I signed up a client recently that was hit by a car while riding a motor scooter. After we met and I began to represent him as his lawyer, he solicited a personal injury settlement from the insurance carrier for the at-fault driver. He did not inform me of this and it escapes me as to why he bothered to meet with an attorney at all. Nevertheless, while the insurance company should not have discussed any part of his injury claim with him since he had legal representation, they claimed that they had not yet received my letter of representation and that my client had told them he did not sign any contracts with any lawyers.
Even though I think I could have voided any personal injury settlement that was arguably reached, my client instructed me not to interfere and informed me that he wanted to proceed with the settlement of his personal injury claim, despite my legal advice to the contrary. As a result, I withdrew from the case and allowed the client to resolve his injury claim as however he saw fit. However, he made a big mistake on a key issue that I want to make you aware of.
Except for the medical bills paid by a Kentucky no-fault carrier, the vast majority of personal injury settlements are inclusive of the medical expenses or any liens that stem from the payment of those medical bills. In other words, when you settle a personal injury claim from a car wreck in Kentucky or Indiana, that personal injury settlement will include every lien or medical bill except for those paid by a Kentucky no-fault carrier.
In this case, the injured victim was on a scooter that because of the size of its engine, qualified as a motorcycle. In Kentucky, motorcycle riders do not generally qualify for no-fault insurance unless they have purchased optional no-fault coverage. So the client’s own health insurance would be responsible for his medical bills. (Recall that the insurance carrier for the at-fault driver typically own pays an injured person’s medical expenses when the entire personal injury claim is settled; not as the injured party incurs the medical expenses.) Thereafter, my former client’s health insurance carrier could assert a subrogation claim against any personal injury settlement that was recovered for the medical bills they paid on the client’s behalf.
Essentially a subrogation claim by a health insurance carrier says that they legally stand in your shoes in regard to the medical bills they have paid on your behalf. So if you recover the medical bills from the at-fault party, the health insurance carrier has the right to recover the amounts they have paid from your personal injury settlement or you. Since the settlement of the former client was inclusive of all medical bills and liens, the client’s own health insurance carrier now has the right to sue him, their own insured, to recover the amounts they have paid on his behalf. In addition, some health insurance plans would give the insurance carrier the additional right to deny payment of future health insurance benefits to the extent that their subrogation rights were impaired.
In essence, the former client not only settled his injury claim too soon and for less than it was worth but also, the amount recovered in that settlement may not be taken away by the health insurance carrier to satisfy their subrogation claim. Very simply, don’t rush a personal injury settlement. The only one that benefits from rushing a personal injury claim is the insurance carrier.