New Bill Helps Protect Consumers from Health Insurance Companies
Waxahachie, TX (Law Firm Newswire) August 1, 2013 - A Texas House Bill was signed this past May which restricts "subrogation," the substitution of one person or group by another for insurance rights.
Texas House Bill 1869, passed unanimously in both the House and Senate, is designed to provide a legal framework which allows the settling of personal injury cases while helping an injured person meet their other expenses and providing certainty to health insurers. The law takes effect in January 2014.
Subrogation by an insurance company occurs when the company that collected premiums from an individual is determined to be reimbursed by their insured for that loss although they have agreed to that loss.
"The subrogated company assumes the legal rights of the insured in order to collect from their own insured after a settlement or from the person who caused the loss," explained John Hale, a Waxahachie personal injury lawyer. "When a health insurance carrier takes on the legal rights of a claimant in order to take the recovery for itself, problems can arise. The responsible party who caused the harm often is not in possession of enough assets or insurance to pay the entirety of the injured party’s losses."
What does Bill 1869 mean for consumers? Some health insurance carriers have made it a priority to collect subrogation from injured policy holders. The Supreme Court of Texas decided in Fortis v. Cantu, 234 S.W.3d 642 (Tex.2007) that insurance companies are allowed to require policy holders to pay out "first money" to the subrogated health insurance company, even if the actual injured party might be left with nothing.
In its ruling, the Supreme Court stated that a health insurer's contractual subrogation rights overruled the made-whole doctrine. With Bill 1869, there is a formula put into place to allow for a balanced division of the recovery when there are not enough funds, so that both the injured party and the health insurer are compensated.
The Hale Law Firm
100 Executive Court, Suite 3
Waxahachie, TX 75165
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