Why You May Have to Reimburse Your Health Insurance After an Accident

When you’re injured in an accident and receive a settlement or judgment, one of the last things most people expect is a bill from their own health insurance company. But for many, that’s exactly what happens.

This situation arises from a legal and contractual principle known as subrogation, and it’s one of the most important — and commonly misunderstood — aspects of personal injury law.

Understanding "Double Recovery"

The law generally prohibits what is called double recovery — meaning, you are not allowed to be compensated twice for the same loss. If your health insurance paid for your accident-related medical treatment, and you later receive compensation for those same bills through a personal injury settlement or judgment, the law views it as a double recovery unless your health insurer is reimbursed.

From a fairness standpoint, the reasoning is simple: the purpose of a personal injury settlement is to make you whole, not to result in a windfall. If your medical bills were already paid, and you also receive money from the at-fault party for those same bills, you haven’t been “made whole” — you’ve been paid twice. Most insurance contracts are drafted to prevent that.

The Contractual Obligation to Reimburse

Virtually all health insurance policies — including private plans, employer-sponsored plans, and even government-backed plans like Medicare — contain language that gives the insurer the right to be reimbursed for medical benefits they’ve paid if you recover money from a third party. This right may be found in the fine print of your policy, often under a section titled “Right of Reimbursement” or “Subrogation.”

The obligation is not just theoretical. Insurance companies actively enforce these rights and will often place a lien on your case, meaning they can demand repayment directly out of your settlement proceeds.

This can come as a surprise to injury victims, who assume that once their insurer pays for treatment, the matter is closed. But unless your lawyer negotiates a reduction or waiver of that reimbursement claim, the lien will often remain in full force and reduce the amount you ultimately receive.

Conclusion

The right to reimbursement is just one of several hidden landmines that can significantly affect the value of your case — and your bottom-line recovery. Most people don’t know these obligations exist, let alone how to manage or negotiate them. And it’s not just health insurance companies. Government entities, workers' compensation carriers, and even medical providers may assert similar claims.

A knowledgeable personal injury attorney understands how to navigate these issues, identify all lienholders, negotiate reductions where possible, and protect your settlement.

Trying to handle a case on your own without understanding the legal and contractual implications of reimbursement can cost you thousands — sometimes tens of thousands — of dollars.

CONTACT PHILLIPS & ASSOCIATES TODAY

Obtaining a settlement that adequately covers your immediate and future needs can be a challenging task, even when there's clear evidence of wrongdoing and negligence by the offending party. In such cases, an experienced attorney can provide crucial assistance in navigating the legal complexities involved. If you have been injured in an accident, contact Phillips & Associates at (818) 348-9515 for a free consultation today. We will work diligently and aggressively towards securing the best possible outcome in your case.