Subrogation is the process that allows insurance companies to seek reimbursement for the medical bills they paid on your behalf after an accident. While this helps insurance companies recoup their costs, it can lower the final amount of compensation you receive.

By learning what subrogation means in a personal injury lawsuit—and speaking with one of our Knoxville personal injury lawyers—you can better protect your rights while pursuing the compensation you need.

What is subrogation?

While subrogation can reduce the amount of money you receive after a settlement, it is intended to prevent double recovery by an injured person.

Imagine you were hit by a drunk driver. You sustain a serious concussion, as well as a broken leg. Your insurance company pays all the medical bills associated with this injury, which add up to $30,000. By the time your case settles, you will receive a total of $100,000. And then, the insurance company asks for $30,000 from that settlement. This is an example of subrogation.

Attorneys may be able to negotiate reductions, but whether reductions are possible depends on the type of insurance, applicable state doctrines, and federal rules.

How does subrogation work in a personal injury lawsuit?

Every personal injury lawsuit is a little different, which means that subrogation is rarely uniform. But, even so, subrogation tends to work in the following manner:

• You sustain an injury due to someone else’s negligence.
• You undergo treatment for this injury.
• You file a personal injury lawsuit against the parties that are at fault for your injury.
• You negotiate a settlement—or, alternatively, go to trial and obtain a verdict.
• You receive the settlement, and it encompasses your medical bills, as well as the other damages.
• You learn that your insurance company has filed a subrogation claim against this settlement.
• You may have to pay out to the insurer, who is seeking reimbursement (note that your attorney may be able to help significantly reduce the amount you must reimburse if you are not “made whole”).
• You end up with less money as a result of giving a portion of your settlement to the insurance company.

Who can file a subrogation claim?

An insurer may have a right to reimbursement depending on the facts of the case. Some of the entities that may serve as this insurance company are as follows, although keep in mind that each payer follows different rules:

• Workers’ compensation.
• Your auto insurance agency.
• Your health insurance company.

If any one of these entities paid for the medical expenses you sustained due to an injury, they may have the right to file a subrogation claim against the settlement you receive.

What are some of the ways subrogation can affect the damages you receive from a car accident?

Subrogation can affect the damages you receive from a car accident in the following ways:

• You may be forced to give up a portion of the money you receive if the insurance company demands reimbursement for paying your medical bills.
• You may receive far less money than you need to address the other damages you sustained if you are ordered to give up a portion of your settlement.
• You may not be able to properly deal with any future damages created by the injury you sustained if the insurance company takes a large portion of your settlement.

Here are some examples to illustrate the above:

• If you receive a $40,000 settlement, but your medical bills were around $30,000, you might end up with no more than $10,000.
• If you receive a $60,000 settlement and are forced to give your insurance company $50,000, you may not be able to deal with the overdue mortgage, car repairs, and job loss that you sustained due to the accident.
• If you receive a $180,000 settlement, one-third of which was meant for home modifications and a long-term caregiver, giving up too much of this settlement could prevent you from getting the care you need.

While there are legal protections meant to protect against unfair outcomes, examples like these can occur, especially with Medicare, Medicaid/TennCare and other policies that have strict rules related to subrogation. Additionally, if you don’t adequately account for all of your losses – by, say, neglecting to include the full amount you’ve lost because of being unable to work, you could end up struggling to afford the support you need as you recover from a car accident injury.

How can you maximize your compensation?

You can maximize your compensation and hold onto the majority of your settlement by doing the following:

• Work with a personal injury lawyer who is knowledgeable about settlement negotiations and subrogation issues.
• Work with a lawyer to argue that you have not been fully compensated for your injury and, as such, the insurance company’s reimbursement claim should be reduced or limited based on the facts of your case.
• Gather evidence that supports your need for a full settlement.
• Work with your lawyer to pursue full and fair compensation, based on the facts of your case and the injuries you sustained due to the car accident.
• Work with your insurance company, medical providers, and any other parties responsible for your medical treatment to negotiate reduced costs for your medical expenses or liens on your medical bills.

Every personal injury case is different. Doing any one of the above doesn’t guarantee that you will keep more of the money from your settlement, but it may make it easier for you to hold onto more of your settlement.

Contact a Knoxville car accident lawyer today

Subrogation can reduce the amount of money you receive from a car accident settlement. The skilled attorneys at Banks & Jones may be able to help. Contact us to speak with a Knoxville car accident lawyer today. We are ready to help you pursue the compensation you need.