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Insurance Company Liens and Personal Injury Suits: ERISA and NEW YORK'S NO LIEN LAW STATUTE - Part 1 of 2

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Beware of your health insurance policy. Some health insurance companies may want you to reimburse them for any medical expenses paid on your behalf for your injury. Most health insurance companies have a clause about “rights of subrogation.” This is a term that means a health insurance company can get payment for the services provided if you get a settlement or court award for a personal injury lawsuit. The “right to subrogation” also means that a health insurance company can start a lawsuit in your name to collect for the medical expenses paid on your behalf.

New York prevents or limits which companies qualify for reimbursement. New York also gives the Plaintiff an opportunity to lower the reimbursement amount on certain situations.

In many instances, New York prohibits insurance companies from reimbursement actions unless the settlement or court award specifically states that covered medical expense are included and should be paid out. For example: 1 – if in a car accident you sue for pain and suffering – your bills are paid by No Fault, and there is NO lien. 2 – if in a car accident or a trip and fall you sue for pain and suffering – your bills are paid by a regular health insurance company, there is NO lien.

The exception to the NO LIEN rule of New York’s General Obligation Law are the federal ERISA rules. Under ERISA there are specific regulations that must be met. If any requirements are not met, then the health insurance company cannot collect a reimbursement. ERISA is generally defined as a health insurance plan that is paid for by the Employer so that that there is no insurance. There can be an Administrator (such as Aetna or United Health Care) but the Employer is the entity that pays the bills, not an insurance company.

There are different laws if you are insured by Federal Medicare or State Medicaid. These will be the subject of other discussions.

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