Question: I was involved in accident while riding in another car that was hit by a car that ran a red light. My health insurance paid most of the medical bills. Now the at-fault insurance has a settlement for me, but my medical insurance wants to put a lien on it to recoup the money they paid. Do they have the right to do that? Why do I pay insurance if they are going take my settlement?
Answer: Yes, your health insurance company can put a lien on your car insurance settlement. Your medical insurer isn’t trying to be greedy and take your settlement with the at-fault driver; instead, they just want to recoup the monies that should instead have been paid for by car insurance.
In most states, car insurance pays first, before health insurance, for injuries sustained in an automobile accident. State laws vary, but in general the order of recovery for loss (if coverage is applicable and/or available) is:
- Workers compensation
- Personal injury protection (PIP)
- Medical payment coverage (MEDPAY)
- Liability coverage (other party's bodily injury liability)
- Uninsured motorist bodily injury or underinsured motorist bodily injury
- Health insurance or other applicable coverage
If your claims had been made under the auto policy first, then the medical policy wouldn’t have had to pay at all for the medical expenses.
But since the medical expenses were paid for by your health insurance provider already, it has the right to get some or all of what they paid out back, from the responsible party. This ends up coming out of your settlement because the car insurance company is compensating you for these medical expenses in their settlement with you.
If as part of your settlement with the at-fault driver’s car insurance company you are receiving compensation for pain and suffering, work loss, and other non-medical expenses, then this money should come to you. Your health insurer only wants back what it paid out.
Insurance is meant to restore you to where you were before an accident, not put you ahead.
Also, insurers won’t double pay. You can’t have your health insurer pay for your medical expenses and then recoup that money and keep it for yourself. Your health insurance company isn’t taking this money away from you since you weren’t out this money to begin with; they were.
Health insurers putting liens on car insurance settlements, to recoup the money they paid out for injuries sustained in a car accident, helps keep down your premiums with them.
If health insurance companies paid out for these claims and didn’t recoup any money from the auto insurer that should have been primary, then your health insurance rates would go way up.
If you are still concerned about the lien on your settlement, you can contact your state’s insurance regulator to discuss the insurance laws that govern this situation and what your consumer rights are.