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.