You really need to know and you really need to care because, often times, “subrogation” will seriously affect the bottom line in your personal injury case.
“Subrogation” is a legal term. It essentially means that someone that has paid you a benefit (like your PIP carrier or Health insurer that may have paid some or all of your medical expenses) related to your accident wants to get its money back out of your settlement. Subrogation can also be called a “lien” or a “right of reimbursement” or a “subrogated interest.” It can have a huge effect on the net amount that you will get at the end of case.
Suppose that you are hit by a drunk driver. You have PIP (personal injury protection) coverage in your policy. Your PIP insurer pays out $10,000 to your medical providers. You settle with the drunk driver's insurer for its policy limits of $25,000. The PIP insurer wants money back. Your attorney wants his or her 1/3 attorney fee and costs. Out of that $25,000 you may only get $6,500 or so if the PIP insurer gets its full $10,000 subrogated interest back.
Some insurers will tell you that they get back all of the money that they paid out on your behalf. Many times they are wrong. They may be entitled to all of it back in a few cases but for the most part they are only entitled to some of it back and on some occasions they get back none at all. Some lawyers (or so we have heard) only are interested in getting the largest settlement that they can get and don't worry about the subrogation claim's against your settlement-they just pay whatever the insurers want. Schauermann Thayer Jacobs Staples & Edwards believes that our job, in addition to settling or trying your claim, is to deal with these companies with their hand out wanting their money back and to get the best deal we can for you so that the net to you is maximized. We do it well. Many times we get them to reduce their subrogated interest. Sometimes we get it eliminated altogether. Remember that hypothetical above. Now suppose that instead:
-your attorney is able to convince your PIP carrier that you are not fully compensated for your injury by the payment of the $25,000. The PIP carrier may then agree to substantially reduce its “lien” or to waive it all together. Instead of only $6,500 in your pocket you get $12,000 or even $16,500 back.
If you have been involved in a motor vehicle collision and your PIP or health insurer is trying to “subrogate” a portion of your settlement proceeds, please feel free to call us. We would be happy to explain this in more detail and or discuss with you other options for the final resolution of your claims.