Maryland Health Plan Subrogation: The Attorney Fee Reduction

By the FigureMyTax Editorial Team · How we calculate

When a Maryland health plan or other payor with a subrogation right is repaid from your recovery, its claim is reduced by the ratio of your attorney fees to your total recovery, not to exceed one-third, unless it intervenes in your case with its own lawyer.

The statute

Courts Article 11-112 applies to any right of subrogation under a contract or law for health care benefits or services paid or payable by a payor, or under a system of self-insurance, when the claim is voluntarily paid from your recovery in a personal injury claim. Unless the payor files a petition to intervene and is independently represented by counsel, the amount it may recover is reduced by your attorney's fees divided by your total recovery, multiplied by the payor's claim, and that percentage may not exceed one-third.

A worked example

Say a health plan paid $9,000 and you settle for $100,000 with a one-third fee ($33,333). The fee is 33.3 percent of the recovery, so the plan's claim is reduced by one-third, to $6,000. At a 40 percent fee the reduction is still capped at one-third. If the plan hired its own lawyer and intervened, no reduction applies. The Maryland medical lien calculator shows both.

Procedure

The payor has no duty to tell you about the reduction. If it asks in writing, you or your lawyer who demands the reduction must give it a certification of the attorney's fees you incurred. The section does not apply to a voluntary reduction by the payor that is larger than the statutory one.

The made-whole rule

A law-firm compilation of Maryland subrogation law reports that subrogation of medical benefits is allowed, that the made-whole doctrine does not apply, and that the common fund doctrine applies through 11-112. We did not read the decisions it cites. A self-funded employer plan is governed by federal law, so ask for the plan document.

What to do

Ask for an itemized claim, ask whether the plan is insured or self-funded and whether it intends to intervene, and send the fee certification if you want the reduction. See the Medicare and Medicaid post and how hospital liens differ.

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