How Does Health Insurance 'Clawback' Affect My Bike Crash Claim?

How Does Health Insurance 'Clawback' Affect My Bike Crash Claim? Photo by Shutterstock

Surprise, surprise: your health insurance company might not have your best interests in mind. From denying coverage for various treatments by specialists, to making you jump through hoops just to get a basic prescription that you have taken for years, there are countless headaches the average American has had to deal with when it comes to private insurance companies. One of these headaches that you probably haven't had to consider, up until this point, is "clawback." As a bike crash victim, even if you win your case and receive a settlement or lawsuit verdict from the at-fault party, you might not get to keep all of those hard-earned funds—at least, not if your health insurance company has anything to say about it.

What a Clawback Provision Means For Your Claim

To provide an example of how clawback works, let us do a little math in a hypothetical bike crash injury scenario. In this example, the driver who caused the collision is 100 percent at fault, and therefore is liable for all of your damages (you are not at all found to be at fault). Your injuries include a fractured clavicle, fractured femur, and extensive road rash and contusions. Damages include:

  • Medical expenses: $50,000
  • Pain and suffering: $100,000
  • Property damage: $7,000
  • Lost earnings while recovering from your injuries: $13,000
  • Total Damages before attorney fees and clawback: $170,000

Reaching the above settlement would likely take many months of negotiation—in most cases well over a year in total. On top of the physical and emotional recovery that a crash victim has to endure in the months after their date of injury, the lengthy legal process of formally making a claim (and seeing it through) can be draining. Yet, this is the only recourse for obtaining the compensation that you need to pay your expenses and seek justice for what was done to you. However, after all of those sleepless nights and emotionally fraught back and forths with the at-fault party's insurance company, you may be left with less than you hope, simply because of your own health insurance company's clawback provision.

Of the $170,000 in total damages, your lawyers fee for settling the claim is one third, which is pretty standard throughout all practices. This leaves you with $113,000 (rounded down slightly for simplicity). If your health insurance company claws back what they paid in medical bills ($50,000), you would then be left with just $63,000. If your pain and suffering damages—often the most significant chunk of a settlement—are significantly less than the above example, as they will likely be if your overall injuries are not as severe, you could be left with almost nothing if your insurance company attempts to claw back a significant portion of the medical bills they initially covered.

An example of this scenario (a smaller personal injury claim with proportionally less pain and suffering compensation) is as follows:

  • Medical expenses: $20,000
  • Pain and suffering: $10,000
  • Property damage: $7,000
  • Lost earnings while recovering from your injuries: $13,000
  • Total Damages: $50,000
  • Total Damages minus your attorney's fee: $33,300.
  • Your award after your health insurance company claws back the $20,000 in medical expenses: $13,300.

Fighting Clawback in a Bike Collision Claim

Fortunately, health insurance companies rarely attempt to claw back 100 percent of your medical expenses. Sometimes, in a perfect world they may not attempt to claw back anything at all. However, more often than not, they will seek some amount of clawback to help maintain their profitability. Your attorney can limit the amount of clawback by carefully investigating the clawback provisions (typically referenced within the plan documents as “subrogation and/or reimbursement”) of your health insurance policy, and by negotiating with your insurer. Many attorneys do not have a clear understanding of this important process, which is why we encourage you to choose your personal injury lawyer carefully, and to do your due diligence when it comes to ensuring that your attorney has experience in every aspect of a bike crash claim. Health plans should never be allowed to recover more than they actually pay for the care you receive. Often, this is only a fraction of the full billed amount of the medical expenses. In Colorado, there are important considerations that must be analyzed to determine what rights, if any, the health plan has to recover what it has paid. Is the health plan insured, or is it an employee health benefit plan that is funded by the assets of an employer? Is the injured party fully compensated from the settlement? Does the plan have to share in the attorney’s fees and costs on a pro-rata basis? All of these issues are critical to determining these rights.

You Have a Right to Limit Clawback

You likely pay a hefty sum for your health insurance, whether you are insured on a group plan, or as an individual. According to Value Penguin, the average monthly premium (as of 2022) for a 40-year-old American on a silver health insurance plan is $541. Gold plans are, of course, much more expensive. So too are family plans. As such, it may seem unfair that your insurance company is allowed to claw back the expenses they incurred for your medical treatment. After all, they would not be allowed to do this if you were at fault for causing the crash, or if you decided not to pursue a claim against the at-fault driver. Regardless of these ethical justifications, it is fully within your rights to question and potentially fight clawback that decreases the compensation you receive following a serious personal injury that took place on your bike. While $10,000 to $100,000 may not be much for a multi-billion-dollar insurance company, it is everything to an individual struggling to get back on their feet. We understand that every dollar counts toward the financial stability of your and your family’s future, and will do everything in our power to maximize your take-home compensation.

Contact Colorado Bike Law Today For Help With Your Claim

There is nothing easy or straightforward about the recovery process of a harrowing crash. This does not stop when you leave the hospital or urgent care clinic. During the personal injury claim process, there are often unexpected obstacles and hurdles at every turn. Insurance companies on both sides—the at fault party's auto insurer, as well as your own health insurance company—can make life difficult for plaintiffs. At Colorado Bike Law, our sole area of practice is assisting bike crash victims who are hit by or run off the road by negligent drivers. We are confident in our ability to obtain the highest possible settlement the circumstances of your case allow, and we can help you retain as much of that compensation as possible by fighting clawback that your health insurance company will likely attempt—particularly in high asset cases. Call ColoBikeLaw today to schedule a consultation.