August 2014 Subrogation Newsletter
2nd Circuit Strips Fully-Insured Plans Of Preemption Of New York Anti-Subrogation Law
For the time being, trial lawyers are celebrating the recent 2nd Circuit decision in Wurtz v. Rawlings Co., LLC, which on July 31st, held that a class action suit seeking to enjoin three defendants from obtaining reimbursement of benefits paid under fully-insured health plans based on New York’s anti-subrogation law (§ 5-335) was not preempted by ERISA. New York remains an anti-subrogation state because the trial lawyers’ lobby is having its way with the legislature, which has bent over backwards every step of the way to destroy the important subrogation rights of health plans. The aggressive pursuit and protection of subrogation rights in that state is the only antidote. We remain hopeful that the U.S. Supreme Court will reverse the 2nd Circuit’s Wurtz decision if and when they grant certiorari in this case.
Recovery Of Allocated Loss Adjustment Expenses In Property Subrogation Cases: Subrogating For More Than Your Insured's Property Damage
Insurance benefits society and our economy not only as a financial mechanism to provide indemnity on covered losses, but also to ensure swift closure after a loss has occurred. Insurers, focused on profitability and the bottom line, are aggressively pursuing subrogation of property losses, recouping both their claim payments and their insureds’ deductibles. But what is only now coming into focus is an effort by our industry to subrogate not only for its claim payments, but also any and all Allocated Loss Adjustment Expenses (ALAE) incurred in and necessitated by the claims handling process. The law in this area has been slow to develop, but progressive carriers are more and more insisting on recovery of their claims expenses from responsible third-party tortfeasors.
Unpublished New Jersey Decision Calls Into Question Comp Carrier's Subrogation Rights Against UM/UIM Benefits
A recent unpublished and quite puzzling decision from the New Jersey Superior Court, Appellate Division, threw decades of established New Jersey subrogation law into question when it announced that a workers’ compensation carrier has no subrogation/reimbursement rights on the medical portion of a third-party claim against an UM/UIM carrier. The Dever decision will surely be used as ammunition by trial lawyers so it is important that subrogation professionals know how to counter the questionable opinion.