Usually some of it. Most health plans have a right to repayment, but in Texas Chapter 140 of the Civil Practice and Remedies Code limits most insurers to the lesser of what they paid or half of your recovery, after a share of fees, when you have a lawyer. Medicare, Medicaid, and some employer plans follow federal rules.
When a health plan pays bills caused by someone else, the policy usually gives it a right to be repaid from your recovery. This is called subrogation or reimbursement, and it is one of the main reasons the amount you take home differs from the settlement amount.
Texas limits it. Chapter 140 of the Civil Practice and Remedies Code, in effect since 2014, applies to health and disability plans, including insurance companies, HMOs, and self-funded plans described in the statute. When you have a lawyer, section 140.005 limits all payors combined to the lesser of half of your gross recovery minus attorney’s fees and costs, or the benefits paid minus their share of fees and costs. Section 140.007 makes a plan that does not hire its own lawyer share in your attorney’s fees.
Federal programs work differently. Medicare has a statutory right to be repaid and must be addressed before funds are released. Medicaid has its own lien rights. Many large employers’ self-funded plans governed by federal ERISA law argue that Texas limits do not apply to them, and the plan documents control those fights.
Repayment is often negotiable, especially when liability coverage is small compared to the injuries. Plans will reduce claims to reflect the cost of recovery and the risks of trial.
Never ignore a repayment claim, because a plan can pursue you after the case closes. Owsley Law Firm identifies every payor early, applies Chapter 140 where it fits, and negotiates repayment so the final numbers are clear before you sign.
What to do, step by step
- Tell your lawyer every plan that paid bills: health, disability, Medicare, Medicaid.
- Get the plan’s itemized list of crash-related payments.
- Ask the plan for its policy or summary plan description.
- Apply Chapter 140 or federal rules as appropriate.
- Negotiate and get a final written payoff before closing.
Plans sometimes include payments for treatment unrelated to the crash. Reviewing the itemized list often lowers the amount owed.
Disability plans that paid wage benefits may also claim repayment, and Chapter 140 covers disability benefit plans as well.
Medicare repayment must be addressed before closing. Medicare’s recovery contractor issues a final demand after the settlement is reported, and waiting can add interest. Your lawyer reports the case, disputes unrelated charges, and pays the final amount from the settlement.
Medicaid has lien rights in Texas as well, and the amount can be reduced in some situations. As with any payor, the itemized list of payments is the starting point, and charges unrelated to the crash should be removed.
Ask your plan for its payment list early in the case rather than at the end. Knowing the repayment amount helps evaluate settlement offers, because what matters is what you keep after fees, costs, and repayment.
Mistakes that cost people money
- Assuming a plan will not seek repayment.
- Spending settlement money before the plan is resolved.
- Accepting the plan’s list without removing unrelated charges.
- Ignoring Medicare’s interest.
Related questions
What does Chapter 140 limit?
With a lawyer, all payors combined recover the lesser of half your gross recovery minus fees and costs, or what they paid minus their share of fees and costs.
Does Chapter 140 apply to my employer’s plan?
It depends on how the plan is funded and whether federal ERISA law applies. The plan documents decide.
Can repayment be negotiated?
Yes. Plans often accept reductions, especially when liability coverage is limited.
Does my plan get repaid before my lawyer’s fee?
Under Chapter 140, a plan that does not hire its own lawyer shares in the attorney’s fees under section 140.007, which reduces what it collects.
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