Posted on: 2022-08-13 Posted by: Lucy R. White Comments: 0

What Is Capitation?

Capitation refers to a fixed fee that an insurance company pays to a doctor for every person he treats, regardless of what services are provided.

Non-capitation is an alternative to capitation. An insurance company will pay doctors in a non-capitated system based on the actual services rendered.

What Is Subrogation?

In the context of a personal injury case, subrogation refers to a legal term that basically means:

  • An insurance company that represents a plaintiff can seek to recover the money it paid to the plaintiff.
  • It can sue the person who caused the plaintiff’s injury (typically, the defendant).

Subrogation is based on the concept that an insurance company is often obligated to pay a policyholder/plaintiff before the plaintiff can file, or finalize, a lawsuit. Subrogation allows the insurance company to pay early and then be reimbursed by the responsible party.

Subrogation can be described as:

  • An insurance company has the right to recover money from those who caused the accident or caused the damage that triggered the insurance company’s payments.
  • The insurance company has the right to place the victim at an accident scene and pursue recovery from the responsible party.
  • The substitution by the insurance company to replace the accident victim, to whom they take over.

What Is the California Civil Code 3040?

California Civil Code 3040 sets a ceiling on the amount an insurance company can recover from a plaintiff’s settlement regarding payments it made to that plaintiff.

Under California Civil Code 3040, the insurance company is limited in its recovery by the less of:

  • The cost of medical services
  • A percentage of the total settlement

How Are Capitation Payments Treated Under California Civil Code 3040?

These payments are made at a fixed rate and do not accurately reflect the true cost of medical services. This is a problem because an insurance company can recover costs from the settlement of a plaintiff for medical services it paid for.

This article was written by Alla Tenina. Alla is a top personal injury lawyer in Sherman Oaks CA, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.

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