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How Does Reimbursement of Medical Insurance Impact My Recovery?

This past April, in a 5-to-4 decision, the United States Supreme Court ruled in favor of an injured airline mechanic and against his employer. After James E. McCutchen, was badly injured in a car accident, his employer, US Airways, paid his medical expenses of $66,866. Mr. McCutchen sued the other driver and received a settlement totaling $110,000. Forty percent of that went to his lawyers, leaving him with $66,000. Under the terms of the plan Mr. McCutcheon had with US Airways he was obligated to reimburse the plan for what it had paid out if he recovered money from a third party. The question before the court was whether US Airways was entitled to the entirety of Mr. McCutcheon’s settlement after attorney’s fees or something less.

In finding in favor of Mr. McCutchen, the Court ruled that, absent specific language to the contrary, health plans must account for lawyers’ fee and expenses incurred in obtaining settlement proceeds. “Third-party recoveries do not often come free: To get one, an insured must incur lawyers’ fees and expenses. Without cost sharing, the insurer free rides on its beneficiary’s efforts — taking the fruits while contributing nothing to the labor. Odder still, in some cases indeed, in this case — the beneficiary is made worse off by pursuing a third party.” “US Airways claimed $66,866 in medical expenses,” the court added. “That would put McCutchen $866 in the hole; in effect, he would pay for the privilege of serving as US Airways’ collection agent,” said the court.

This case emphasizes the importance of closely reviewing a health plan’s terms of coverage. If you or a loved one has been the victim of another’s negligence and have questions of how reimbursement of medical insurance may ultimately impact any final recovery, please contact Oracle Law Group for a free consultation about your rights.