The Supreme Court of Hawaii determined that a subrogation and claims recovery service provider was a “collection agency” under the Hawaii statute and regulations controlling collection agencies, and therefore was required to register as such.  It was further held that the medical benefits plan members - from whom the recovery agent sought reimbursements  - were “consumers,” as protected under the pertinent statutes and regulations.  The court concluded, however, that such members were not “injured”  by the technical violations or the recovery service provider's conduct, and therefore could not maintain the claim asserted.  FULL DECISION

EMPLOYERS' FIRE INS. CO. v. BROOKNER (New York, App. Div. Jan. 22, 2008)

In this recent decision, the Appellate Division of the New York Supreme Court ruled that even though an insured of a subrogating insurance carrier had resolved related litigation arising from the same loss involving the “subrogation target,” the carrier was not precluded from asserting its subrogation claim against such party.  The court noted that although the carrier must stand in the shoes of its insured, due to the fact that the parties were merely co-defendants in the related action, their respective resolved cross-claims in that action did not preclude the carrier from litigating its property damage claim in this separate action.  The pivotal distinction for the court was that the cross-claims for indemnification or contribution were not the “same claim” as the cause of action for property damage asserted in the subrogation action, nor were the cross-claims asserted based upon the “same harm” as asserted in the subrogation action. 
FULL DECISION

GILLETTE v. WURST (Pennsylvania, Dec. 28, 2007) - Run Date 1/21/2008

In this recent decision, the Pennsylvania Supreme Court ruled that an insurance carrier that has provided workers compensation death benefits to an employee's widow is entitled to its subrogation interest in any amount that the widow has the right to recover under the Wrongful Death Statute, 42 Pa. C. S. §8301, and that such interest cannot be defeated if the widow disclaims her right to benefits in favor of her children.  While the widow was free to disclaim and allow those rights to pass to her children, the subrogation lien would follow her rights and attach to those funds received by her children.  NASP's Amicus Committee had filed a brief in this case arguing for this application of the law.
FULL DECISION

AUTO-OWNERS INSURANCE v. UNIDEN AMERICA (U.S.D.C., E.D. Wis., August 3, 2007) - Run Date 9/10/2007

This federal trial court opinion in a fire subrogation matter contains a marvelous review as to whether a cause and origin expert's opinion holds up under Daubert standards.  The court permitted the expert to testify as to the origin of the fire, but not whether the allegedly responsible product was defective at the time it was sold. 
FULL DECISION

VANGUARD CAR RENTAL v. HUCHON (U.S.D.C. S.D. Fla., Sept. 14, 2007) - Run Date 9/24/2007

Federal trial court in Florida struck down as unconstitutional 49 U.S.C. 30106 (often called "Graves Amendment") that was enacted in 2005 to protect car rental companies from state vicarious liability statutes.  This decision, premised on a violation of the Commerce Clause, will act to buttress subrogation claims that had previously been limited by this federal statute in Florida, Connecticut, New York and Maine. 
FULL DECISION

IN RE GUARDIANSHIP OF HOLMES (Mississippi, Sept. 27, 2007) - Run Date 10/4/2007

Supreme Court of Mississippi prevented employee welfare benefit plan's reimbursement from third-party settlement monies paid to minor plan beneficiary; holding that ERISA did not preempt state law requiring chancery court approval of assignment of minor's right to health insurance proceeds. 
FULL DECISION

PREFERRED MUT. INS. CO. v. PINE (N.Y., Oct. 2, 2007) - Run Date 10/11/2007

New York appellate court disallowed subrogation claim by a landlord's carrier against a tenant based upon the particular facts of case and wording of lease.  The decision provides nice overview of possible claims and relevant issues (other than waiver of subrogation) to be considered in similar instances. 
FULL DECISION

SOLECTRON USA, INC. v. FEDEX GROUND PACKAGE SYSTEMS (W.D. Tenn., Oct. 11, 2007) - Run Date 10/18/2007

Federal trial court in Tennessee permitted defendant to remove subrogation action from state court based upon diversity of citizenship pursuant to 28 U.S.C. § 1332, despite the fact that both named parties were incorporated in Delaware.   The court looked past the named parties to the real parties in interest - the subrogating carrier and the defendant, which met the diversity requirements.  The court noted that a necessary underlying fact was that the carrier had paid the entire loss suffered by Solectron and therefore was the only real party in interest on Plaintiff's side. 
FULL DECISION

MULLER v. SOCIETY INSURANCE (Wis. App., Feb. 20, 2007) - Run Date 10/25/2007

On October 31, 2007, the Wisconsin Supreme Court will hear oral argument on a subrogation case involving the application of the "made whole" doctrine.  Earlier this year, the Court of Appeals of Wisconsin had reversed a trial court's ruling that awarded insureds a portion of their subrogating carrier's own settlement funds received from a tortfeasor.  This appellate decision under review provides a balanced overview of the public policy and logistical concerns underlying the "made whole" doctrine and its application in other contexts.
FULL DECISION

BONNER v. BILLEN (Tenn. App., Nov. 5, 2007) - Run Date 11/8/2007

This past week, the Tennessee Court of Appeals decided a workers compensation subrogation matter with significant settlement strategy ramifications. The appellate court agreed that a settlement between the carrier and employee providing for a lien against "any recovery of the employee ... for the expenses for the injuries alleged" would apply against a jury verdict against a tortfeasor that was earmarked for future medical expenses. The case strongly suggests that a carrier and injured worker can make separate agreements concerning the extent of the carrier's lien against future third party funds and that such agreements will be enforceable.
FULL DECISION

POYNTER v. GENERAL MOTORS CORP. (U.S.D.C. E.D. Tenn, Nov. 9, 2007) - Run Date 11/16/2007

This decision involving allegations of spoliation, rendered by a federal trial court in Tennessee this past week, presents a marvelous overview of the analysis courts are often employing these days in similar cases.

The court reviews the validity and limits of various types of independent causes of action and recoverable damages for spoliation of evidence by a third-party that has allegedly prevented the presentation of an otherwise valid product liability claim against a manufacturer. 
FULL DECISION

RYDER v. STATE FARM MUT. AUTO. INS. (Arkansas, Nov. 15, 2007) - Run Date 11/29/2007

In this decision, the Supreme Court of Arkansas addressed the "made whole" doctrine that requires that an insured be "made whole" before a subrogee insurance carrier can recover its subrogation lien. The court decided that such common law created doctrine applied to limit statutorily created subrogation under the state's "med-pay" statute, even though the statute had no such stated limitation. This support for the doctrine - despite the absence of an explicit limitation in the statute itself - demonstrates how this court (like many others) feels, rightly or wrongly, that the "made whole" doctrine is a fundamental underpinning to the equitable law of subrogation. 
FULL DECISION 

 

If you want to recommend a recent decision to the NASP Subro Law Corner, please send an email to Ken Levine at klevine@nldhlaw.com