Right of Reimbursement in Washington State

If you are injured in a motor vehicle collision and your personal injury protection coverage and/or your health insurance pays for your medical treatment, those insurance companies may have a “right of reimbursement” out of any compensation you obtain from the driver that caused the crash and your injuries. This simply means that the insurance companies may be legally entitled to be paid back out of any settlement or other resolution of a personal injury claim.

What Is a Right of Reimbursement and Why Does it Exist?

The right to reimbursement allows an insurance company to recoup the money that it paid towards the medical treatment you received if you obtain a monetary recovery against another person who caused your injuries. It is helpful to use a hypothetical example to understand the principles of reimbursement:

John Smith was injured in a collision that was caused by another driver. The other driver’s insurance company is not responsible for paying for John Smith’s medical expenses as they are incurred. Instead, John Smith must pay for his medical expenses up front. John Smith may be able to use the personal injury protection coverage under his own car insurance to pay for medical treatment. He may also use his health insurance. Another option is paying out of pocket for his medical treatment. John used his health insurance to pay for his treatment. After completing treatment, John Smith has a total of $1,000 in medical expenses for the injuries he sustained as a result of the crash. John Smith made a personal injury claim against the other driver’s insurance company, and he included his $1,000 in medical expenses as part of his claim. Ultimately, John Smith settled his claim with the other driver’s insurance company for $5,000. Out of this $5,000, John’s Smith’s own health insurance has a right to be paid back the amounts it paid towards his medical expenses. This is reimbursement.

From a logical perspective, reimbursement makes sense because your insurance company should not be obligated to be on the hook entirely when the accident was caused by another driver. Your own insurance company must stand by you in the short term and cover your medical expenses up front, because that is what they are contractually obligated to do under the terms of your policy. However, they may have a right to be paid back when you have been paid by the other driver who caused your injuries.

When Insurance Companies May be Reimbursed in Washington

An insurance company’s right of reimbursement may arise if an injured person obtains money for a personal injury claim from a third party.

There are many scenarios where a right of reimbursement may come into play. Some of these include:

• Worker’s compensation paid for medical expenses;
• Your health insurance company paid for your medical expenses; and
• You have personal injury protection (PIP) on your car insurance policy, and your car insurance company paid for medical expenses.

Dealing with rights of reimbursement and insurance companies can get confusing very quickly. The laws are complicated and sometimes insurance companies need to be reminded of their rights and limitations when it comes to reimbursement.

Limitations on the Right of Reimbursement

Insurance companies are not always entitled to be paid back the full amount that they paid towards your medical expenses. Sometimes, they are not entitled to a reimbursement at all, even if you obtain a monetary recovery from the at-fault party. The extent and existence of a right of reimbursement depends on several factors:

• The type of injuries you sustained;
• The total cost of the medical treatment;
• The total value of your damages;
• The type of insurance that paid for the medical expenses;
• The type of insurance that you are making a claim against;
• Whether you were at fault for the crash in whole or in part; and
• How much insurance is available.

This is not an exhaustive list of the limitations and legal considerations that may be applicable with respect to reimbursement. For example, there are a whole set of different rules for Medicare and employer-sponsored health insurance policies that are governed by federal law (ERISA health insurance policies). Because these issues are so nuanced, it is extremely beneficial to have a lawyer on your side who knows how to deal with all of the different rights of reimbursement in any situation. We are well versed in reimbursement rights and the legal decisions that can be applied to make sure you are treated fairly.

Contact a Washington Personal Injury Law Firm

The experienced Vancouver personal injury attorneys at Schauermann Thayer handle all aspects of personal injury claims, including reimbursement. Schedule a free initial consultation with a personal injury lawyer in Vancouver by filling out an online contact form or by calling us today at (360) 695-4244.