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New York Judge Rules Health Insurance Company Has No Right to a Lien

Gerry Oginski
NY Medical Malpractice & Personal Injury Trial Lawyer

Blog Category:
10/14/2009
Gerry Oginski
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Typically, in a medical malpractice or personal injury case in New York, an injured victim has their medical care and treatment paid by their health insurance company. (This assumes of course that they have health insurance and does not discuss the different issues that arise when Medicare or Medicaid are involved.)

When an injured victim brings a lawsuit against the person or company that caused the injury, the health insurance company that paid for your medical bills usually turns around and asks to be reimbursed for that money. That is known as a "Right of Subrogation." If you were injured and need to see a doctor but don't have money to pay, the doctor, knowing that you'll be bringing a lawsuit for your injuries may agree to treat you and he will have a "lien" against the proceeds of your lawsuit. This means at the end of your case, if you are successful, you are required to repay the doctor for his treatment of you.

So what does this have to do with the case of Thomas v. Waller 113940/07, that was just decided by Justice Alice Schlesinger, a sitting judge in the Supreme Court of the State of New York and reported in the New York Law Journal on Tuesday, October 13, 2009? A lot, and here's why:

When your health insurance company gets wind that you have a lawsuit, they hire a company, in this case The Rawlings Company, to go after you and your lawyer to get reimbursed for the medical bills that they paid on your behalf. In some cases, a company like this one has been permitted to participate in the actual medical malpractice or personal injury lawsuit that you have brought against the wrongdoer. They do this to protect their right to get repaid. But here's the problem for them.

If a case is settled for only pain and suffering, the health insurance company is not entitled to get repaid. If the case is settled and money is set aside for medical expenses, then they can get reimbursed. The reasoning is that you should not be allowed to get double the benefit; once by your health insurance company paying for your medical bills, and second, you getting paid for bills that you didn't actually pay out of your own pocket.

In the Thomas case, there was no claim for medical expenses. Nor did The Rawlings Company, on behalf of Oxford health insurance company ask to insert themselves into the lawsuit. Instead, the case was settled prior to trial, with no money set aside for any medical expenses. Now comes Rawlings who says to the injured victim and his attorney, "Pay us the $28,718.05 that Oxford paid for your medical bills. The injured victim says "No way. You're not entitled to it. You don't have a lien, and you cannot assert a right of subrogation since there's no allocation of money for medical bills."

Justice Schlessinger rebuked the health insurance company for claiming that the injured victim was taking advantage of their health insurance company. In fact, she said that the injured victim had a contractual right to receive medical benefits when needed. The bottom line: Oxford Health Insurance and their agent, The Rawlings Company, were not entitled to recover anything.

Category: Medical Malpractice


4 Comments to "New York Judge Rules Health Insurance Company Has No Right to a Lien"

I live in Texas and my wife was involved in and accident and the Rawling company is going after our uninsured motorist insurance that I had on my car policy the person that caused the accident had the state minimum of 25k and I had 51k with full medical insurance through my company and they are going after me for 40k reimbursement on the medical bills and they are like the MOB its a shake down when dealing with no compassion for the victim do you think I will have to pay.
Posted by Mark on July 31, 2012 at 08:08 PM
Kevin,
In the past, Oxford and Rawlings were notorious in aggressively pursuing injured victims, trying to get repaid, if an injured victim was able to recover compensation in New York.

The current law in New York prohibits a private insurance company from recouping medical expenses that the health insurance company paid out, that they were contractually obligated to pay. They no longer have this right.

If however the injured victim had an ERISA-based plan, Medicare or Medicaid, then there is a requirement to negotiate with and repay those plans.
Posted by Gerry Oginski on January 26, 2012 at 12:10 PM
I am an NYS GL adjuster and have had run-ins with Rawlings and Oxford. I just got off the phone with someone who was an "Oxford Representative" inquiring about the status of one of their policyholders claims against my insured. I told him that the client was not pursuing the claim. He then asked if there was Med Pay on my GL policy and I said if it did it would be to the claimant not Oxford.(Besides, isn't Med Pay designed to cover un-paid bills? Oxford paid the bills.) He then said he would contact his policyholder to pursue a claim against my insured so he can recover what Oxford paid out. I can only imagine what he is going to tell this poor person. This seems like Bad Faith to me. Or at a minimum, unethical. What do you think?
Posted by Kevin on January 26, 2012 at 11:37 AM
Dear Mr Oginski,
I have read your post regarding the NY insurance companies not having a right to a lien in a personal injury suit. Can you tell me if this would also be the same for a retired federal employee covered under Emblem healthcare (Formerly GHI)? Or are federal employees exempt from this ruling
Posted by Lynn on September 29, 2010 at 10:22 PM

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