New Colorado legislation regarding the "Make Whole Doctrine" will take effect August 11, 2010. If you have a slip and fall case, motor vehicle injury case, or any case where you have an issue related to repayment to health insurance for payment of accident-related medical bills, then the information in this article is required reading.

This saga began seven years ago when Colorado auto insurance "no-fault benefits" went away. Health insurance suddenly was thrust to the forefront to pay for medical care previously paid by auto insurance. The health insurance company's first reaction was to resist paying at all. However, thereafter many health insurance companies became militant about exercising their rights to get paid back from their insured's recoveries from injury settlements or judgments.

This obligation, called subrogation, requires an injured person to pay back his/her health insurance company for the medical bills that they paid on your behalf. This contractual requirement is generally buried deep within your insurance contract but rest assured, it is there and your health insurance company will not hesitate to enforce it.

As an example, consider a person in a rear-end collision who is injured and gets treatment for which his health insurance pays $10,000 to his treatment providers. Imagine that a settlement is finally reached where the insurance company for the at-fault driver pays $25,000. Under such circumstances and until House Bill 10-1168 goes into effect, there would be little question but that the health insurance company would have to be paid back most, if not all, of that $10,000.

In case you are wondering, yes, the health insurance company is being paid a monthly insurance premium to provide this coverage, but when you actually use their services, they get paid back. Seems a little unfair? Perhaps they would argue that cases where an injured person collects a settlement or judgment are a mere fraction of all the claims they pay and that it is only fair that if a settlement is reached, based on the medical expenses incurred, they should be paid back on those more statistically rare occasions.

The problem with subrogation is that when the injured person has to repay his health insurance company, it often leaves little or no money left for the victim. Historically, health insurance companies have not been receptive to forgoing their repayment. They seem to care little about what we lawyers call the idea of adequate or full compensation for our clients first.

This argument, which is called the "Make-Whole Doctrine," generally fell on deaf ears with most unsympathetic health insurance companies. To make matters worse, we had very little legal support from Colorado courts to help us convince insurance companies of an injured person's right to be fully compensated BEFORE the insurance company got their money back.

Another major issue that plagued Colorado Courts for the last seven years was whether it was fair for a negligent party's insurance company to get the benefit of an injury victim's health insurance's ability to re-price medical charges and pay less than the full bill.

For example, assume that a negligent driver injures a person. The injured person gets medical care using their own health insurance. Now, if the victim did not have health insurance, the medical and hospital bills would be substantially more than what health insurance is able to negotiate. If you have ever seen a hospital bill before your health insurance re-prices it, you know what I am talking about. It is not uncommon that a simple emergency room visit might bill out as much as $6500-$7500. But later, a health insurance company pays perhaps $1800. That serves as payment in full due to negotiated rates between insurance companies and hospitals.

The legal issue is whether it is fair for the at-fault party, or far more typically his auto insurance, to get the benefit of the victim's health insurance's ability to re-price health care charges? In other words, should the at-fault party's insurance company only be responsible for the much smaller medical charges that the victim's health insurer negotiated? Why should the negligent party's insurance company get a break simply because the person they hit was responsible enough to have health insurance?

Think of it this way: should a negligent driver not have to pay for a person's medically required time off from work for the injuries they caused when the person hit uses his medical leave that he had accumulated or uses his vacation time? It seems wrong that the victim's financial responsibility in having health insurance should give a negligent driver and his insurance company a partial pass on paying what should otherwise be paid. That benefit should accrue to the injured person.


A) Make Whole Adopted As Law:
Well, up until the new Colorado House Bill 10-1168, which was signed into law by Governor Ritter earlier this month, these issues were largely unresolved. However, now Colorado has appropriately addressed the issues. Anyone handling an injury matter for any Colorado injury victim needs to know what just occurred at the State House.

Colorado now recognizes that many settlements simply do not appropriately compensate an injury victim IF the health insurance is permitted to enforce their subrogation claim on money they paid for medical expenses. Colorado statute 10-1-135 now provides a manner through the use of arbitration to determine if, and to what extent, a health insurer, as well as some other sorts of subrogation (i.e. uninsured motorist coverage) should be paid back under the particular circumstances of the case.

The sole focus of these inquiries IS to what extent the victim is or is not fully compensated for their injuries by the settlement received. To the extent that the limits of liability coverage do not make the victim whole, the health insurance WILL NOT LEGALLY BE ENTITLED TO ANYTHING on their claimed rights asserted. Further, the law now recognizes that a full policy settlement on a liability policy is rebuttal presumed to not fully compensate an injury victim, thereby making it very difficult for the insurance company to recover anything back in those specific circumstances. It is all too common for an at-fault party to have only $25,000 of liability insurance that is insufficient to compensate the injured party for serious injuries.

Many times, negligent people simply do not buy enough insurance coverage to fully pay for the injuries they cause. Thus, the surrendering by an insurance company of their entire coverage limits will be presumed NOT to fully compensate an injury victim.

This law requires very particular steps to be taken by the victim's lawyer in order to assure that the victim benefits from this new law. By way of example, a very specific "60 day letter" MUST be sent to the health insurance company at the right time to give the insurance company sufficient time to assert their now significantly dwindled rights to subrogation.

If these very specific requirements are not met, the injury victim WILL feel the effect of the financial consequences of this major mistake. So make sure you or your lawyer knows what needs to be done when it comes to this complex new law.

B) The Amount Billed, Not Paid, Is The Law:
Next, the same new Colorado law provides that the amount a health insurance company actually paid for medical care is no longer permitted to be admissible in court as a factor in considering what that at-fault party, and actually more realistically his liability insurance, should have to pay to reimburse medical expenses.

The court or jury must simply consider what the reasonable value of the medical expenses were and then award that figure. If appropriately presented, legitimate medical care expenses could be awarded to the injury victim for more than what the victim may actually have to repay the health insurance company, assuming that anything has to be paid AT ALL.

These new laws "level the playing field" with insurance companies, who have for years held the upper hand when it comes to issues related to fair recovery and compensation for injury accident victims. With the passing of this new legislation, Colorado recognizes that fairness requires action to right certain injustices in the practical application of Colorado personal injury laws.

At Anderson Hemmat, we are vigilant in making certain that we are fully up to date on the law as it changes. We can sit down with you to help you understand how these changes may affect your case.


Chad Hemmat


Co-Founder & Lead Trial Attorney

Chad Hemmat is a co-founding principal partner of Anderson Hemmat. Mr. Hemmat directs all civil litigation operations at Anderson Hemmat. Litigation is the actual court process. Mr. Hemmat is personally involved in every case and insures that each client receives impeccable representation. Read more...



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