What is subrogation? Law Library interior.

What is Subrogation?

The principle of subrogation allows an entity (an individual or organization) to substitute for another when it comes to rights of recovery, such as for a debt or payment of benefits.  Nearly every personal injury claim involves resolving subrogation claims, sometimes from multiple claimants.

Subrogation in Personal Injury Claims 

In personal injury cases subrogation frequently arises in the context of payment of medical expenses.  A person injured in an automobile accident by the negligence of another person will often receive treatment for accident-related injuries paid for through the injured person’s health insurance benefits.  Ultimately the cost of medical treatment incurred is a part of the injured person’s personal injury claim, and subrogation allows the health insurance company to “step into the shoes” of the injured person to seek reimbursement from the negligent person for any bills it paid for accident-related injuries.

An Example with Numbers

An injured person gets medical treatment after an accident that costs $10,000, which is paid by her health insurance.  She then negotiates a settlement with the negligent person’s automobile insurance company for $12,500, which she feels is fair compensation for what she went through.  As part of the settlement agreement the injured person is required to sign a document releasing the negligent person from all further claims.  After that document is signed the health insurance company can no longer make a claim against the negligent person, and the health insurance company will likely demand to recover its $10,000.00 from the injured person.  This can come as an unexpected and unwelcome surprise to the injured person, who will be responsible to pay the $10,000 out of the $12,500 settlement–leaving her only $2,500.

The Bottom Line

The above example is only one of many ways that subrogation matters arises in personal injury cases.  Subrogation can be complex, and understanding and incorporating these issues into an overall strategy for resolving your claim is vital. There are many instances where the law permits and requires a complete waiver of subrogation claims or a major reduction. Understanding when these rules apply can make a substantial difference in what an injured party “puts in their pocket.” 

Becker Franklin Rovang PLLC attorneys understand the complexities, and will make sure to gather the facts necessary before resolving a personal injury claim to ensure our clients understand exactly which entities need to be repaid, and how much.  Call us today for a free consultation about your injury claim.