are sent out by health insurance companies after they make payments on a claim involving an injury that a third party could be liable for. What these letters essentially say is that under the terms of your health insurance policy you are required to pay us back any money you receive from a third party for medical bills we paid on your behalf. (Before I go into the explanation of all this, I will cut to the chase and let you know that you do not have to pay any part of your settlement back to your health insurance company and that 100% of what you receive is yours to keep.)

I think the best way to understand this is to think about an automobile collision case. Let’s say you are stopped at a red light and someone rear ends you. You are taken to the hospital via ambulance where they examine you and perform some x-rays and other tests. In this scenario, your health insurance carrier is going to pay all the bills for the ambulance, x-rays, hospital visit, etc., even though the collision was the fault of the person who rear ended you.

Now, let’s say the insurance company for the at-fault driver wants to settle with you for your medical bills and pain and suffering. This could be through you directly or via an attorney you hired. When they go to settle with you, one of the things they are going to reimburse you for is your medical bills. However, you didn’t pay those bills, rather your health insurance company did. This is why the insurance company sends out the “subrogation” letters. They are telling you that under the terms of your policy you are not allowed to “double dip” meaning you don’t get the benefit of having the health insurance company pay your bills and then you get to turn around and pocket the money for those bills when you receive a settlement that includes reimbursement for those bills. If you receive a settlement that includes money for bills paid by your health insurance company, you are required to pay it back to the health insurance company under the terms of your policy and the law. (There are a lot more nuances on exactly how much you have to pay back that I am not going to go into.)

Vaccine Injury Compensation Claim (“VICP”) claims are completely different though. By law, the health insurance companies are not allowed to seek any reimbursement from you for monies they paid out for SIRVA injury claims covered by the VICP. Under the VICP, you are entitled to damages that include your medical bills that were not covered by health insurance but not your medical bills paid by your insurance. Hence, when you receive a VICP settlement, you are not being reimbursed for the medical bills your health insurance company paid, rather you are just getting reimbursed for the medical bills that you had to pay yourself or still owe. You are also receiving compensation for your pain and suffering.

It makes sense when you think of it this way, the VICP is a government program designed to compensate people for their out-of-pocket expenses, lost wages, and pain and suffering from vaccine injuries. Its purpose is not to reimburse multi-billion-dollar health insurance companies for claims they paid out. Accordingly, the law states that as far as VICP cases go the health insurance companies cannot seek any part of a VICP settlement from the Vaccine Injury Fund or the injured person.

In sum, the full amount of your VICP claim award is yours to keep. It is tax free also. There are not attorneys’ fees, and your health insurance company cannot seek any part of it either.¬† If you receive $100,000.00 for your SIRVA injury, you get to keep $100,000.00.

If you receive a subrogation letter, you might want to provide the order contained on this link to your health insurance company http://chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/

If you have any questions, please don’t hesitate to contact me at 773.412.3320 via phone or text or e-mail me at

Daniel Alholm