What is the TPPRA?

The TPPRA, or Third Party Payor Recovery Act, is a legal statute—most notably used in states like Texas—that gives third-party payors (such as health insurance companies, government programs, or employee benefit plans) the right to recover money they’ve paid for a beneficiary’s medical treatment when that beneficiary wins a personal injury settlement or award.

In personal injury cases, this law plays a major role in determining how much of a plaintiff’s compensation must be repaid to insurers after the case is resolved.

What does the Third Party Payor Recovery Act do?

The TPPRA is designed to protect insurers and benefit plans that pay for medical treatment on behalf of injured individuals. When those individuals later receive compensation through a personal injury lawsuit or settlement, the payor may assert a lien or reimbursement claim to recover part of the funds it spent.

The law establishes rules for how much can be recovered, what notice must be given, and how disputes are resolved.

• Grants insurers a right to reimbursement from injury settlements or verdicts.

• Applies to medical expenses paid by private health plans, government programs, and sometimes workers’ comp carriers.

• Requires notice and cooperation from plaintiffs and attorneys.

• Caps or limits recoveries in some cases to protect injured individuals.

Who is considered a third-party payor under the TPPRA?

A third-party payor is any entity that pays for medical care on behalf of someone else. In personal injury law, this typically includes:

• Health insurance providers (private or group plans)

• Medicaid or Medicare

• ERISA plans

• Self-funded employee benefit plans

• Workers’ compensation carriers

If these entities pay for injury-related care and the plaintiff recovers damages, they may be entitled to reimbursement under the TPPRA or a similar law.

• Medicare and Medicaid often follow separate federal recovery rules, but states may apply the TPPRA framework as well.

• ERISA plans may be subject to different preemption rules, depending on the case.

• State-specific versions of the TPPRA exist and vary by jurisdiction.

How does the TPPRA affect a personal injury settlement?

Before settling a personal injury case, the plaintiff’s attorney must identify and address any third-party liens or reimbursement claims. Under the TPPRA, failure to resolve these claims can lead to legal liability for both the attorney and the plaintiff. The amount the payor is entitled to may be negotiated, especially if the settlement doesn’t fully cover all losses.

Some statutes include statutory caps or equitable principles to reduce repayment amounts in proportion to attorney’s fees and other factors.

• Plaintiffs may receive less net recovery if substantial liens exist.

• Attorneys must resolve liens before disbursing settlement funds.

• Negotiations may reduce the lien amount based on fairness or hardship.

• Failure to comply can lead to double payment or legal sanctions.

How is the TPPRA enforced?

Third-party payors enforce their rights through liens, subrogation claims, or reimbursement demands. If a lien is properly filed, it attaches to the plaintiff’s recovery. Courts may enforce the lien directly, and some statutes give payors the right to sue if they’re excluded from the recovery process.

Many states require notice and disclosure to all parties involved in the litigation to protect these recovery rights.

• Lien enforcement actions can delay or reduce final payouts.

• Attorneys may be held liable for ignoring valid liens.

• Payors must comply with notice and timing requirements.

• Courts balance the rights of injured plaintiffs and insurers.

Conclusion

The Third Party Payor Recovery Act (TPPRA) ensures that insurance providers and other payors can recover the cost of medical treatment when an injured person wins compensation from a third party. While it protects insurers’ financial interests, it also creates important obligations for plaintiffs and their attorneys to resolve liens and reimbursement claims before settling a case.