Made Whole – What if There Isn’t Enough Money to Compensate You and Pay Your Health Insurance Back?


In a previous post on subrogation, I talked about paying your health insurance company back for the money that they paid for your medical care . But what if the amount your health insurance carrier paid is more than the amount of money available from insurance? This can happen under many circumstances. One example would be where you are severely injured and require extensive medical care in order to recover from your injuries, and the insurance policy limits are not enough to pay back the monies that your health insurance paid out. Another example is when the person who hurt you only has the state minimum of $25,000 in liability coverage (see my previous blogs on bodily injury coverage and UIM coverage if you have questions on types of coverage). If your health insurer has a subrogation (“right to be paid back”) clause in their contract (like that’s not going to happen, right?), this could result in your health insurer taking the entire recovery, leaving no money for you.

Fortunately, the State of Colorado has adopted the position that if the injured party recovers the policy limits of an insurance contract and there isn’t enough money to pay the health insurer back, the health insurer is better able to sustain the monetary loss (it’s their business model after all). Under this public policy the victim of the negligence has to be “made whole” (“fully compensated” is the language the law uses) before the insurer gets to be paid back on their subrogation claim. So, if you recover the policy limits of all insurance policies available, including your own uinsured/underinsured policy (UM/UIM), there is what is called a “rebuttable presumption” that you have not been made whole.

If that happens, there is a procedure you can follow in order to notify your health insurance company (referenced as a “payer of benefits” in the law) that you are challenging their right to be paid back. There is the potential for the health insurer to ask for arbitration (a form of trial in front of an arbitrator instead of jury or judge), but when they already have to overcome the legal presumption that you have not been made whole, it becomes dicey, at best, for the insurer to attempt to continue to demand to be paid back.

A couple of things to consider, though: If you recover less than the policy limits of all available insurance policies, there is a “rebuttable presumption” that you have been made whole and that the health insurer should be paid back. If that happens, there are steps you can take to get the health insurance carrier to reduce the amount of their subrogation claim so it’s not an all or nothing approach. Also, there are exceptions which make Colorado law inapplicable to some health insurers, including Medicare, Medicaid, plans known as “ERISA” plans, and other federal health insurance plans.

This law is an example of why having a firm experienced in the nuances of personal injury law is so important. It’s also another reason you should give us a call, because we do understand and are experienced in it.

Call us for a free initial consultation at 719-633-6620.

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