An injured person settles a case for less than the case is worth, because the at-fault driver had a $50,000 policy and no assets. Then the health plan that paid $38,000 in medical bills sends a reimbursement demand for $38,000.
Minnesota has a statute that answers this. It says a health plan’s subrogation clause is unenforceable unless it does two things: waits until the injured person has been made whole, and gives back a share of the fees and costs that produced the recovery.
The statute is real, it is short, and it is directed at the health carrier rather than at the injured person. The question that decides most files is not whether the statute says what it says. It is whether the entity demanding repayment is inside or outside the class of entities the statute regulates — and that turns on whether the employer funds its own health benefits or buys insurance.
What does § 62A.095 actually require?
Two conditions, both of which must appear in the clause itself.
Minn. Stat. § 62A.095, subd. 2:
No health plan described in subdivision 1 shall contain a subrogation, reimbursement, or similar clause that provides subrogation, reimbursement, or similar rights to the health carrier issuing the health plan, unless:
(1) the clause provides that it applies only after the covered person has received a full recovery from another source; and
(2) the clause provides that the health carrier’s subrogation right is subject to subtraction for actual monies paid to account for the pro rata share of the covered person’s costs, disbursements, and reasonable attorney fees, and other expenses incurred in obtaining the recovery from another source unless the health carrier is separately represented by an attorney.
Note the structure. The statute does not say “a health plan may recover only X.” It says a health plan may not be offered, sold, or issued in Minnesota unless it complies. Subdivision 1(a): “A health plan may not be offered, sold, or issued to a resident of this state, or to cover a resident of this state, unless the health plan complies with subdivision 2.” It is a rule about what may lawfully be in the contract, enforced against the carrier, not a distribution formula applied at settlement.
Three more sentences in subdivision 2 do real work.
If the carrier hires its own lawyer, the fee subtraction goes away — and is replaced by negotiation, then arbitration. “If the health carrier is separately represented by an attorney, the health carrier and the covered person, by their attorneys, may enter into an agreement regarding allocation of the covered person’s costs, disbursements, and reasonable attorney fees and other expenses. If the health carrier and covered person cannot reach agreement on allocation, the health carrier and covered person shall submit the matter to binding arbitration.”
The plan’s own payments do not count toward “full recovery.” The closing sentence: “For the purposes of this section, full recovery does not include payments made by a health plan to or for the benefit of a covered person.” Without that sentence, a carrier could argue its own payment of the medical bills helped make the person whole and therefore triggered its own right of reimbursement. The Legislature closed the circle.
And the section does not abolish other recovery rights. “Nothing in this section shall limit a health carrier’s right to recovery from another source which may otherwise exist at law.” A carrier that pursues the tortfeasor directly is doing something the section does not address.
Subdivision 3 adds an anti-retroactivity rule that is easy to miss and occasionally decisive: no addition or amendment of a subrogation clause “shall be applied to the disadvantage of a covered person with respect to benefits provided by the health carrier in connection with an injury, illness, condition, or other covered situation that originated prior to the addition of or amendment to the clause.” The clause that governs is the one in force when the condition originated.
Which plans are inside the statute?
More than the phrase “health plan” suggests in one direction, and less in another.
“Health plan” is defined by who issues it. Minn. Stat. § 62A.011, subd. 3 defines a health plan as a policy or certificate of accident and sickness insurance from an insurance company licensed under chapter 60A; a subscriber contract from a nonprofit health service plan corporation under chapter 62C; a health maintenance contract from an HMO under chapter 62D; a health benefit certificate from a fraternal benefit society under chapter 64B; or coverage from a joint self-insurance employee health plan operating under chapter 62H. “Health carrier” in § 62A.011, subd. 2 tracks the same five categories.
Every one of those is a Minnesota-regulated insurance entity. That is the textual reason the ERISA fight exists, and it is a better starting point than the fight itself: § 62A.095 regulates the content of insurance contracts issued by carriers Minnesota licenses.
Section 62A.095 then reaches out and pulls in six categories that are otherwise excluded from the chapter’s definition of “health plan.” The last sentence of subdivision 1: “For purposes of this section, ‘health plan’ includes coverage that is excluded under section 62A.011, subdivision 3, clauses (4), (6), (7), (8), (9), and (10).” Those clauses are fixed indemnity, specified-disease and hospital indemnity coverage; hearing, dental, and vision coverage; blanket accident and sickness insurance; accident-only coverage; long-term care policies; and Medicare supplement coverage. A dental plan and an accident-only policy are subject to the subrogation limits even though neither is a “health plan” for most of chapter 62A.
