South Dakota Health Plan Reimbursement: Made-Whole and Common Fund

By the FigureMyTax Editorial Team · How we calculate

We did not find a South Dakota 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 a standard subrogation clause trumps the made-whole rule, and that the common fund rule applies.

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 South Dakota statute for a health plan.

What a compendium reports

A law-firm compilation of South Dakota subrogation law reports that subrogation of medical and disability benefits is allowed, that made-whole is a default rule the parties can contract around and that general subrogation language is enough to displace it (Westfield v. Rowe, 2001), and that the common fund rule applies. 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. Under the common fund rule the plan bears about 36.3 percent of its claim and recovers about $5,730; under a standard clause with no fee sharing, it takes the full $9,000. The South Dakota medical lien calculator shows both.

Hospital liens and Medicaid are different

Hospitals have a statutory lien (SDCL 44-12-1) and Medicaid has its own statute (28-6-7.1). 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 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 South Dakota's rules apply to your specific case with a licensed South Dakota attorney.