One question frequently asked by our Tennessee automobile accident clients is why they have to repay their health insurance company out of any settlement they receive in their automobile accident claim. The clients feel that they have paid for the health insurance for many years and, when they have to use it to pay medical bills arising from a car accident, the health insurance company wants its money back. It seems unfair.
The reason that repayment of some amount is often necessary is because the health insurance contract has a “subrogation” or “reimbursement” provision that requires repayment if you get a settlement of a personal injury case and the bills were incurred because of the injury covered by the settlement. The power your insurance company has to enforce this provision depends on how it is written, whether it is governed by state or federal law, and other factors.
These provisions in health insurance contracts are now commonplace. Indeed, it is the rare health insurance contract that does not have such a provision. The laws that govern Medicare and Tenncare have similar provisions.