And one large category is expressly carved out. Subdivision 1(b): health plans providing benefits under health care programs administered by the commissioner of human services “are not subject to the limits described in subdivision 2,” and are instead governed by the subrogation right in § 256B.37 and the lien provisions in §§ 256.015, 256B.042, Minnesota Statutes 2010, § 256D.03, subd. 8, and 256L.03, subd. 6. Medical Assistance recovery is not capped by § 62A.095. A file with both a commercial plan and an MA lien is running under two different rulebooks.
The notice requirement that looks like a burden and is actually a trap for the plan
Minn. Stat. § 62A.096 is one sentence and a consequence:
A person covered by a health carrier who makes a claim against a collateral source for damages that include repayment for medical and medically related expenses incurred for the covered person’s benefit shall provide timely notice, in writing, to the health carrier of the pending or potential claim. Notwithstanding any other law to the contrary, the statute of limitations applicable to the rights with respect to reimbursement or subrogation by the health carrier against the covered person does not commence to run until the notice has been given.
Read the sanction carefully. The penalty for not notifying the carrier is not that the claim is barred — it is that the carrier’s limitations clock never starts. A plaintiff who quietly settles and never tells the plan has not defeated the plan’s claim; the plaintiff has made that claim permanently timely.
The notice is also the event that generates the record you will need later. It is what forces the carrier to state its position, produce its plan language, and decide whether to retain separate counsel — which, under subdivision 2, changes the fee-allocation rule.
Where does ERISA come in, and how much of it can anyone actually say?
Here the honest answer requires separating three things that get run together.
First, the federal statute. ERISA’s preemption provision, 29 U.S.C. § 1144(a), is broad: “Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.”
Subsection (b)(2)(A) saves state insurance regulation: “Except as provided in subparagraph (B), nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities.”
And subsection (b)(2)(B) — the “deemer clause” — takes part of it back: “Neither an employee benefit plan described in section 1003(a) of this title, which is not exempt under section 1003(b) of this title (other than a plan established primarily for the purpose of providing death benefits), nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer, bank, trust company, or investment company or to be engaged in the business of insurance or banking for purposes of any law of any State purporting to regulate insurance companies, insurance contracts, banks, trust companies, or investment companies.”
Second, what the Supreme Court has done with those three clauses in exactly this setting. FMC Corp. v. Holliday, 498 U.S. 52 (1990), decided whether ERISA preempted a Pennsylvania statute “precluding employee welfare benefit plans from exercising subrogation rights on a claimant’s tort recovery,” id. at 54. The plan was self-funded: “it does not purchase an insurance policy from any insurance company in order to satisfy its obligations to its participants.” Id. The Court read the three clauses together:
We read the deemer clause to exempt self-funded ERISA plans from state laws that “regulat[e] insurance” within the meaning of the saving clause. … State laws that directly regulate insurance are “saved” but do not reach self-funded employee benefit plans because the plans may not be deemed to be insurance companies, other insurers, or engaged in the business of insurance for purposes of such state laws. On the other hand, employee benefit plans that are insured are subject to indirect state insurance regulation.
Id. at 61. And the holding, stated as a rule: “if a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer’s insurance contracts; if the plan is uninsured, the State may not regulate it.” Id. at 64.
Be precise about what that decides and what it does not. FMC holds that the deemer clause exempts a self-funded plan from a state insurance law that would otherwise be saved. It did not construe Minn. Stat. § 62A.095, which did not exist in 1990 — the section was enacted by Laws 1995, ch. 219. Whether and how FMC’s framework applies to § 62A.095 in a given case is a question for the court hearing that case, and this page does not answer it.
Third, what governs a self-funded plan’s reimbursement claim if the state limit does not. The plan document, enforced in federal court. 29 U.S.C. § 1132(a)(3) authorizes a civil action by a fiduciary “to obtain other appropriate equitable relief … to enforce any provisions of this subchapter or the terms of the plan.” In U.S. Airways, Inc. v. McCutchen, 569 U.S. 88 (2013), the Court described the route and then addressed the defenses:
This Court has held that a health-plan administrator like U.S. Airways may enforce such a reimbursement provision by filing suit under § 502(a)(3) of ERISA. … We here consider whether in that kind of suit, a plan participant like McCutchen may raise certain equitable defenses deriving from principles of unjust enrichment. In particular, we address one equitable doctrine limiting reimbursement to the amount of an insured’s “double recovery” and another requiring the party seeking reimbursement to pay a share of the attorney’s fees incurred in securing funds from the third party. We hold that neither of those equitable rules can override the clear terms of a plan. But we explain that the latter, usually called the common-fund doctrine, plays a role in interpreting U.S. Airways’ plan because the plan is silent about allocating the costs of recovery.
