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Patrick, Esq.
Patrick, Esq., Attorney
Category: Personal Injury Law
Satisfied Customers: 12508
Experience:  Attorney with significant personal injury experience
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A pedestrian (child) was hit by a car. The driver did not get

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A pedestrian (child) was hit by a car. The driver did not get a ticket. The medical bills are about 500k. The driver's policy has a limit of 100, the parents' policy has a limit of 250 for underinsured driver, and they have health insrurance.
If the parents' sue the driver and his policy and get the maximum 100, and then their policy pays another 250, does that money go the family or will it just be used to pay medical expenses, and the other 150 in medical expenses will have to be covered by their health insurance or out of pocket?
Hello and thank you for entrusting me to assist you, I will do everything I can to answer your question.

New Jersey law recognizes a legal doctrine known as the "made whole" rule, which provides that insurance companies do not have the right to be reimbursed until the plaintiff has been FULLY compensated for his or her injuries, absent a specific contractual stipulation to the contrary.

These days, most insurance companies do have subrogation clauses which override the default "made whole" rule, but basic principles of equity still apply which dictate that an insurere must accept a proportionate sum of a plaintiff's settlement in satisfaction of their right to subrogration (the righ to be repaid).

Critial, however, is that the plaintiff and insurance company agree on an amount as payment in full in ADVANCE of the settlement being finalized. This is when the plaintiff has leverage, since the insurance company knows if they demand too much, the plaintiff has no motivation to continue pursuing the claim, as they would be doing so only to have the money go entirely or mostly to the insurer.

If the child in this circumstance does not yet have an attorney I emphatically recommend that their parents retain one immediately. An injury of this magnitude is life-changing, and if settlement of the claim is not handled properly now it will impact the child for the rest of their life.

An experienced attorney will be able to effectively negotiate the child's medical bills and satisfy all outstanding liens on the child's settlement recovery while leaving a substantial "net" settlement for the child.

To locate a New Jersey personal injury attorney to assist with the claim, see here:

Again, provided this situation is properly handled, the insurance companies should agree to a reduced sum in satisfaction of their subrogation rights, leaving the child with a signifiant net settlement.

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.
Customer: replied 3 years ago.

I am sorry. but this is still confusing. My question was if the insurance policy will be paying only for medical expenses up to 350k, or can they have the health insurance company pay for medical stuff, so that the family can have some money for the future?


Thank you for your reply and sorry for any confusion.

The health insurance company has an obligation to pay according to the terms of the health insurance policy in effect regardless of who is at fault and regardless of what sort of recovery from an "at fault" driver is expected. So, whatever the health insurance policy would obligate the medical insurance company to pay out of the $500,000, they must pay regardless of anything else that happens and they must do so up front, meaning they can't wait to see what is going to happen with the personal injury claim.

The above noted, once the medical insurance company pays out on accident-related injuries, they have what is known as a right to subrogation, meaning a right to be repaid for some portion of what they paid out from the child's recovery from the at-fault driver's insurance. This is where the "made whole" rule comes into play. Absent a specific provision in the health insurance contract which provides to the contrary, the health insurance company has NO obligation to be repaid from the personal injury settlement for ANY money it paid out to cover medical bills unless the settlement FULLY compensates the child for their injuries (i.e. "makes them whole").

In recent years, courts have held that the made whole rule can be overridden by contractual provisions to the contrary (i.e., a contract specifically stating that the made whole rule doesn't apply), but even then, the medical insurance would have an obligation to accept a reduced, proportional sum in satisfaction of their right to subrogation to account for the fact that the child is only being partially compensated for her injuries.

Put another way, the medical insurance has an obligation to pay for medical services pursuant to the terms of the insurance policy. Once a recovery from a third party is obtained (i.e. the "at fault" driver for the accident), the medical insurance is entitled to reimbursement only if the settlement FULLY compensates the victim for their injuries or the insurance contract contains a provision which expressly overrides the default "made whole" rule. Even then, the medical insurance company has an equitable obligation to accept a reduced, proportional sum of the settlement proceeds in full satisfaction of its right to subrogration. This, however, needs to be negotiated in advance of actually settling the child's case with the at fault driver's insurance, otherwise the medical insurance company has no reason to accept anything less than the maximum amount which they are entitled by law to receive.

All this is to say that an individual in the child's circumstance should be able to retain a large portion of the settlement because even if the medical insurance is entitled to be re-paid for their contribution to the child's medical expenses, that amount can be negotiated down before settlement.

As you can obviously tell, these issues are extremely complex and best handled by a skilled local personal injury attorney.

I do hope this clarifies things for you, and if you have any further concerns, I am more than happy to provide additional assistance.

If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards.
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