Resolving a personal injury suit can be a long and tiresome process. Subrogation interests can make that process even more tiresome. At its core, subrogation occurs when one party claims the legal rights of another so that they may be reimbursed for any losses incurred. For example, let’s say that you get rear ended at a red light. You call your insurance carrier, and they pay for whatever expenses you may have related to the accident. Your insurance company wants reimbursement from the at-fault party’s insurance carrier. After all, they’re the party that caused the accident. Your insurer has “subrogated” the rights of your policy and can recover the amount that they paid on your behalf.
Rarely, however, do personal injury claims resolve so neatly. A more commonly used option that your insurance provider has as part of your insurance contract is that it can include itself in your lawsuit. This generally means that the insurance provider can seek recovery from the damages that you, the plaintiff, receive. When the settlement or jury verdict renders you compensation, you may be required to pay your insurance provider for covering your expenses.
This might not seem fair, which is why Wisconsin has adopted a made-whole doctrine. The doctrine holds that whenever a plaintiff is not “made whole” by the settlement or jury award that he or she receives, the insurance provider with subrogation rights may be prevented or severally limited in what they can recover from the plaintiff.
To illustrate, let’s hop back into the car accident scenario presented in the first paragraph, adding a bit more details. Suppose you’re severally injured and your medical bills amount to a staggering $100,000. Your health insurance covers almost all of these costs, but when you make a claim against the at-fault driver’s insurance company, you learn that their policy limit is only $35,000. Suppose further, that your underinsured motorist’s coverage has a limit of $75,000, but that limit is often reduced by whatever you receive from the other motorist’s insurance, meaning that you can only recover $40,000 ($75,000 - $35,000 = $40,000) from that policy. After all is said and done, you still receive $75,000, but that falls quite short of the $100,000 in medical expenses that you incurred.
In a situation like this, you may be able to claim that you were not made whole by the money you had received. After all, your expenses far exceed your compensation. In Wisconsin, situations like this - where an injured party’s expenses (in this case $100,000) exceed the limited pool of funds (in this case $75,000) - the injured party will have priority to those funds over the subrogated party, the insurance provider. The insurer would have to “eat” any losses that they incurred. In our scenario, our insurance company would have to “eat” the $25,000 loss ($100,000 (paid by insurer) - $75,000 (max amount available to victim) = $25,000 loss to insurer)
Situations involving subrogation are often more complicated than we have laid out above. Wisconsin has a special hearing, known as a Rimes hearing, in which cases like these are litigated. Navigating these waters can be difficult on your own. Our attorneys at Levine Lyon & Eisberner LLC can help you make a claim after an injury and get you the compensation you deserve, free of any subrogation interests your insurance provider may claim if the situation warrants it. Call now for a free consultation at 1-888-367-8198.