Louisiana Health Plan Reimbursement: Made-Whole and Common Fund

By the FigureMyTax Editorial Team · How we calculate

We did not find a Louisiana statute that governs a health plan's reimbursement from your settlement. A secondary source reports that the made-whole and common fund rules apply, that first-priority contract language can override made-whole, and that subrogation of medical benefits is allowed.

What the made-whole rule is

The made-whole doctrine says an insurer that paid your bills cannot be repaid from your recovery until you have been fully compensated for your losses. Some states enact it by statute; others leave it to courts or to the insurer's contract. We found no Louisiana statute for a health plan.

What a secondary source reports

A law-firm compilation of Louisiana subrogation law reports that subrogation of medical and disability benefits is allowed, that the made-whole and common fund doctrines apply under a 1996 Louisiana Supreme Court decision, that first-priority contractual language can override made-whole, and that a person who settles knowing of an obligation to reimburse a plan cannot later claim he was not made whole. We did not read the decisions, so treat these as leads.

A worked example

Say a health plan paid $9,000 and you settle for $100,000 with a one-third fee and $3,000 in costs. If you are fully compensated and the plan has no override, it bears about 36.3 percent of its claim for fees and costs and recovers about $5,730. If you are not fully compensated and the plan has no clear first-priority language, it may recover nothing. If its language overrides made-whole, it may claim the full $9,000. The Louisiana medical lien calculator offers those positions.

Medicaid and providers are different

Medicaid has a statutory privilege under R.S. 46:446 and providers have the privilege of R.S. 9:4752; neither depends on whether you are made whole. See the Medicare and Medicaid post and our post on the provider privilege.

What to do

Ask for an itemized claim and the plan document, ask whether the plan is insured or self-funded, and ask it to reduce its claim for your fees and costs. A self-funded employer plan is governed by federal law.

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