Rhode Island Health Plan Reimbursement: Made-Whole and Common Fund

By the FigureMyTax Editorial Team · How we calculate

We did not find a Rhode Island statute that governs a health plan's reimbursement from your settlement. A compendium of subrogation law reports that subrogation of medical benefits is allowed, that made-whole does not apply where the contract language is clear, and that the common fund rule applies only to the extent of the benefit your attorney provided.

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. Some states enact it by statute; others leave it to courts. We found no Rhode Island statute for a health plan.

What a compendium reports

A law-firm compilation of Rhode Island subrogation law reports that subrogation of medical and disability benefits is allowed, that the made-whole doctrine was applied to a liability insurer in 1981 but a lower court held it does not displace a clear subrogation clause in a health plan, and that the common fund doctrine applies only to the extent of the benefit your attorney provided. 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 the common fund rule applies, the plan bears about 36.3 percent of its claim and recovers about $5,730. If it claims in full under a clear clause, it takes $9,000. The Rhode Island medical lien calculator shows both.

Hospital liens and Medicaid are different

Hospitals have a statutory lien (R.I. Gen. Laws 9-3-4) and Medicaid has its own statute (40-6-9). See how hospital liens work and the Medicare and Medicaid post.

What to do

Ask for an itemized claim and the plan document, look for clear subrogation language, ask whether the plan is insured or self-funded, and ask it to share 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 Rhode Island's rules apply to your specific case with a licensed Rhode Island attorney.