Fortis Benefits v. Vanessa Cantu and Ford Motor Company, 05-0791,
In The Supreme Court of Texas

Texas Supreme Court Grants Petition For Review - NASP Amicus Brief Filed - Oral Argument Set For November 16, 2006 at 9:00 a.m.

Last December we reported to you on the NASP Amicus brief Gary Wickert filed with the Texas Supreme Court in the case of Fortis Benefits v. Vanessa Cantu and Ford Motor Company, No. 05-0791 (Texas Supreme Court). As you may recall, this case, appealed from the Texas Court of Appeals, involved the application of equitable defenses such as the made whole doctrine to contractual subrogation rights in the health insurance subrogation arena. In summary, the facts are that Cantu filed suit to recover for injuries sustained in a motor vehicle accident on April 12, 1998. Fortis Benefits intervened into the suit, asserting an interest in any recovery by Cantu by virtue of its payment of medical benefits under a health Plan issued to Cantu. This private, non-self-insured Plan contained subrogation and reimbursement language granting Fortis a right of recovery notwithstanding whether the policyholder was made whole. Cantu settled the suit for $1.445 million and claimed she was not "made whole". Fortis was not a party to the settlement.

The trial court found that Fortis could not recover its $250,000 subrogation interest because Cantu was not "made whole", and the Court of Appeals, with a strong dissent by one of the justices, affirmed. Fortis appealed the case to the Texas Supreme Court, and asked if NASP would consider filing an amicus brief in support of the Plan's subrogation rights. Gary Wickert filed an amicus brief on behalf of NASP which set forth in detail that the law in 28 of 33 states which have spoken on this issue, is that equitable/legal subrogation is totally different from contractual subrogation, and that the equitable made whole doctrine can and should be overridden by contract terms in a policy of insurance. The intent of the parties to the insurance contract should be given effect. Even major insurance treatises such as Couch on Insurance state clearly that the general equitable made whole doctrine should only apply "in the absence of contrary statutory law or valid contractual obligation to the contrary". Trial lawyers are watching this case carefully.

We are pleased to announce that on August 25, 2006, the Texas Supreme Court granted our Petition for Review, and immediately scheduled oral arguments for November 16, 2006 at 9:00 a.m.

We are now more optimistic than ever that the Texas Supreme Court will reverse the Court of Appeals decision and follow the lead of the Ohio Supreme Court, which held in Northern Buckeye Educational Counsel Group Health Benefits Plan v. Lawson, 814 N.E.2d 1210 (Ohio 2004), that contractual subrogation provisions overrule equitable doctrines such as made whole and common fund. This success was due, in part, to a NASP Amicus brief filed with the Ohio Supreme Court.

We will keep you updated on the progress of this significant subrogation appeal, which we hope will continue the ripple effect throughout the country and reinforce the importance of the intent of the parties to insurance Plans, policies and contracts, with regard to avoiding the inequitable results of the made whole, common fund, and other "equitable" doctrines. For information on the appeal or for a copy of the Amicus Brief filed by NASP, please contact Gary Wickert at gwickert@mwl-law.com.