Under New York law, a group health insurer does not have a subrogation claim against your injury compensation unless the group health policy is a “self-funded plan”. Subrogation claims against your injury compensation were abolished in New York several years ago with a single exception: “self-funded” group health plans.

What is a “self-funded” health plan?

A “self-funded” group health plan means that your employer is paying for the claims of its insured employees. Instead of paying for insurance to cover the expenses of its employees’ health care, the employer opts to pay the claims from its own funds. “Self-funded” group health plans almost always involve large employers with 10,000 or more employees, i.e., Walmart.

The large majority of group health plans are “insured”. An “insured” group health plan means that your employer pays an insurance company a premium in return for health care insurance for its employees. An “insured” group health plan is far more common than a “self-funded” group health plan.

How can you tell an “insured” from a “self-funded” group health plan?

As a participant in a group health plan, you are entitled to certain documents maintained by the plan. In order to determine whether your group health policy is “insured” or “self-funded”, you have the legal right to demand that your group health plan provide you with a Summary Plan Description and Form 5500. With these documents, you will quickly and easily be able to determine whether you have an “insured” or “self-funded” group health plan.

The Summary Plan Description is a legal document that your health plan is legally required to maintain, and it will state specifically whether it is self-funded or insured. Getting the Summary Plan Description is the best way to determine whether your group health plan will have a subrogation claim against your injury compensation.

Another great way to determine if a valid subrogation claim exists is to request the group health plan’s Form 5500, a tax form that the plan must file with the IRS. Form 5500 must specifically state when the group health plan is self-funded or insured. With Form 5500 and the Summary Plan Description, you will have your answer whether your group health plan is entitled to assert a subrogation claim against your injury compensation.

An insider’s secret about subrogation claims

Let’s say you do your homework and determine that your group health plan is “insured”, meaning that a valid subrogation claim does not exist. Great news, right? You’d think so, but the group health plan has little secrets that they are hiding from you.

“Insured” group health plans have no legal right to claim a subrogation interest against your injury compensation under New York law. However, the “insured” group health plans hire third-party administrators, i.e., The Rawlings Company in Kentucky, whose only job is to recover money on their purported subrogation interest. Even though you’ve done your homework and determined that the “insured” group health plan has no legal right to a subrogation interest, the third party administrators will ignore the law! That’s right, third party administrators, like The Rawlings Company, hope that you don’t know the law and that you will pay the subrogation claim from your injury compensation.

Let’s say you confront the third-party administrator with the law, it won’t stop them from coming after you. The sad news is that third party administrators either don’t know New York law, or they simply don’t care. The third party administrators are coming for your injury compensation, whether you like it or not.

What you can do to defeat a bogus subrogation claim in New York

What do you do when a third party administrator ignores New York law and stubbornly pursues a subrogation claim against your injury compensation? Take them to court! You can’t lose. New York law is crystal clear that the group health plan is not entitled to collect from your injury compensation.

The best bet is to bring a motion before your case resolves, whether by settlement or judgment, asking the Court to invalidate the claimed subrogation interest and asking the court to impose costs, fees and sanctions against the third party administrator and the group health plan for pursuing a bogus subrogation claim. Now, you’re taking control.

What if you have questions about subrogation claims in New York?
If you have questions about subrogation claims, I welcome your phone call on my toll-free cell at 1-866-889-6882. You are always welcome to request a FREE copy of my book, The Seven Deadly Mistakes of Malpractice Victims, by sending me an e-mail at jfisher@fishermalpracticelaw.com .