HB1381
Concerning An Insurer's Right To Subrogation And Reimbursement For Medical And Hospital Benefits.
AI-Generated Summary
This bill proposes amendments to Arkansas Code § 23-89-207, concerning an insurer's right to subrogation and reimbursement for medical and hospital benefits. The legislative intent states that the act should only apply to an aggregate of five thousand dollars ($5,000) in medical and hospital benefits under § 23-89-202(1). The bill clarifies that an insurer has a right of reimbursement and credit from a tort recovery or settlement, less the cost of collection. It also establishes an insurer's lien on the recovery to the extent of benefit payments. The legislation further outlines an insurer's right of subrogation if a recipient does not pursue recovery against a liable third party. Importantly, it prohibits insurers from conditioning settlement or payment of a judgment on issuing a single check jointly to the injured party and their insurance company. The bill also explicitly states that the common law doctrine requiring a party to be made whole before insurer reimbursement does not apply. Finally, it clarifies that this subchapter does not affect rights and obligations under the Workers' Compensation Law.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be insurance companies that provide medical and hospital benefits. By clarifying and potentially expanding their rights to reimbursement and subrogation, insurers may recover a greater portion of the benefits they have paid out to policyholders who have also received compensation from a third party for their injuries. This could lead to reduced financial exposure for these insurance companies, potentially impacting their operational costs and profitability. Additionally, if the cost of collection is shared proportionally, insurers might benefit from a more streamlined recovery process.
Who Might Suffer?
Individuals who receive medical and hospital benefits and subsequently recover from a third party for their injuries could be negatively impacted. Specifically, if the bill allows insurers to claim reimbursement or subrogation rights without the recipient being fully compensated first, injured parties might receive less from their own legal recovery. The explicit removal of the "made whole" doctrine means that an insurer could be reimbursed before the injured individual has covered all their personal losses and expenses related to the injury. The restriction to $5,000 in benefits could also impact how this applies, potentially shielding larger claims from this limitation.