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Why Does My Health Insurance Company Need to Be Repaid After My Auto Accident?

I was recently injured in an accident, which was somebody else’s fault. My health insurance company paid my medical bills and now I’m about to settle with the at-fault person, and my health insurance is telling me, they have the right to get all of their money back. Is that correct?

Unfortunately, under current Texas law, your health insurance does have the right to get fully reimbursed, even if that leaves you with little or nothing out of the settlement, but those rights are changing so it’s important that you stay informed.

Traditionally, under Texas law, if you are injured in an accident and it was somebody else’s fault and your health insurance paid those medical bills, and then you entered into a settlement with the at-fault party and as part of that settlement, the at-fault party also paid your medical bills then the health insurance company did have the right to get their money back because you’re compensated twice. The health insurance company paid your medical bills, the at-fault person paid the medical bills, but under those circumstances, you still have some rights.

First, you’d hired an attorney to get that settlement that got the health insurance company paid back. Under Texas law at that time, the health insurance company had an obligation to contribute to the cost of your attorney. More importantly, in many settlements, the injured party was not fully compensated. The person who caused the injury may not have had enough insurance to fully pay for the injured persons damages. Under those circumstances, your health insurance company did not have the right to be fully reimbursed because the injured person was not fully compensated.

Unfortunately, about five years ago, all of that changed. When the Texas Supreme Court held that when a health insurance company paid medical bills and the injured party got a settlement, the health insurance company did have the right to get all of its money back, even if that meant leaving the injured party with nothing.