Nearly four years ago I first wrote about the obscure, but critically important, issue of “subrogation.” This legal doctrine allows insurance companies to reimburse themselves out of settlements their clients receive for covered injuries.
The incident I wrote about back in 2015 was a classic example of the problem. A baseball fan who was savagely beaten in a stadium parking lot and who now faces a lifetime of medical expenses won an $18 million settlement. His ongoing medical expenses mean that he will need that money. But his insurance company went to court to try to claim a significant portion of the settlement.
Now the Oregon legislature is set to consider a bill that would limit the practice. According to a recent article in Willamette Weekly, SB 421 “would match the laws in many other states, where the injured party can be ‘made whole’ for all damages, including pain and suffering, from the at-fault party’s insurance before the injured party’s medical insurer gets paid.” According to the legislature’s website (see link below) the bill, which has bi-partisan sponsorship, has been referred to the Judiciary Committee, though a hearing on it has not yet been scheduled.
As the newspaper notes, the insurance industry has not yet taken a formal position on the bill, but “health insurers are likely to oppose it.” As an Oregon attorney who frequently deals with insurance issues such as these I urge the Senate to move quickly on this bill and for the House to take it up too. Though subrogation is a term that few outside the legal profession and the insurance industry have ever heard, it is an issue that should concern all of us.
The issue, however, goes beyond that. As I noted when I addressed this issue several years ago, the problem is that while insurance is widely regulated at the state level, health insurance policies are commonly governed by federal law. While virtually every state outlaws subrogation federal law does allow it. So we all need to let our legislators in Salem know how important SB 421 is, but those efforts need to be accompanied by a push to change federal law as well.
There is something fundamentally unfair about the idea that we pay for health insurance, but when we get hurt discover that the law’s first concern is protecting the business interests of the insurance company. Customers who remain healthy and do not use their insurance do not get their premiums back, so where is the justice behind insurers being able to claim the dollars that an injured person has won in a legal settlement? Customers are entitled to the insurance coverage for which they have paid. Legally and morally this is ought to be completely separate from any damages that an injured person is able to claim via our court system.