The taxi driver was found to be fully responsible for the traffic accident in which a pedestrian was injured. The medical expenses incurred by the injured person during hospitalization were partially covered by the medical insurance fund, with the remainder paid by the injured person himself. Subsequently, the taxi company and the insurance company that underwrote the offending vehicle compensated the injured person for the medical expenses they had actually incurred. Consequently, which party shall bear the medical expenses covered by the basic medical insurance fund?

On March 25, 2025, the Lujiazui People's Court of the Shanghai Pudong New Area People's Court (hereinafter referred to as "Pudong New Area People's Court") held a hearing on a dispute over the right of recovery between the Shanghai Pudong New Area Medical Insurance Affairs Center (hereinafter referred to as "Medical Insurance Center") and a certain taxi company and an insurance company.

After nearly an hour of trial, the collegiate panel deliberated and issued a first-instance judgment in court: The insurance company shall pay the amount initially advanced by the basic medical insurance fund of the medical insurance center within the limit of the commercial third-party liability insurance. The remaining part shall be paid by the taxi company.

This is the first medical insurance fund recovery case filed by the medical insurance center as the plaintiff and decided by a Shanghai court after the implementation of the Regulations of Shanghai Municipality on Medical Insurance on March 1, 2025.

[Case Review]

In July 2021, Wang, an employee of a taxi company, collided with pedestrian Zhao while driving a taxi, resulting in Zhao¡¯s injury. As Wang violated the rule of yielding to pedestrians while driving, he was ultimately found to be fully responsible for the accident.

After the incident, Zhao incurred nearly CNY 150,000 in medical expenses during hospitalization. Of this amount, over CNY 40,000 was covered by the basic medical insurance fund, with the remainder paid by Zhao himself.

Subsequently, Zhao sued the taxi company and the insurance company that underwrote the offending vehicle in the Pudong New Area People's Court for a motor vehicle traffic accident liability dispute. The court ruled that the insurance company should compensate Zhao for medical expenses, disability compensation, nursing fees, and other costs, totaling over CNY 160,000. After the incident, the taxi company immediately prepaid Zhao CNY 50,000 for medical treatment. This expense was settled together with the more than CNY 4,000 that the taxi company should have compensated in this case. Both parties did not appeal, and the taxi company and the insurance company automatically fulfilled the judgment.

Thus, Zhao¡¯s losses were fully compensated. However, who should pay the CNY 40,000 advanced by the medical insurance fund?

According to Article 30 of the Social Insurance Law of the People¡¯s Republic of China, after the basic medical insurance fund has made the initial payment, it has the right to seek compensation from a third party. The Regulations of Shanghai Municipality on Medical Insurance which came into effect on March 1, 2025 also clearly stipulates that if the basic medical insurance fund is used to pay for medical expenses that should be borne by a third party, the medical insurance agency has the right to recover it according to law. Accordingly, the medical insurance center filed a lawsuit with the Pudong New Area People's Court, requesting that the taxi company and insurance company return the more than CNY 40,000 that the medical insurance fund had advanced.

During the hearing, the taxi company argued that the more than CNY 40,000 in medical expenses were all used to treat Zhao¡¯s own diseases and had no direct causal relationship with the traffic accident in question, and that the Medical Insurance Center¡¯s claims lacked evidentiary support and legal basis. The money paid by the medical insurance fund is a welfare expenditure for insured persons under the national social security system and should not be borne by the company.

The insurance company argued that the involved vehicle was insured with compulsory insurance (with a limit of CNY 200,000) and commercial third-party liability insurance (with a limit of CNY 100,000). The company had already fulfilled its corresponding compensation obligations in the traffic accident case. Therefore, even if the court ruled that it should bear the responsibility for repayment, it should be handled within the remaining insurance limit. Furthermore, the Medical Insurance Center claimed that the lawsuit had already exceeded the limitation of actions of three years.

