Subrogation in Ohio is an increasingly big problem.
In this post, I’ll share four tips to consider when dealing with Ohio subrogation claims. If you would like to schedule a free consultation to discuss subrogation, please click here or post your question here.
1. Argue That the “Make Whole Doctrine” Applies to Your Case
The Sixth Circuit has recognized the “make whole doctrine.” The Sixth Circuit has held that for the plan language to conclusively disavow the “make whole doctrine,” it must be clear and specific in establishing both the priority to the funds recovered and a right to any full or partial recovery. In the absence of such clear and specific language rejecting the “make whole rule,” the courts will apply the “make whole doctrine” as the default rule. This rule applies to both subrogation and right of recovery provisions. See National City Corp. v. Charles E. Miller, U.S.D.C. Northern District of Ohio, Western Division, Case No. 3:96 CV 7449; Copeland Oaks v. Houpt, 209 F.3d 811, 813 (Sixth Cir. 2000); Marshall v. Employers Health Ins., (1997) WL 809997 (Sixth Cir. 1997); and Henley Printing Co. v. Brantner 243 F.3d 956 (6th Cir. 2001).
In National City Corp., Judge Katz held that where the language of an ERISA plan is ambiguous as to subrogation rights, the “make whole doctrine” governs the parties’ relative priorities in recovery from the tortfeasor. Judge Katz found the following: “The purpose of subrogation is to prevent a double recovery by a subrogor, not to permit an insurer to evade payment for an injury. Where the insured is not fully compensated for his injury, there is no danger that the insured will be unjustly enriched by a double recovery. Therefore, the Court holds that NCC cannot enforce its right of subrogation until the Millers, its insureds, are fully compensated for their injuries.”
In Copeland Oaks, the Court examined the applicability of the “make whole rule” to a subrogation clause in an ERISA plan and held “that in order for plan language to conclusively disavow the default rule, it must be specific and clear in establishing both a priority to the funds recovered and a right to any full or partial recovery.” Because the plan language at issue in Copeland Oaks failed to establish a right to any partial recovery, the “make whole rule” applied.
The Court expanded on the “make whole doctrine” in Marshall, holding the following:
We now hold that in order for plan language to conclusively disavow the default rule, it must be specific and clear in establishing both the priority to the funds recovered and a right to any full or partial recovery. In the absence of such clear and specific language rejecting the “make whole rule” – with clarity and specificity, ultimately determined by the reviewing court – it is arbitrary and capricious for a plan administrator not to apply the default rule.
The Marshall Court specifically distinguished subrogation from a right of reimbursement. Further, it reviewed the subrogation language and right of reimbursement language separately. The Court found that the subrogation language was ambiguous, and did not state whether the beneficiary had to be made whole or if the plan was entitled to the amount it had paid. Adopting the “make whole rule,” the Court stated:
Such a rule is consistent with the equitable principle that an insurer does not have a right of subrogation until the insured has been fully compensated, unless the agreement itself agrees to the contrary.
In Henley Printing Co. v. Brantner 243 F.3d 956 (Sixth Cir. 2001), the Court held that subrogation and the right of reimbursement are two distinct doctrines, and the language governing both should be reviewed separately. The Court acknowledged that it adopted the “make whole rule” with regards to subrogation, but argued that it had never adopted it with regards to reimbursement. The Court clarified that the “make whole doctrine” would apply not only to subrogation provisions but also to the right of reimbursement, holding:
“We see no principled reasons for treating them differently when it comes to the default application of the “make whole rule” to ambiguous provisions.”
In proving that our client has not been made whole, we send a letter to the subrogated carrier. This provides them with: a summary of how our client was injured, the injuries sustained, the total amount of medical bills, the maximum amount of automobile insurance available, the amount of legal work we have done on the case, our legal fee, our expenses to that date and the reasons why we feel the settlement will not fully compensate our client. In support of our argument that our client has not been made whole, we include letters from our client’s treating physicians, which document our client’s pain and suffering, permanent injuries and the extent of any future medical care and treatment.
2. Take Advantage of a Disputed Liability Problem
Always send the subrogated carrier a letter summarizing the facts of the case, as well as the factual issues when liability is being disputed. Be sure to attach copies of any transcripts, accident reports, or any other documentation which reveal that a disputed liability problem exists. Also advise the carrier of any recent settlement offers and provide the carrier with a summary of special damages to document how the disputed liability problem has affected settlement negotiations.
3. Take Advantage of a Proximate Cause Problem
We always send a letter to the subrogated carrier, summarizing the reasons why a proximate cause issue exists in our case. We provide details if a pre-existing medical condition, a subsequent or prior incident, injury, or illness exists affecting causation in our case.
When arguing for a reduction or a full subrogation waiver, we have found that the best approach is to make every conceivable argument that the Defendant tortfeasor would have made in the case. We always make the argument that pre-existing problems, prior falls, injuries at work and prior or subsequent accidents, affect causation in your case. We always send copies of all medical reports from our treating physician reflecting a pre-existing problem, prior or subsequent injuries, illnesses or any other medical problems affecting causation in our case to the subrogation carrier. We also include copies of any defense medical examination reports. Additionally, we summarize for the carrier the history of our client’s illness or injury affecting causation and outline the total medical bills, amount of legal work we have done in the case, expenses in the case and provide a brief history of settlement negotiations to date.
4. Pursue Shared Attorney’s Fees & Expenses
Last, but not least, remind the subrogated carrier that it is required at the very least to share your attorney’s fees and expenses.