Nelson Abbott here with the Abbott Law Firm. We help accident victims. I wanted to talk about subrogation rights and how to figure that out and what that means.
So subrogation rights basically mean that somebody is involved in an automobile accident, or medical malpractice, slip and fall, or dog bite, whatever it is, and the person is entitled to recover money from another person or company or insurance company because of the negligence of the other person causing those injuries. But, in the meantime, before that recovery occurs the person has collected money from maybe it’s health insurance, could be Medicaid, could be Medicare. There’s different possibilities such as that, but those are called collateral sources under the law. And so the question arises, okay, when they finally resolve the case and they recover from the third party, the negligent party, do they need to reimburse or pay back this collateral source, the insurance or the Medicaid or whatever? And oftentimes the answer is yes. In the case of Medicaid and Medicare, the answer is almost always yes. In the case of health insurance, it depends on the language of the policy. And there’s some complicating factors there that need to be analyzed individually in each case.
So, just recently, the Utah Supreme Court issued a decision called Latham v. Office of Recovery Services. It was authored by Justice Peterson. And this is a very good case for people that have been injured in an automobile accident and might owe a reimbursement to Medicaid when they finally settle. So what happened in that case is a person was injured because of medical malpractice. They had a stroke and the hospital didn’t properly diagnose it in a timely way, and so the outcome was worse than it otherwise would have been. And they had a rather large claim. They had $104,000 in past medical expenses, and they expected about $6 million in future medical expenses.
Now, the decision doesn’t explain why, but for some reason when they settled the case, they only settled it for $800,000. And there can be a lot of reasons that can happen. It could be that proving negligence isn’t as straightforward as it might seem. And so there’s a good risk that they thought, “Well, we could lose this case if we went to trial, so we’re going to take a settlement that’s lower than our past and future medical bills combined.” There’s some other reasons they might settle, some more subtle. But, for example, sometimes the future medical expenses are hard to prove or, you know, the defense might be able to really point some holes in the case for future medical expenses, and so there’s a good risk of loss there.
There is also the ability of people to testify. You know, juries sometimes can be influenced by… Well, a doctor comes in and sounds very credible and very believable, and then the stroke victim comes in and doesn’t sound as credible. So I don’t know what the story is in this case. I’m just speculating and throwing out some possible reasons why somebody might take less than their past plus future medicals. But that’s what happened in this case. And the amount was about 10%, they only got about 10%. Past medicals were $104,000, and they settled for $800,000. Future medicals were six- point-something million. So the total was maybe $7 million, and they settled for $800,000. So about…let’s just make it easy, 10%.
So Medicaid then comes in and says, “Well, we want to be reimbursed. We’ve spent $104,000. Admittedly now we’re not on the hook to pay the future.” They might become obligated at some later point, but for now they’re not obligated to pay it, probably because of this settlement. But we don’t know that. I’m just guessing. “So we want to be reimbursed for our past medical expenses. We want $104,000 in medical expenses.”
And the patient said, “Well, hold on here. We only got 10% of our claim, so the past medical expenses should be reduced in a pro rata way, 90%.”
Medicaid said, “No way. We want our full amount. We don’t care about any of this reduction whatever.” So they fought that in the trial court. Medicaid won. The judge said, “Yeah, you’ve got to reimburse them the whole $104,000.” Just to complicate it a little bit, there was a reduction for attorney’s fees of one-third. So it was really about, I think, $65,000, something like that, that Medicaid was supposed to be reimbursed. But the patient fought it, and it went to the Utah Supreme Court. And the Utah Supreme Court now agreed with the patient and said, “No, the patient only got 10% of past and future medical bills. And since they only got 10% of that, Medicaid should only be reimbursed about 10%. And so now it’s going back to the trial court. I’m sure they’ll be able to settle it pretty easily, and they’ll get this matter resolved.
But one of the things that we can do to help clients who hire us in making claims is to help them work out these subrogation issues. Sometimes that’s one of the most complicated parts of handling a personal injury case, especially when we hit policy limits. There’s sometimes cases where we hit policy limits, but even the policy limits are not enough to cover all past and future medical expenses. And so what do we do? How do we preserve the right of the patient to continue collecting health insurance or Medicaid or Medicare or, you know, what not? And also how do we maximize the amount of money that’s payable to our client.
So these are some issues that have to be addressed in every personal injury case. And this Latham decision that just came out from the Utah Supreme Court is, frankly, a very good decision for Utah injury patients. If you have any questions or would like to know more, go ahead and book appointments, send us a text, give us a call. We’d love to talk to you and find out how we can help you. Nelson Abbott, Abbott Law Firm.