[Case Study]

After reviewing the case, the Pudong New Area People's Court held that, in accordance with the relevant provisions of the Civil Code of the People's Republic of China and the Social Insurance Law of the People¡¯s Republic of China, after the basic medical insurance fund has made the initial payment, it has the right to seek compensation from a third party. The plaintiff, as the statutory functional department, requested the two defendants to return the medical expenses prepaid by the medical insurance fund for the victim, which is in line with the relevant provisions of the Regulations of Shanghai Municipality on Medical Insurance, and the court supported this request. The medical expenses of more than CNY 40,000 involved in the case were related expenses incurred by the victim due to the traffic accident. The plaintiff¡¯s request for the two defendants to return the medical expenses prepaid by the medical insurance fund is lawful and well-founded and should be supported.

Regarding the liability of the two defendants, the insurance company should return the part initially paid by the medical insurance fund within the remaining insurance liability limit, which is about CNY 6,800, and the remaining balance of more than CNY 38,000 shall be returned to the plaintiff by the taxi company.

The basic medical insurance fund is a special fund for basic medical insurance of employees, raised from units and individuals by medical insurance agencies in accordance with relevant regulations in China to ensure the basic medical care of employees. Taking into account the circumstances of this case, ensuring that the medical insurance fund obtains legal and compliant recovery for medical expenses paid in advance will be beneficial to maintaining the security of the medical insurance fund and promoting social equity.

I. What is ¡°medical insurance fund payment in advance¡±?

Medicare funds are often referred to as the ¡°medical treatment money¡± and ¡°life-saving money¡± for the people. Generally, the basic medical insurance fund consists of three components: the pooled fund, the supplementary fund, and payments from individual medical accounts. When the balance in an individual¡¯s medical account is insufficient, or when the individual¡¯s out-of-pocket expenses reach a certain threshold, pooled and supplementary funds may be utilized for proportional payment.

In cases involving third-party liability torts, such as motor vehicle traffic accident liability disputes or disputes over the right to health, if the injured party chooses to pay medical expenses using a medical insurance card after the accident, the medical insurance fund may make advance payments. According to legal provisions, after the basic medical insurance fund has made advance payments, it has the right to seek reimbursement from the third party.

II. Should the two defendants in this case return the medical expenses advanced by the medical insurance fund?

After the court¡¯s trial, it was found that in the previous traffic accident case, it had been clearly determined that a certain taxi company should bear tort liability, and a certain insurance company should bear the payment liability within the insurance limit. The medical expenses involved in this case were expenses incurred by the victim in the traffic accident for treating injuries, which fell within the statutory scope of compensation. The medical insurance pooled fund had advanced this part of the expenses in advance, and the two defendants should reimburse them.

During the court hearing, the two defendants also raised the argument that the medical expenses involved in this case were incurred by the victim for treating his own diseases and had nothing to do with the traffic accident in question. After the court¡¯s trial, it was deemed that the victim¡¯s hospitalization and treatment were supported by corresponding medical history, diagnosis certificates, appraisal reports, medical expense invoices, etc., and were necessary and reasonable expenses for treating injuries caused by the traffic accident. In the previous court trial of the traffic accident case, the two defendants had raised objections but failed to provide sufficient evidence to prove them, nor did they file an application for relevance appraisal in that case.

In this case, the two defendants raised objections again but still failed to provide sufficient evidence to refute. In addition, after the judgment in the traffic accident case was rendered, neither of the two defendants filed an appeal and they voluntarily complied with the judgment after it took effect. The previous case had already affirmed the medical expenses incurred by Zhao due to the traffic accident. As this case involves a dispute over the Medical Insurance Center¡¯s exercise of its right of recourse based on the facts and legal responsibilities determined in the previous case¡¯s judgment, the court did not accept the two defendants¡¯ argument that the medical expenses involved were not related to the treatment required for Zhao¡¯s injuries sustained in the traffic accident.

The limitation of actions commences from the date when the right holder knows or should have known that their rights have been infringed and who the obligor is. The judgment in the previous case was rendered on September 8, 2022, and the limitation period for this case should commence from the date when the Medical Insurance Center (specifically referring to Pudong Medical Insurance Center in this context) was informed of the judgment. Furthermore, after the implementation of the Regulations of Shanghai Municipality on Medical Insurance on March 1, 2025, the status of Pudong Medical Insurance Center as the rightful claimant was explicitly confirmed. In summary, the court did not accept the insurance company¡¯s argument that the three-year limitation period for legal actions had expired.

