The term “Subrogation” frequently comes up in personal injury cases, both in Florida and elsewhere. So what does subrogation mean and how does it work?
In simplest terms, subrogation means that one person or party “stands in the shoes” of another as far as right to assert a claim. In the personal injury context, when someone is hurt they often seek medical treatment as a result of their injuries. The injured person then has a right to hold the party causing their injuries accountable–usually by seeking money damages.
If the injured person seeks medical treatment and another party–such as a health insurance company–pays for the treatement, the paying party may be subrogated to the injured person’s claim to seek damages. So if the insurance company pays for the medical treatment, it can step into the shoes of the injured person and sue the responsible party for the amount paid. If the injured person pursues the claim directly, the insurer can require reimbursement form the insured.
The right to subrogation can arise in different ways. These include the right as a general matter of law–called common law subrogation–or as a result of a contract. In the context of the contract right to subrogation, the terms of the contract may require an injured party in settling an injury claim to protect the insurer’s subrogation rights. In other words, in settling the claim, the injured party must pay the insurer from the settlement.
To further understand how subrogation works, an example may help. Susan is entering a large discount store and trips over an uneven portion of the parking lot. She falls and breaks her wrist and has to be taken to the Emergency Room. In seeking treatment, Susan incurs medical bills of $8,500 which are paid by Susan’s health insurance company. Susan’s health plan has a subrogation provision that reads like this:
POLICYHOLDER, his/her heirs and assigns, herewith assigns and conveys to Insurance Company and Insurance company shall be subrogated to any all rights against any entity who may be liable to POLICYHOLDER for any loss or damage for which Insurance Company may pay benefits. Insurance Company may pursue any and all responsible parties at its own expense, and may at its option, bring such action in its own name or that of POLICYHOLDER.
If Susan brings a claim against the property owner where she fell, she is obligated to resolve the insurance company’s subrogation claim either by paying the claim in full or by negotiating the amount so that the insurer releases the claim. If Susan settles and fails to resolve the subrogation claim, she may get sued by her insurer. If Susan decides not to pursue a claim for her injuries, the insurance company could itself bring a claim against the property owner.
Navigating the “ins and outs” of subrogation claims requires an experienced injury attorney. This is especially true since there are defenses that can be raised to avoid or lessen the subrogation claim. This is important since the money paid for subrogation will not go to the injured person. In order to assert these defenses, the injured party must know what to do and when to do it.