I. Introduction

• Library: The Law of Automobile Insurance in SC (SCBar) (2015 Ed.)

I. Introduction

This chapter addresses the most common statutory liens that could attach to claims made in personal injury claims involving automobile insurance policies. Statutory liens arise by operation of law, given a specified set of facts and under determinate conditions. In essence, statutory liens involve subrogation rights that import some legislative purpose or governmental policy otherwise discouraged by limitations from both the state and federal judiciary under common law. Insureds receive medical treatment and compensation under a variety of factual situations involving public healthcare providers or public sponsorship. When they do, they implicate these statutory rights of subrogation.

Most health insurers provide for a contractual right of subrogation. By definition, however, statutory liens are not contractual, although they may coexist with their contractual counterparts. Attorneys who disregard subrogation or lien issues do so at their and their clients' risk.

A. "Subrogation"

The principle of subrogation allows an insurer to stand in the shoes of an insured to recover from a liable third party monies paid out to the insured as a result of the third-party's wrongdoing. Thus, if A injures B and C pays for all of the medical treatment for B's injuries, C is subrogated to B's recovery against A provided that a contractual or other legal provision between B and C establishes a right of subrogation.

In Calvert Fire Insurance Co. v. James, the South Carolina Supreme Court announced that this state recognizes both legal and contractual rights of subrogation:

Legal subrogation is not dependent on contract. The doctrine is an equitable one, founded not upon any fixed law, but upon principles of natural justice; its purpose is to require the ultimate discharge of a debt by the person who in equity and good conscience ought to pay for it; and it is to be applied according to the dictates of equity and good conscience in the light of the actions and relationship of the parties.¹

In subsequent cases, the supreme court recognized that South Carolina favors the principle of subrogation, which "is to be liberally and expansively applied."² The court explained that the "remedy is broad enough to include every instance in which one person, not a mere volunteer, pays a debt for which another is primarily liable, and which in equity and good conscience should be discharged by the latter."³

Subrogation is historically an equitable doctrine, and there are...