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What Is Subrogation?

What-Is-SubrogationWhen a person is injured, they will visit a hospital for treatment. A bill for their treatment will then be submitted to the person’s health insurance company for payment. The health insurer will provide payment based on the terms of the policy a person has with their insurance company. After making the payment or before payment is submitted, the insurance company may speak with the person to learn details about the incident that caused the injury. The health insurer is trying to determine if a third party could be held responsible for the incident that caused the injuries. If they believe a third party played a role in the accident, the third party may have a financial responsibility when it comes to paying their policyholder’s medical expenses. This is how the legal concept of subrogation works.

The legal concept of subrogation is one of the oldest of modern society. Historians can trace its beginnings back to the times of ancient Roman law. The concept of subrogation became part of English common law during the 1200s. Subrogation is now a major part of the insurance industry as well as the economy of the United States. It is considered part of economic justice as it provides indemnity as well as individual responsibility.

Q: What is the Difference Between Worker's Compensation and other type of Insurance Situation?

A: Subrogation has been used successfully to provide affordable premiums and make worker’s compensation insurance affordable for employers of all sizes in the United States. Subrogation involving worker’s compensation is different from other types of insurance situations. It this situation, it is considered a set of rules designed to safeguard reimbursements. The financial responsibility for loss is on those who are determined to be the wrongdoers. This has kept insurance premiums at acceptable levels. With worker’s compensation, the insurance is not controlled by the rights of its insured. The insurance carrier can seek to obtain reimbursement from any party who is or is not involved with the insurance contract.

Q: What is the Principle Of Indemnity?

A: Subrogation is a legal concept that works with the principle of indemnity. This concept is based on the principle that individuals should not and can’t be financially rewarded because of their injury or loss. The goal of an insurance claim should only be to reimburse the insured’s loss. The goal of subrogation is to prevent individuals who have been the victim of an accident from collecting twice on their claim. One time from the company who provides the insurance and another time from those responsible for the incident that caused them harm or damage. It restricts a person to only collecting the limits of their insurance coverage.

Q: What is the Collateral Source?

A: This is a private entity. It could be everything from a government agency to a private insurer. This is an entity who gives payment to a party with a personal injury claim. The issue of subrogation is involved when there is a question concerning what part of a jury verdict or out-of-court settlement has to be used to repay the collateral source. This is the source making payments to those who sustained an injury.

Q: What is the Settlement?

A: The legal concept of subrogation can make a settlement of a lawsuit against a third party a challenge. In this situation, the injured party, as well as the collateral source provider, may be permitted to reach a settlement agreement with the party determined to be at fault for an incident. This is a situation that could make it difficult for an insured to obtain ongoing benefits. It can eliminate the need for an insurer to pay for such benefits. In such cases, the right of an accident victim to obtain ongoing benefits, and the responsibility to pay such benefits, is determined by sufficient notice being given to the non-settling party.

Q: What is Anti-Subrogation State?

A: Arizona is an anti-subrogation state. Private health insurers are not permitted to seek subrogation rights against an individual’s personal injury settlement. This standard is able to be applied with most Arizona health insurance plans. There are a few exceptions to Arizona’s anti-subrogation rule. Exceptions apply to taxpayer-funded healthcare plans as well as government-guaranteed health insurance plans. There are also certain employee benefit plans permitted to pursue subrogation rights.

Q: What is Health Insurance Reimbursement?

A: Some individuals in Arizona wonder if they have to reimburse their health insurance company out of funds they receive from their personal injury settlement. This depends on a number of different factors. Arizona has some very strong state constitutional case law, as well as state policy provisions that cover this type of situation. These laws and provisions have made such reimbursements unable to be enforceable in Arizona. Individuals may not have to pay a health insurance providers any type or reimbursement. This is often the case, even if a health insurer has a reimbursement provision in their health insurance policy agreement. If the individual has a self-funded health policy they obtained from their employer, reimbursement may be a consideration.


Legal Advice
Dealing with subrogation can be complicated. Should anyone be facing such a situation, they should immediately contact an experienced attorney for assistance.

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