III. What is the significance of the "first case" judgment?

The Social Insurance Law of the People¡¯s Republic of China stipulates that after the basic medical insurance fund has made advance payments, it has the right to seek reimbursement from a third party. However, in practice, the recovery rate of medical insurance funds has been limited. The Pudong New Area People's Court hopes that through the trial and judgment of this case, it can further clarify the rightful claimant, liable party, and scope of recovery for medical insurance fund reimbursement, serving as a guideline for future rulings in similar cases. The court also hopes that relevant parties can have a clearer understanding of the judicial determination and ruling direction for medical insurance fund recovery, thereby enabling them to rationally choose a dispute resolution method.

In the next stage, Pudong New Area People's Court will endeavor to further promote the establishment of a systematic mechanism for information sharing and communication regarding medical insurance fund recovery work, as well as a non-litigious source management mechanism, with the aim of effectively enhancing recovery efficiency, safeguarding the security of medical insurance funds, and striving to form a social consensus that advance payments made by medical insurance funds should be legally returned.

[Relevant Laws]

I. Civil Code of the People's Republic of China

Article 188 The limitation of actions with a people¡¯s court to protect civil rights is three years. Where otherwise provided by law, those provisions shall prevail.

The limitation of actions commences from the date when the right holder knows or should have known that their rights have been infringed and who the obligor is. Where otherwise provided by law, those provisions shall prevail. However, if more than twenty years have elapsed since the date when the rights were infringed, the people¡¯s court shall not protect the rights. In special circumstances, the people¡¯s court may, upon the application of the right holder, decide to extend the limitation period.

Article 1175 If damages are caused by a third party, the third party shall bear tort liability.

Article 1179 Where a person causes personal injury to another person by infringing upon them, they shall compensate for medical expenses, nursing expenses, transportation expenses, nutrition expenses, food subsidies for hospitalization, and other reasonable expenses incurred for treatment and rehabilitation, as well as income lost due to absence from work. Where a person causes disability to another, they should also compensate for the costs of assistive devices and disability compensation. If the injury results in death, they shall also additionally compensate for funeral expenses and death compensation.

Article 1191 An employer shall bear tort liability if any of its employee causes damage to others due to the performance of his duties. After the employer assumes tort liability, it may recover compensation from the employee who has committed intentional or gross negligence.

During the period of labor dispatch, if a dispatched employee causes damage to others while performing work duties, the employing unit that accepts the labor dispatch shall bear tort liability; if the labor dispatch unit is at fault, it shall bear corresponding liability.

II. Social Insurance Law of the People¡¯s Republic of China

Article 30 The following medical expenses shall not be included in the payment scope of the basic medical insurance fund:

(1) Those that should be paid from the work-related injury insurance fund;

(2) Those that should be borne by a third party;

(3) Those that should be borne by public health;

(4) Those incurred for medical treatment outside the territory of China.

When medical expenses are legally required to be borne by a third party, but the third party fails to pay or cannot be determined, the basic medical insurance fund shall make advance payments. After the basic medical insurance fund has made advance payments, it has the right to seek reimbursement from the third party.

III. Civil Procedure Law of the People's Republic of China

Article 264 If a person subject to enforcement fails to perform his or her obligation to pay money within the time limit specified in a judgment, ruling, or other legal document, he or she shall pay double the interest on the debt for the delayed period. If a person subject to enforcement fails to perform other obligations within the time limit specified in a judgment, ruling, or other legal document, he or she shall pay a penalty for delayed performance.

IV. Interpretation of the Supreme People¡¯s Court on Several Issues Concerning the Application of Law in the Trial of Road Traffic Accident Damage Compensation Cases

Article 16 If a traffic accident caused by a motor vehicle that is not legally insured with compulsory traffic insurance results in damage, and the parties request the party under a statutory duty to insure the vehicle to pay compensation within the liability limit of the compulsory traffic insurance, the people¡¯s court shall support the request.

If the party under a statutory duty to insure the vehicle to purchase insurance and the infringer are not the same person, and the parties request the party under a statutory duty to insure the vehicle to purchase insurance and the infringer to bear corresponding responsibilities within the liability limit of the compulsory traffic insurance, the people¡¯s court shall support the request.

(Case prepared by: Chen Weifeng and Song Limin from Pudong New Area People's Court)