Id. at 91 (citing Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006)).
Now put the two bodies of law side by side, because they are addressed to the same two questions.
| Question | Minnesota, § 62A.095, subd. 2 | Self-funded ERISA plan after McCutchen |
|---|---|---|
| Must the injured person be made whole first? | Yes — the clause is unenforceable unless it “applies only after the covered person has received a full recovery from another source” | Not if the plan’s clear terms say otherwise; the double-recovery limit “cannot override the clear terms of a plan” |
| Must the plan bear a share of fees and costs? | Yes — subtraction for the “pro rata share” of costs, disbursements, and reasonable attorney fees, unless the carrier is separately represented | Not if the plan’s clear terms say otherwise — but the common-fund doctrine “plays a role in interpreting” a plan that is silent on allocating recovery costs |
| Who decides an allocation dispute? | Binding arbitration, if the carrier is separately represented and no agreement is reached | The court, applying the plan document |
The two doctrines Minnesota made mandatory are the same two doctrines McCutchen made defeasible. For an insured plan, make-whole and common-fund are written into the contract by force of state law. For a self-funded plan, they are default rules that a well-drafted plan document can displace — and the drafting question becomes whether the plan actually did.
Which means the first fact to establish is not legal at all. Whether the employer self-funds is a question answered by the plan documents, not by the insurer’s name on the ID card: a self-funded employer commonly pays a carrier to administer claims, so the card, the explanation of benefits, and the correspondence can all carry an insurance company’s logo while the money is the employer’s. Ask for the plan document and the summary plan description in writing, early, and read what they say about funding and about allocation of recovery costs.
How this fits with the rest of a Minnesota injury file
Subrogation is one of three separate systems that reduce what an injured person keeps, and they do not coordinate with each other.
- The collateral source statute, Minn. Stat. § 548.251, decides what comes off a verdict — and it turns partly on whether a subrogation right has been asserted. We have written separately on the order in which a Minnesota verdict is reduced, including the Revisor’s published note that a portion of § 548.251 was held preempted as applied to ERISA plans.
- No-fault benefits are a first-party system with their own offset in Minn. Stat. § 65B.51, subd. 1, described in our overview of the No-Fault Act and in the tort threshold analysis.
- Health plan reimbursement is a contract claim governed by § 62A.095 or by the plan document, depending on the answer above.
The same medical bill can appear in all three analyses, and it is not double counted in the client’s favor anywhere.
What to do
- Ask for the plan document and the SPD in writing at intake, and put the funding question — insured or self-funded — in the file before you value the case.
- Give the § 62A.096 notice. Withholding it does not extinguish the plan’s claim; it prevents the plan’s limitations period from ever starting.
- Get the subrogation clause itself, not the demand letter. Section 62A.095, subd. 2 is a rule about the text of the clause. If the clause does not contain the two required provisions, the compliance question is on the table.
- Fix the date the condition originated. Subdivision 3 blocks a later amendment from being applied to the covered person’s disadvantage for a condition that originated before the amendment.
- Watch for separate counsel. If the carrier retains its own attorney, the automatic pro rata fee subtraction is replaced by an agreement — and, failing agreement, by binding arbitration.
- Segregate any public-program lien. Medical Assistance recovery runs under §§ 256B.37, 256.015, 256B.042, Minnesota Statutes 2010, § 256D.03, subd. 8, and 256L.03, subd. 6, not under § 62A.095’s limits.
- For a self-funded plan, negotiate against the plan text. McCutchen makes plan silence on allocating recovery costs meaningful; a plan that never addressed fees is in a different position from one that did.
The observation
Minnesota’s subrogation statute is a good statute. It states two fair rules — be made whole first, pay your share of the cost of the recovery — and it states them as conditions on what may lawfully appear in an insurance contract sold in this state.
That drafting choice is also its limit. A rule aimed at what a carrier may put in a policy has nothing to grab onto when there is no policy, because the employer is paying the claims out of its own account and hiring a carrier only to process the paperwork. And that arrangement is not the exception in employer coverage.
