We have blogged a tad about the concept of "subrogation" in the context of personal injury claims. In short, if you are injured and incur medical bills, the entity that pays the bill (usually a government insurer like Medicare/Medicaid or a private health insurer) or the medical provider that rendered the service, generally has a right to get paid back right out of the personal injury judgment or settlement proceeds. For instance, if you are injured in a car accident that is not your fault, and your health insurance company pays $3000 of your medical bills related to the accident, your health insurance company will demand that you pay them back most or all of that $3000 when you settle your claim or get paid on a trial judgment for that injury. This subrogation stuff leads to many many disputes between the injured party and the entity demanding subrogation reimbursement - especially when the amount recovered by the injured person is very low - or even less than the medical bills. In fact, some of the claims for subrogation reimbursement will result in the injured person getting NOTHING (because the reimbursement claim actually exceeds what the injured person recovered). So, as we do all of the time for our clients, an attorney will have to intensely negotiate a reduction in the amount that is actually paid to the entity claiming a right to subrogation reimbursement. MOST of the time the entity claiming a right to subrogation reimbursement will agree to a reasonable reduction in the subrogation payment because if it was not for the pursuit of the personal injury claim, the entity would get nothing (they never pursue the claims on their own - they will almost always wait for the injured party to collect on their claim). It use to be somewhat rare for an entity claiming a right to subrogation payment to be a pig about what they want paid back. However, now many medical insurance companies and medical providers have hired private collection companies (or law firms) to collect on the subrogation claims, and since almost all of these companies/law firms get paid a percentage of what they can collect, these private collection companies/law firms become not just pigs - but hogs. They tell us over the phone and in writing that they just don't care if the injured party gets next to zero for their injury - they still want it all - and they want us to pursue the tortfeasor, take all of the risks and time, and get it for them (like leeches) - or they will sue our client. We recently had a woman who had over $102,000.00 in auto accident medical bills paid by a private insurance company called "Wellcare." The private collection company hired by Wellcare (called "First Recovery Group") to pursue the Wellcare subrogation claim demanded that the injured woman pay over to them ALL of her settlement net proceeds that have been offered by State Farm insurance (they offered $100,000). That's right, ALL of it.
They say in business that you can be a pig, but not a hog. Pigs get fed, but hogs get slaughtered - unless you are a private subrogation collection company.
Call us about this if you want more examples or more explanation. Stay tuned on this important issue.