New Provision in Medical Malpractice Legislation Raises Employer Concerns

June 03, 2011

While HR Policy and other employer associations have applauded efforts by the House of Representatives to enact medical malpractice legislation, concerns are being raised over a recently-inserted provision in the bill that would essentially reimburse plaintiffs for costs that were paid for by their health plans.  Today, many health plans, including employer-sponsored plans, maintain "subrogation" rights; i.e, a right by the plan to recoup from a medical malpractice award the amounts of medical claims paid by the plan for the plaintiff's additional health care necessitated by the provider's negligence.  The new provision would prohibit subrogation, thus allowing successful plaintiffs to keep damages awarded to pay for medical claims even if those claims had already been paid by an employer-sponsored plan.   Employer plans could not be made whole.  When the House Judiciary Committee passed the Help, Efficient, Accessible, Low-cost, Timely Healthcare Act (HEALTH Act; H.R. 5) in February, it rejected this provision, but the House Energy and Commerce Committee recently passed its version of the bill which included the prohibition against subrogation.  While the ultimate success of the HEALTH Act is far from certain, the Association is working to ensure that health plans maintain the right to subrogate medical claims.