If you’ve worked or attended any of the talks I’ve given or BikeLaw 101 Continuing Legal Ed classes I’ve given, or possibly just run into me on the street you’ve probably heard me prattle on about SUBROGATION.
A few weeks ago I posted a story about State Farm suing Rad Bikes over a house that burned down and many folks had …questions… about this… How can State Farm sue Rad? Don’t you have to be the actual injured party to go after someone for damages? I thought Insurance Companies were generally NOT the party…”
It’s all about “SUBROGATION” folks…
Subrogation is fancy legal word that most people have never heard of but which permeates almost every single case we handle where a rider is hurt, or where a cyclist’s bike is destroyed.
So what is SUBROGATION?
It’s basically a devilish clause of your insurance contract that gives your insurer the righti to take the money you pay in premiums … and then stand in line with its hand out, expecting you to give the insurer a big part of your personal injury settlement…
In EVERY single liability or property or health or auto insurance policy issued in the US there is some sort of Subrogation clause. What it says…in essence… is this: If you get hurt or your property is damaged we’ll pay your claim… BUT… if you get money from a 3rd party who is at fault then WE GET FULLY REIMBURSED FOR ALL MONEY WE SPEND ON YOU… Furthermore, we have the RIGHT TO GO AFTER ANY 3rd PARTY who caused the harm.
In the typical bicycle/car crash case the cyclist is injured and gets the medical bills paid by health insurance. If they are lucky enough to have disability insurance they may get part of their salary paid while they are off work. If their bike is destroyed we often find that we get a better recovery by going through the cyclist’s HOMEOWNER’s policy than by pursuing the car driver. If the cyclist has large out of pocket medical bills we can ask the cyclist’s AUTO policy to pay some of them through the “Medical Payments” coverage in the AUTO policy…
Now… you pay a PREMIUM to the company to buy each of those policies…and each of those insurance policies has a SUBROGATION clause so that if the you recover money from the car driver or her/his insurer then those 4 policies demand that you FULLY REIMBURSE the Health, Disability, H/O and Auto carriers at the end of the case.
Further, each of those companies can choose to pursue the car driver on its own. That’s right …even if you say “screw it, I’m not going after the car driver” the insurer can still go forward and sue the car driver directly.
In the State Farm v. Rad Bikes case, that’s exactly what happened.
State Farm insured the house that burned down. State Farm paid big money [“in excess of $250,000” per the lawsuit] as a result of the fire. One would assume that there was an inspection into the cause of the fire, either by the Fire Department/Fire Marshall or by State Farm itself. When I worked as in-house trial counsel for CIGNA and, later, at an aggressive insurance defense firm, SUBROGATION claims were a huge part of the business model… and we pursued them all over. In one CIGNA case CIGNA had underwritten the workers comp coverage in a case where a truck driver had been killed when rolls of steel came off the truck – a lawsuit was filed – I represented CIGNA as we pursued our own $500,000+ subrogation claim for medical bills paid against the outfit that improperly secured the load.
In the typical bicycle v. car crash case the health insurer provides the most aggressive subrogation claim. A cottage industry has developed of companies that do little else but “collect” these claims from injured parties and the lawyers who represent them. Companies like “Optum” and “Rawlings” and “Meridian” have a business model that involves digging into YOUR medical data and presenting a claim to you and your lawyer on behalf United Health Care or Anthem or whoever your insurer is.
Trial lawyers representing injured victims cannot simply ignore these claims – our ethical rules tell us that we are required to deal with them once they let us know they are pursuing the claim. Often the “Subrogation” claims become a BIG part of the recovery. We are trying to get the bad guy’s auto carrier to pay a sum to settle the claim & we try to negotiate with these Subrogated companies to get them to take LESS than the full amount. I mean, YOU are paying ME to get your case resolved, but these greedy SUBROGATION companies stand their at the end, with their hand out expecting 100% full reimbursement… Now, we have some strategies for getting them to the negotiating table and trying to get them to take less than the full amount but, too often, the greedy insurer wants your Premium payments AND your personal injury recovery… Also, the federal legislature has seen fit to PROTECT certain types of subrogation claims by giving these subrogation claims a lot of POWER under federal law… it can get hairy…
Here’s the RAD story
Here’s another RAD story which I also wrote about some months ago –
in this one a 12 yr old girl died while using a RAD bike… this is a products liability claim alleging that “Rad Power markets its e-bikes to children without adequate warnings. In addition, design defects on the RadRunner e-bike … contributed to the accident and her death…” The family has also sued GIRO claiming the helmet was defective. In this case it is quite possible that the girl’s health insurer is also a party, trying to claw back from any settlement or verdict the amount of medical bills it paid…
SUBROGATION – your greedy insurer’s devilish way of saying “Thanks for the Premiums…we want your PAIN AND SUFFERING money too”