Employers, Insurers Step Up Recovery of Accident Costs

As the cost of providing health coverage to workers "continues to escalate," some employers and health insurance companies are "getting more aggressive" in efforts to recover medical expenses from accident victims who collect damages in civil injury lawsuits, the Wall Street Journal reports.

According to the Journal, employers and health insurers maintain that the practice, called "subrogation," is necessary to ensure that "medical expenses aren't paid twice" and that, by "recovering those costs from someone who's been compensated elsewhere, ... they're saving money for everyone on the plan."

Jay Kirschbaum, a senior vice president at Willis Group Holdings, said, "Employers are trying to make sure these plans run as efficiently as possible," adding, "They also have a fiduciary duty to the plan and the entire group of employees that are covered by it."

However, accident victims "sometimes can be left with little or none of the money they fought for in court" after employers and health insurers mandate that they are to "be paid first out of any settlement, regardless of what remains for the injured person," the Journal reports.

Roger Baron, a professor of law at the University of South Dakota, said, "It's especially in the catastrophic cases that people are almost never fully compensated," adding, "And then their health plan, that's been collecting premiums from them all this time, wants to take it away?"

Many employers and health insurers until recently "didn't vigilantly" use subrogation, as some states and federal courts "didn't think the claim held water," but a Supreme Court decision last year "has given them a clearer legal map to suing employees and winning," according to the Journal (Fuhrmans, Wall Street Journal, 11/20).