Legal Malpractice Forum
| Publication year | 1981 |
| Pages | 528 |
| Citation | Vol. 10 No. 3 Pg. 528 |
1981, March, Pg. 528. Legal Malpractice Forum
Subrogation, often considered a nuisance by personal injury attorneys, can present significant problems to the plaintiff's attorney as well as to the defendant's attorney. Because of the widespread use of insurance coverage such as Blue Cross/Blue Shield to pay for the out-of-pocket expenses which accompany personal injuries, the concept of subrogation has application to nearly all such damage claims. The failure of the attorney to recognize the application of this concept to bodily injury cases can at best lead to embarrassment and at worst to a legitimate claim of malpractice. Obviously, such claims are not desirable to either the individual practitioner or to our profession as a whole.
The first step in creating a solution is to recognize and to define the problem. In the past, payment to the injured party of direct insurance benefits to compensate that person for the out-of-pocket expenses incurred would not serve to reduce the liability of the tort feasor for personal injury claims. In some circumstances, this application of the collateral source rule resulted, arguably, in double recovery by the injured person.
The utilization of this rule has been justified on many bases, perhaps the most viable of which is the rationalization that since the injured party has been paying insurance premiums for this coverage, there is no double recovery at all. While this concept remains totally valid, the insurance agreements themselves have changed. Subrogation clauses are now found in most, if not all, policies which provide health or disability benefits. While such a provision probably will not reduce the ultimate liability of the tort feasor, it will effectively prevent a second recovery of these medical or income payments.
As such, the inclusion of this clause may very well modify or reduce the recovery of the injured party. Now, the provider of health or disability benefits not only has a right to reimbursement of the totality of the payments it has made, but also, in some circumstances, this right may be superior to the rights of the injured party. (A contrary result is reached under the Colorado No Fault Act and the Colorado Supreme Court decisions thereunder).(fn1) In short, the insurance company has made payments, thus they want their money back from the person who caused the injury.
Furthermore, this concept is not limited in application to insurance contracts written by the private sector. Pursuant to the Colorado Workmen's Compensation Act, the insurance carrier has a statutory right to reimbursement of all benefits it has provided and may exercise this right...
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