Texas Legal Glossary · Personal Injury

Subrogation

Written and reviewed by Shane M. Boasberg, founder of SMB Law, PC · Licensed in Texas since 2003 · Updated October 2026

Definition: Subrogation is an insurer’s right to be repaid out of your injury recovery for benefits it already paid, such as hospital bills. Texas caps a health plan’s share under Civil Practice and Remedies Code Chapter 140, and PIP carriers have no subrogation right.

Also called: subrogation lien, reimbursement claim, subro

What subrogation means in Texas

Subrogation is the right of a party who paid for a loss to step into the shoes of the person it paid and collect from whoever caused the loss. In an injury case, the party is almost always an insurer. Your health plan pays $40,000 in hospital charges after a crash on MoPac. It has not agreed to eat that cost. It now has a claim against the at-fault driver, and in practice against your settlement.

Health insurers, Medicare, Medicaid, workers’ compensation carriers, and your own auto carrier (for collision or UM/UIM payments) all assert subrogation. One exception stands out. Texas Insurance Code § 1952.155(b) gives a PIP carrier no subrogation right, so personal injury protection benefits never have to be paid back.

How it works in practice

Most health plans fall under Chapter 140 of the Civil Practice and Remedies Code. Section 140.005 limits what the plan can take when you are represented by a lawyer. The plan’s recovery is capped at the lesser of what it actually paid or a share of your recovery (roughly half) after attorney’s fees and case expenses come off the top. The plan also has to bear its proportionate share of those fees and costs.

Self-funded employer plans governed by ERISA are the big exception. Federal law controls, and the plan document often claims full reimbursement. Medicare must be repaid under the Medicare Secondary Payer Act, and Texas Medicaid has its own recovery unit. Settlement money is held in the lawyer’s trust account until every lien is resolved and released in writing.

Why it matters in your case

Subrogation decides what you actually take home. A $100,000 settlement with a $45,000 health lien is a different case than the same settlement with no lien. The lien amount is rarely final. Plans routinely accept less when the policy limits are low, fault is disputed, or the statutory cap applies. We treat lien resolution as part of the case itself and start it before the settlement check arrives, not after.

Example

Dana is rear-ended on I-35 and her employer’s fully insured health plan pays $30,000 in bills. Her case settles for the other driver’s $50,000 policy limits. Under Chapter 140 the plan cannot simply demand its $30,000. Its claim is capped by the statutory formula and then negotiated down further because the limits were low. Dana’s net recovery goes up by the amount the plan gives back.

This entry explains Texas law in general terms and is not legal advice for any specific situation. Statutes and case law change; the date above reflects the last review.