What is Subrogation and How Does It Affect Your Claim

Private Health Insurance Subrogation

If you have private health insurance through an employer or purchased individually, the insurance policy likely contains a subrogation clause giving the insurer the right to seek reimbursement from any third-party recovery. In Texas, the "made whole" doctrine historically required that the insured be fully compensated for all of their losses before the insurer could assert its subrogation right. However, many insurance contracts now include language that attempts to override the made whole doctrine through contractual provisions.

Your attorney must carefully review your insurance policy to determine the scope of the subrogation right and whether opportunities exist to negotiate a reduction.

ERISA Plans

If your health insurance is provided through your employer and the plan is governed by the Employee Retirement Income Security Act (ERISA), the subrogation rules are governed by federal law rather than Texas state law. ERISA plans often have stronger subrogation rights because federal courts have interpreted ERISA to preempt state law protections like the made whole doctrine.

The United States Supreme Court addressed ERISA subrogation in *US Airways, Inc. v. McCutchen*, 569 U.S. 88 (2013), holding that plan terms control and that equitable defenses may apply to limit the plan's recovery. Navigating ERISA subrogation requires specific knowledge of federal law and careful analysis of the plan documents.

Medicare and Medicaid

If Medicare or Medicaid paid your medical bills, the federal government has a statutory right to reimbursement under the Medicare Secondary Payer Act (42 U.S.C. Section 1395y) and the Medicaid Third Party Liability provisions (42 U.S.C. Section 1396a(a)(25)). These rights are mandatory and cannot be waived. Failing to properly account for Medicare or Medicaid liens can result in penalties and future coverage problems.

However, Medicare does allow for reduction of its lien based on procurement costs (attorney's fees and litigation expenses). Your attorney can negotiate with the Medicare Benefits Coordination and Recovery Center to reduce the lien amount.

Workers' Compensation

If you were injured on the job and received workers' compensation benefits, the workers' compensation carrier has a subrogation right against any third-party recovery under Chapter 417 of the Texas Labor Code. This means that if a third party (not your employer or coworker) caused your injury, and you file a personal injury claim against that third party, the workers' compensation carrier can seek reimbursement from your recovery.