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By: Murphy & Murphy Law Offices

Med Pay Subrogation

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Does Subrogation Apply if Med Pay Has Paid for Your Medical Expenses After a Car Accident?

Subrogation is when one party stands in for another party and can legally assume their rights. The most common example of this occurs after car accidents. If a victim is injured during an accident where another driver was at fault, the victim’s insurance company will pay for their medical care up to their policy limits. However, the insurance company wishes to be paid back for these expenses. Under subrogation, the insurance company now has the right to seek reimbursement from the at-fault party for their costs the same way the victim can seek damages from the at-fault driver.

Because California does not offer PIP insurance, you may have utilized the Med Pay portion of your car insurance to cover expenses for necessary medical treatments after the crash. Under California law, subrogation does not apply to Med Pay costs, and the insurance company does not have the right to sue the at-fault party directly for these expenses. Instead, your insurance will seek to collect reimbursement from any settlement you receive. A personal injury lawyer can help you understand what Med Pay costs you may be responsible for and when.

 What is Med Pay?

Med Pay is an optional add-on to your auto insurance that can help cover medical bills after an accident. It differs from Personal Injury Protection (PIP) insurance because it does not include payments for lost wages or other costs associated with your injuries. The policy limits of your coverage are governed by the plan you purchase. The minimum limit is $1,000, but some plans can cover as much as $100,000.

Medical costs after an accident can be expensive, and those without good health insurance may choose to get Med Pay insurance to cover those costs in the event of an accident. Even individuals with good health insurance coverage may purchase Med Pay because it covers passengers or pedestrians injured in a crash. The insured can also use it if they are injured as a pedestrian, biker, public transit rider, or passenger in another vehicle.

How Does California’s “Made Whole” Rule Impact Your Settlement?

If you were injured in a car accident caused by someone else, you can think of Med Pay payments as similar to an interest-free loan: the insurance company will pay for your medical bills up to your policy limit until you are able to recover compensation from the at-fault driver. Once you have recovered your settlement, your insurance will need to be reimbursed for their expenses.

But what happens if you had to pay out-of-pocket costs for medical expenses above your Med Pay limit, and your settlement was only enough to cover those costs? Often in these cases, California’s “Made Whole” rule applies. Under the “Made Whole” rule, insurers will not be reimbursed until after the insured is fully compensated for their losses. For example, if your insurance made a $2,000 Med Pay payment for your treatment, and you had to pay an additional $10,000 in medical bills, the insurance would only be able to collect reimbursement for settlement amounts over $10,000.

It is important to note that it is legal in California for insurance companies to write exceptions to the “Made Whole” rule into their policies. Therefore, reading your policy with an experienced lawyer is crucial to understanding your provisions and factoring this information into your settlement negotiations.

How Can a Car Accident Attorney Help You?

Each auto insurance company writes its own policies for Med Pay coverage, and the details can vary from provider to provider. If you have been injured in an accident and have questions about Med Pay or your specific insurance plan, an attorney can be a useful resource. When negotiating a settlement, a skilled car accident attorney will take into account your insurance’s right to reimbursement for Med Pay expenses to ensure that you will get the compensation you deserve. Contact our law office today to schedule a free consultation on your case: (805)330-3393.