Finally! A bill passes in Texas creating a law that actually helps people who have sustained a personal injury. This blog post helps explain what the new law means to people who have used their health insurance to cover medical bills due to a personal injury.
House Bill 1869 (HB 1869) was signed by Governor Rick Perry in late May 2013. It is known as the Subrogation Reform Bill. It places a limit on the amount a health insurer (such as Blue Cross Blue Shield, Aetna, Humana, etc.) can recover out of a personal injury settlement in Texas, however the new law does not affect all types of health insurance plans, only certain types.
Let’s begin by talking about health insurance subrogation and health insurance liens: what they are and how they work. Let’s say Paul Plaintiff is rear-ended at a stop light by Dan Defendant, suffers a serious neck injury and four months after the accident Paul has neck surgery. Paul has health insurance with United Healthcare (UHC) and Paul uses his health insurance to pay the medical bills. The total amount UHC pays for Paul’s neck surgery and all of Paul’s treatment related to the car accident is $37,000. Dan Defendant has automobile insurance with Progressive, and Progressive reviews Paul’s injury claim and offers Paul a $50,000 settlement which is Dan’s policy limit for bodily injury. UHC has a $37,000 lien (or “subrogation interest”) against Paul’s $50,000 settlement from Progressive. In other words, UHC has the right to be reimbursed $37,000 from Paul’s $50,000 settlement. Here’s why…
Buried somewhere in Paul’s UHC health insurance contract (which is probably a very long document) there will be subrogation language. This contract language will say, essentially, if the person covered under the health insurance contract is injured due to a third party’s negligence or intentional act, and the injured person is going to get a settlement from the third party’s insurance company, then the health insurance company is entitled to be paid back up to the amount it paid out for medical treatment due to the accident. So in Paul’s case, UHC has a $37,000 lien against Paul’s $50,000 settlement, essentially leaving $13,000 to compensate Paul for having neck surgery.
If that doesn’t seem fair to you, and if you think: “It’s health insurance, that’s what it’s there for…UHC shouldn’t get most of Paul’s money!” then I agree with you. Thankfully so do State Representative Four Price (R-Amarillo) and State Senator Robert Duncan (R-Lubbock) who championed the Subrogation Reform bill.
HB 1869, the Subrogation Reform bill, places a limit on the amount certain health insurance plans can claim as a lien against a third party settlement. It is important to remember that not all health insurance plans are covered by HB 1869. HB 1869 will take effect as a new law on January 1, 2014 and will be codified as Chapter 140 of the Texas Civil Practice & Remedies Code.
What types of health insurance plans are NOT covered by HB 1869 Medicare plans, Medicaid plans, CHIPS, workers compensation plans, and self-funded ERISA plans.
The types of health insurance plans that ARE subject to the limitations created by HB 1869 are ERS plans (state employee coverage), insured ERISA plans and every other health insurance plan and every non-ERISA self-funded plan that is sold or issued in Texas.
What is the limit on how much a health insurance plan covered under the new law can take from a settlement? If the Plaintiff (insured person) is represented by an attorney, then the most the plan can take is 1/3 of the insured person’s settlement. If the Plaintiff is not represented by an attorney, then the most the health insurance plan can take is 50% of the settlement.
So under the new law, using Paul Plaintiff’s accident as an example, if UHC’s lien was being dealt with on or after Jan 1, 2014 when the new law takes effect, the most UHC could get from Paul’s settlement is 1/3 of $50,000 which would be $16,666.66 (assuming Paul is represented by an attorney) or 50% of $50,000 which would be $25,000 (if Paul is not represented by an attorney). Either way under the new law Paul is better off than if UHC’s lien was being resolved under current law (where UHC could insist on getting $37,000 of Paul’s $50,000 settlement).
This covers the high points of HB 1869, but of course there is more to it than I can include in this blog post. For example, there are aspects of HB 1869 that affects whether a health insurance plan can attach its lien to first party insurance coverage for an automobile accident, such as PIP (Personal Injury Protection), UM (Uninsured Motorist) and UIM (Underinsured Motorist).
If you have suffered a personal injury, either in Houston or somewhere else in Texas, and you would like to better understand your legal rights, contact me for a no-charge consultation. I am Board Certified by the Texas Board of Legal Specialization in Personal Injury Trial Law and I have dedicated my legal career to representing injured Texans.
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