Monthly Archive for May, 2010

States Can Subrogate but Health Insurers Cannot: Kansas House Bill 2750 & Arizona Senate Bill 1043

Published by August Ober on May 20, 2010 in Auto, Health Care Issues, PIP/MedPay and UM/UIM | 0 Comments

Kansas and Arizona both presently prohibit health insurance companies from seeking subrogation recoveries within their states. Interestingly, both states introduced legislation to allow their state funds or programs to seek recovery of their payments through subrogation and/or reimbursement.

Kansas seeks to allow its state employee fund to pursue subrogation rights and reimbursement from its employees. The Kansas bill would provide the underlying plaintiff attorney a fee of either 33-1/3 or 40% from any recovery by the state health plan. It also establishes coordination of benefits as a matter of law.

Arizona Senate Bill 1043 was enacted on May 6, 2010. The bill creates for the State of Arizona the “Children’s Health Insurance Program” (CHIP). The law grants the State subrogation rights “against any other person or firm to enforce the assignment of medical benefits.” Section 36-2986, subsection A, paragraph 8. With the new CHIP program the legislature has created subrogation rights for the State of Arizona to ensure they remain the payor of last resort. This law is an example of a state using subrogation to further advance public policy and provide benefits to the citizens of its state as well as assistance in controlling costs.

As reported by the Amicus Committee for the National Association of Subrogation Professionals, Weltman, Weinberg and Reis, Co., LPA member.

Condominiums Insurers Cannot Subrogate Against Unit Owners: Kentucky House Bill 391 Enacted

Published by August Ober on May 20, 2010 in Property | 0 Comments

Kentucky introduced and enacted a law relating to Condominium subrogation. House Bill 391, signed into law on April 8, 2010, creates new sections to the state’s Uniform Condominium Act. The new law requires condominium associations to maintain insurance policies and mandates that the insurers of such policies waive their subrogation rights against “any unit owner or member of his or her household.” It also declares that each unit owner to be an “insured person under the policy with respect to liability arising out of his or her interest in the common elements or membership in the association.” With enactment of this bill restricting subrogation, Kentucky follows many other states with similar legislation on their books.

As reported by the Amicus Committee for the National Association of Subrogation Professionals, Weltman, Weinberg and Reis, Co., LPA member.

Louisiana Senate Bill 578

Published by August Ober on May 20, 2010 in Health Care Issues | 0 Comments

The proposed bill limits Health Subrogation & Creates Extra Contractual Liability on P&C Insurers Louisiana is considering a bill to prevent auto, property and workers compensation insurers from paying health plan or health insurers their subrogation liens. The bill requires such P&C carriers to first obtain the written consent of the health plan or insurer’s “insured” or their “legal representative.” The bill provides that any suit to enforce this obligation include payment of the attorney fees for bringing the case. Practically speaking, the bill will make health subrogation nearly impossible. Health carriers’ rights to reimbursement will be clearly dependent on their insureds’ consent. The bill gives no instructions, explanations, information or bases for why and when an insured may withhold consent. Under the present wording, an insured could withhold their consent for a reasonable perceived basis or merely a whim. Such legislative ambiguity will in turn have a chilling effect on health care subrogation in the state. The bill also creates extra-contractual liability on the part of any auto, property or workers compensation companies that pay such healthcare subrogating claims without such written consent. Senate Bill 578 will have hearings shortly in Louisiana.

As reported by the Amicus Committee for the National Association of Subrogation Professionals, Weltman, Weinberg and Reis, Co., LPA member.

Wisconsin: The Collateral Source Rule and Paulson

Published by Michael Dougherty on May 11, 2010 in Auto and Property | 0 Comments

In Fischer the court had an opportunity to further expand upon Paulson v. Allstate Insurance Co., 665 N.W.2d 744 (2003). In Paulson the supreme court held that where plaintiff’s insurance company pays 100 percent of the repair costs, then subsequently settles its subrogation claim with the tortfeasor’s insurer for a reduced amount based on plaintiff’s alleged contributory negligence the plaintiff could not collect the difference under the collateral source rule. Fischer extended Paulson to apply in the arbitration context when the plaintiff’s insurance carrier elects arbitration and whether successful or not found the insured cannot maintain a right to its own claim for the subrogated amount.

Fischer v. Steffen, 2010 Wisc.App.LEXIS 319 (2010)

Date: April 28, 2010

Florida: Equitable Subrogation and Prejudice in Mortgage Claims

Published by Michael Dougherty on May 11, 2010 in Property | 0 Comments

In Aurora the Court of Appeals for the First District of Florida had for the first time an opportunity to determine what constitutes prejudice when the doctrine of equitable subrogation is used to allow a refinancer of a first mortgage to retain the seniority of the first mortgage against a second when the second was not paid off during the refinancing. The court determined that Florida adheres to the modern/liberal view when it comes to the application of the doctrine of equitable subrogation. Under the modern view, as opposed to the traditional view, constructive notice of the second lien to the first does not preclude the application of the equitable subrogation doctrine. The court will only look to whether the second lien holder would be prejudiced if the doctrine of equitable subrogation is applied.

In determining if the second lien holder is prejudiced, the court looks to whether the lien holder was left in a worse position than if the prior lien had not been discharged. The court found that when a first mortgage loan is refinanced for more than the amount due and owing on the first mortgage, the risks assumed by the second lien holder increase without the second lien holder’s consent and prejudice ensues.

Aurora is unique in that the refinanced holder of the first mortgage agreed to cap their claim at the amount of the original first mortgage, despite the fact that the re-finance was for a considerably higher amount. The court found that the doctrine of equitable subrogation applied and permitted the re-financed first mortgage holder to maintain its first position over the second lien holder.

Aurora Loan Services, LLC v. Senchuk, et al, 2010 Fla.App.LEXIS 4869

Date: April 13, 2010