Kansas Health Plan Subrogation: The K.A.R. 40-1-20 Ban and Its Limits

By the FigureMyTax Editorial Team · How we calculate

A Kansas regulation bars insurance companies and health insurers from issuing contracts with a subrogation clause, or any provision with a similar purpose or effect, for coverage reimbursing medical, surgical, hospital or funeral expenses. Federal and some self-funded plans may fall outside it.

The regulation

K.A.R. 40-1-20, on the Kansas Insurance Department's site, says: no insurance company or health insurer, as defined in K.S.A. 40-4602, may issue any contract or certificate of insurance in Kansas containing a subrogation clause, or any other policy provision having a purpose or effect similar to that of a subrogation clause, applicable to coverages providing for reimbursement of medical, surgical, hospital or funeral expenses. It was amended in 2013 to add health insurers.

What this means for you

For a health policy issued in Kansas by a regulated insurer, a clause that lets the plan take back what it paid from your settlement is barred, so the made-whole question usually does not arise. Our calculator therefore shows a regulated health plan's claim as $0.

Exceptions to check

No-fault insurers are expressly subrogated for duplicative PIP benefits under K.S.A. 40-3113a. A news report on a Tenth Circuit decision says a federal employee health plan was held outside the regulation because federal law preempts it, and a Kansas Court of Appeals opinion discusses whether a school district plan counted as a health insurer. We read only excerpts of those decisions, so treat them as leads. A self-funded employer plan or a plan issued in another state may also be outside the regulation; ask for the plan document and for where the policy was issued.

The made-whole rule

A law-firm compilation of Kansas subrogation law reports that the Kansas Supreme Court has not adopted the made-whole doctrine and that the regulation makes it largely irrelevant for health insurers. We did not read the cases.

What to do

If a plan demands repayment, ask which plan type it is, where it was issued and for the plan document, and cite the regulation. See how hospital liens and PIP claims differ and how Medicaid and Medicare recover.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Kansas's rules apply to your specific case with a licensed Kansas attorney.