There is a growing and troubling trend in courts across the country: denying subrogated insurance carriers the right to intervene in pending litigation on the theory that the insured’s attorney already “adequately represents” the insurer’s interests. While this assumption may appear superficially convenient, it rarely holds true in practice. Subrogation is complex. Its objectives differ significantly from the insured’s goals. And the insured’s attorney, no matter how capable, is not hired, paid, or ethically obligated to advocate for the insurer’s financial recovery. The recent Da Nolt case is a vivid example of exactly how and why an insurer’s interests can be compromised when a court assumes that the carriers’ interests are adequately protected and the intervention is denied.[1]
In Da Nolt, a school district suffered significant property damage during a roofing project. Its property insurer, CM Regent Insurance Company, paid more than $1.1 million in first-party benefits and immediately retained specialized subrogation counsel to investigate and pursue third-party recovery against the roofing contractor. When the contractor later sued the school district over unpaid contract amounts, and the school district counterclaimed, CM Regent sought to intervene in the litigation to protect its subrogation rights. Despite the insurer already having hired experienced subrogation counsel who had thoroughly investigated the loss and understood the liability landscape and subrogation posture, the trial court denied the intervention, concluding that the school district’s attorney would adequately protect the insurer’s interests.
The Da Nolt case shows just how flawed that assumption was.
While the appeal was pending, the school district and the contractor negotiated a settlement behind the insurer’s back. The very school district which the court had declared was “adequately” representing the interests of the carrier then attempted to declare CM Regent’s subrogation rights satisfied by allocating funds in the settlement and sending the insurer a check. The insurer objected, arguing that the insured had neither sought its consent nor protected its interests, and that a large attorney fee had been carved out of money earmarked for the carrier’s lien. CM Regent further insisted that it had earlier negotiated its own settlement with the contractor, which the contractor had reneged upon. The Superior Court ultimately remanded the case because none of these issues had been evaluated, and the record lacked the settlement agreement, the check, or even the insurance policy containing the applicable subrogation clause.
This is a textbook example of why a subrogated carrier must be allowed to intervene and participate fully in litigation that will determine the fate of its recovery rights. When carriers are excluded, they are forced to rely on the insured’s lawyer to decide strategy, settlement posture, allocation of proceeds, and attorney fee distribution. The insured and insurer may share a broad desire to pursue recovery, but their interests are rarely truly aligned. The insured seeks full compensation for its own damages, strategic leverage in underlying disputes, or closure. By contrast, a subrogated carrier is seeking to recoup money it has already paid and protect its lien, reserve position, and statutory or contractual credit. These interests diverge constantly in litigation, and they diverge sharply during settlement negotiations.
There is also an inherent conflict when the insured’s attorney is expected to protect the insurer’s lien. The plaintiff’s attorney is obligated to advance the insured’s interests, not the carrier’s. That same attorney typically seeks a contingency fee based on the client’s gross recovery, which creates obvious tension when a significant subrogation lien must be paid back. Without intervention, the insurer may find itself in the exact position CM Regent was in: having its lien reduced or diluted by unilateral settlement maneuvers, fee allocations, or questionable distribution decisions. These issues lie at the heart of why courts should be cautious before concluding that a carrier’s interests are adequately protected simply because the insured is litigating.
Intervention provides many substantive and practical advantages. First, it allows the carrier to have its own counsel evaluate liability, damages, and the viability of third-party claims. Relying on the plaintiff’s lawyer to opine on liability or prospects for recovery is rarely advisable, especially when that lawyer’s incentives differ. Second, intervention allows the carrier to monitor the litigation and ensure that the lawsuit is properly developed through discovery, expert analysis, and preservation of evidence. Cases can languish or be strategically narrowed by plaintiff’s counsel in ways that harm subrogation interests. Third, intervention protects the carrier against settlement gerrymandering, where damages are allocated or structured in ways that reduce or eliminate the insurer’s lien. Fourth, intervention prevents the insured from secretly negotiating a settlement that impairs the insurer’s rights or entering into agreements without the carrier’s consent, precisely what occurred in Da Nolt.
Intervention also preserves the carrier’s rights in the event of procedural dismissals, sanctions, non-suits, or limitations issues. Without intervention, a case may be dismissed or settled in a way that extinguishes the insurer’s claims entirely. In contrast, once a carrier intervenes, its claim cannot be dismissed merely because the plaintiff’s claim fails. The intervening carrier becomes a party with an independent right to pursue recovery.
Beyond these concerns, subrogation counsel provides strategic value that plaintiff’s counsel cannot replicate. Experienced subrogation attorneys understand how to maximize statutory credits, navigate indemnity provisions, evaluate insurance layering, and locate additional responsible parties. They know how to protect workers’ compensation files, evaluate borrowed-servant defenses, handle Medicare Set-Asides when necessary, and negotiate full recoveries even in minimum limits scenarios. Subrogation counsel brings expertise and focus that plaintiff’s counsel—who is dedicated to a different set of objectives, does not and cannot provide.
Da Nolt is not an outlier. It is a case study demonstrating the real risks of assuming that subrogation interests can be adequately protected by attorneys who do not represent those interests. The consequences for CM Regent were not theoretical; they were concrete and immediate. The insured settled without consent. The lien was impacted. Counsel fees were taken from the insurer’s portion. The insurer’s own subrogation counsel was sidelined. And the appellate court had to remand the case because the trial court never investigated any of these issues.
Courts that deny intervention often do so with the best of intentions, believing they are streamlining litigation or avoiding duplicative participation. But the cost of being wrong is severe. Failing to allow a subrogated carrier to intervene risks forfeiting the insurer’s recovery rights, undermining important contractual provisions, and encouraging litigation behavior that disadvantages all subrogated interests. Subrogation law has evolved significantly in recent decades, and the days of carriers “sitting back” and relying on plaintiffs’ counsel must be viewed as a cautionary chapter of history, not a model for modern practice.
The lesson from Da Nolt is clear. Subrogated carriers are only truly protected when they are allowed to be present, participate, and be represented by qualified, experienced subrogation counsel. Anything less is a gamble with the insurer’s money, one that courts should not force carriers to take.
For questions regarding subrogation litigation in any state, contact Lee Wickert at leewickert@mwl-law.com
[1] Da Nolt, Inc. v. North East School District Appeal of: CM Regent Insurance Company, 2025 WL 3204378 (Pa. Super. Ct., 2025).
