Cost Plus Plans

If you work for a city or county in North Carolina and are covered by your employer’s health plan, you may not be entitled to recover the full amount given by third-party liability insurance for your injuries.

North Carolina is an anti-subrogation state.  Our state does not allow health insurance to take the money you receive from your own car insurance.  There are exceptions to this rule, however, including a health plan that is given by a city or county in North Carolina.

“The administration of any cost plus plans as herein provided shall not be subject to regulation or supervision by the Commissioner of Insurance.” G.S. 58-65-135

N.C.G.S. 58-65-135 is where corporations formed under Article 65 and 66 gain their authority to avoid North Carolina’s anti-subrogation rule and collect for any expenses paid to a medical provider for which a third party is responsible.  A city or county in North Carolina, fall under those articles, making them not subject to the insurance commissioner’s rules and regulations.

There are certain arguments you can make to avoid having to repay your health insurance for expenditures made on your behalf because of the negligence of a third-party.

As the Lien Manual points out, one argument to apply the anti-subrogation rule to Cost Plus Plans is to argue that “administration” means the operation and management of the plan, not to benefits of the plan.  Using the plain meaning of the statute, the Plan’s collection would fall under the anti-subrogation rule. See North Carolina Personal Injury Liens Manual, Christopher Nichols, P. 403.

What if we have a unique situation where a minor is injured?  Can a Cost Plus Plan seek reimbursement from her liability insurance?  This question has not been answered by any Court in North Carolina.  (Indeed, whether a Cost Plus Plan can obtain reimbursement at all remains unanswered.)  If presented with a minor injury, there are some arguments based on common law to keep the Plan away from your recovery.

Where a minor child is injured by a liable tortfeasor, two potential causes of action arise, (1) the minor may recover for pain and suffering, permanent injury, and impairment of earning capacity, and (2) the parents may recover medical expenses incurred for necessary medical treatment and the loss of earnings of the child during its minority if unemancipated. Ellington v. Bradford, 242 NC 159, 160-61, 86 S.E.2d 925, 926 (1955).   An unemancipated minor is not responsible for her medical bills. Price v. Seaboard Air Line, R.R., 274 N.C. 32, 42, 161 S.E.2d 590, 598 (1968)(Father paid for his child’s medical bills and was found to be solely responsible for those bills.  The minor child was not responsible for them). Further, a minor cannot recover for medical expenses where the minor is represented by a Guardian Ad Litem (“GAL”). Brown v. Lyons, 93 N.C. App. 453, 378 S.E.2d 243 (1989).

When a Plan seeks reimbursement, they are seeking reimbursement for medical expenses that the Plan forwards on behalf of the minor.  Logically, if a minor is not responsible for their medical expenses, then the Plan has no right to seek reimbursement from the minor because they received no benefit from the Plan for the Plan to seek reimbursement.  At least, you or your lawyer should argue.

A problem arises, however, where the parent uses the Plan in the future.  Many Plans can attempt to raise the premiums of the parent or seek compensation by denying future claims.  All these factors need to be taken into consideration by you or your attorney when dealing with a Plan’s request for reimbursement.  These arguments should make the Plan seek settlement at a reduced rate rather than the full amount for a lack of desire to litigate the issue.  Remember, an adverse ruling by a Court could affect the Plan’s right to reimbursement for other Plan members in future.  They are wary of this and will try to settle to avoid such an adverse result.

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