“Consumers have been well served by insurance industry practices that authorize insurers, after paying covered claims to an injured policy holder, to be subrogated to the policy holder’s rights to recover damages from those liable for the injury. Courts should resist efforts by the plaintiffs’ bar to undermine those subrogation rights.” Richard Samp, WLF Chief Counsel
WASHINGTON, D.C. The Washington Legal Foundation (WLF) this week urged the U.S. Court of Appeals for the Sixth Circuit in Cincinnati to reject efforts by the plaintiffs’ bar to undermine the well-established subrogation rights of insurance companies. In a brief urging the appeals court to affirm dismissal of a lawsuit seeking a narrowing of insurance carriers’ subrogation rights, WLF argued that recognition of broad subrogation rights leads to lower insurance policy rates and decreases the chance that loss-causers will escape the consequences of their actions.
The lawsuit was filed by an auto insurance policy holder who, following an auto accident caused by the other driver, recovered his medical bills from State Farm (his own insurance carrier) and then won a tort judgment against the other driver. The insured argued that even though his insurance policy included a provision that subrogated State Farm (to the extent of its payments) to his right of recovery against “any party liable” for his injuries, he was entitled to keep medical compensation paid by the other driver’s liability carrier pursuant to the tort judgment, thereby providing him with a “double recovery.”
WLF argued that the insurance policy’s “any party liable” language extended State Farm’s subrogation rights not simply to the tortfeaser (as the policy holder argued) but also to the tortfeaser’s liability insurance carrier. It argued that adopting the policy holder’s narrow construction of this standard subrogation language would upset long-settled expectations, and would lead to increased litigation and higher insurance premiums.
Following its filing, WLF issued the following statement by Chief Counsel Richard Samp: “Consumers have been well served by insurance industry practices that authorize insurers, after paying covered claims to an injured policy holder, to be subrogated to the policy holder’s rights to recover damages from those liable for the injury. Courts should resist efforts by the plaintiffs’ bar to undermine those subrogation rights. The inevitable result would be a reallocation of insurance funds away from compensation payments and toward litigation expenses.”
WLF is a public interest law firm and policy center that regularly litigates in support of civil justice reform, to ensure that unwarranted lawsuits do not drive up costs for all consumers.