So the practical answer to “how much can my health plan take?” begins with a question that has nothing to do with injury law: who is actually paying for your health benefits? Two employees at two companies down the street from each other, hurt in the same intersection, holding cards from the same insurer, can face materially different reimbursement rules — and neither of them can tell which one they are by looking at the card.
That is not a Minnesota policy choice. It is what happens when a state insurance regulation meets a federal statute that draws its most consequential line between insured and uninsured plans, and leaves the sorting to whoever reads the plan document first.
Madgett Law, LLC handles Minnesota personal injury claims, including the subrogation and reimbursement fights that decide what a client actually keeps — health plan claims under Minn. Stat. § 62A.095, ERISA plan reimbursement demands, and public-program liens. If a health plan has sent you a reimbursement demand on an injury settlement, the plan document is the first thing to read. Send us a message or call 612-470-6529.
Sources: Minn. Stat. § 62A.095 (2025) (subd. 1(a), the prohibition on offering, selling, or issuing a noncompliant health plan; subd. 1(b), the carve-out for health plans providing benefits under programs administered by the commissioner of human services and the cross-references to § 256B.37, § 256.015, § 256B.042, Minnesota Statutes 2010, § 256D.03, subdivision 8, and § 256L.03, subd. 6; the closing sentence of subd. 1 extending “health plan” to coverage excluded under § 62A.011, subd. 3, clauses (4), (6), (7), (8), (9), and (10); subd. 2, clauses (1) and (2), the full-recovery condition and the pro rata costs-and-fees subtraction with the separately-represented exception, the agreement-then-binding-arbitration sentence, the savings sentence for other rights of recovery at law, and the sentence providing that full recovery does not include the health plan’s own payments; subd. 3, retroactive amendments regulated); Minn. Stat. § 62A.096 (2025) (written notice of a pending or potential claim; the health carrier’s limitations period does not commence until notice is given); Minn. Stat. § 62A.011 (2025) (subd. 2, “health carrier”; subd. 3, “health plan” and the enumerated exclusions in clauses (4), (6), (7), (8), (9), and (10)); Minn. Stat. § 548.251 and Minn. Stat. § 65B.51, subd. 1 (2025) (referenced for the separate collateral-source and no-fault offset systems) (Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes). Revisor’s history line for § 62A.095 (enacted by Laws 1995, ch. 219, § 1; subsequently amended 1Sp2001 c 9 art 2 s 1; 2002 c 379 art 1 s 113; 2006 c 255 s 10; 2011 c 108 s 32; 2016 c 158 art 2 s 9); Revisor’s history line for § 62A.096 (Laws 1995, ch. 219, § 2; not amended since). 29 U.S.C. § 1144 (text in effect on July 30, 2026, per uscode.house.gov) (subsection (a), the supersedure clause; subsection (b)(2)(A), the saving clause; subsection (b)(2)(B), the deemer clause); 29 U.S.C. § 1132(a)(3) (text in effect on July 30, 2026) (civil action by a participant, beneficiary, or fiduciary to obtain other appropriate equitable relief to enforce the terms of the plan). FMC Corp. v. Holliday, 498 U.S. 52 (1990) (question presented — preemption of a state law “precluding employee welfare benefit plans from exercising subrogation rights on a claimant’s tort recovery,” and the self-funded character of the plan, at 54; reading of the deemer clause and the insured/self-funded distinction, at 61; the holding stated as a rule — “if a plan is insured, a State may regulate it indirectly … if the plan is uninsured, the State may not regulate it,” at 64). U.S. Airways, Inc. v. McCutchen, 569 U.S. 88 (2013) (enforcement of a plan reimbursement provision under ERISA § 502(a)(3), citing Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006); the holding that neither the double-recovery limit nor the common-fund doctrine can override the clear terms of a plan, and that the common-fund doctrine informs interpretation where the plan is silent about allocating the costs of recovery, at 91). Both federal opinions were read in full from the Caselaw Access Project archival text; Sereboff is cited here only as it appears within McCutchen. Neither decision construes Minn. Stat. § 62A.095, and this article does not state how Minnesota or federal courts have applied ERISA preemption to that section — that question is identified, not answered. This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular plan is insured or self-funded, and what its terms provide, depends on the plan documents. Every case depends on its own facts. No outcome is promised or implied.