Michigan Health Plan Reimbursement: Made-Whole and Common Fund

By the FigureMyTax Editorial Team · How we calculate

We did not find a Michigan statute that governs a health plan's reimbursement from your settlement. A secondary source reports that the made-whole and common fund rules apply, so a plan may be repaid only after you are fully compensated and may bear a share of your fees.

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 Michigan statute for a health plan.

What a secondary source reports

A law-firm compilation of Michigan subrogation law reports that the made-whole and common fund doctrines apply in Michigan and cites older decisions. It also reports a federal court holding on whether subrogation of medical benefits is allowed, which we could not reconcile with the rest, so treat it as a lead. We did not read the decisions.

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 override, it may recover nothing. If its contract overrides, or it is a self-funded federal plan, it may claim the full $9,000. The Michigan medical lien calculator offers those positions.

Medicaid and no-fault are different

Medicaid has its own statutory priority under MCL 400.106 and the no-fault insurer's reimbursement is limited by MCL 500.3116; neither depends on whether you are made whole. See the Medicare and Medicaid post and our post on provider bills and no-fault claims.

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 Michigan's rules apply to your specific case with a licensed Michigan attorney.