Indiana Medical Payment Subrogation Statute
The Indiana Medical Payment Subrogation Statute, Indiana Code 34-53-1-2, requires insurance carriers to use its insured’s attorney as its own attorney for its medical payments lien when an insured files a personal injury lawsuit. The statute requires the insured’s carrier pay the insured’s attorney “the insurer’s pro rata share of the reasonable and necessary costs and expenses of asserting the third-party claim.” Because this becomes a situation over which the insured’s carrier has little control, it is necessary to put the defendant’s carrier on notice of your medical payment claim. The case law establishes that if the defendant’s carrier is on notice of the claim and settles the personal injury claim without including the medical payments lien, it can owe the lien to the carrier. It is also necessary to put the insured’s attorney on notice of the medical payments claim so that he knows you expect him to protect the claim.
The insured’s carrier is to pay its share of attorney fees. The carrier should request a copy of the insured’s fee contract because if the insured contracted with his attorney to pay less than 33 1/3 percent of the claim, the carrier is also entitled to that fee rate. The carrier should also request a breakdown of any fees it is expected to pay its share of.
Indiana Med Pay
We frequently get cases where the other carrier will not resolve a medical payments lien case until they determine the insured has a personal injury claim. Often, this determination is based solely on whether the insured files a personal injury case prior to the statute of limitations. Unfortunately, by that time, the statute of limitations for the medical payments lien has often run. We recommend sending the file to Keis George approximately thirty days before the statute of limitations. We can get the file set up quickly and send a demand letter to the other carrier. If we cannot resolve the case prior to the statute of limitations, we will file suit. If we find the insured has filed his own personal injury case after we file the medical payments lien, we will dismiss the case and send it back to the client to handle with the insured’s attorney. Under Indiana law, the dismissal is mandatory, as the insurer is not allowed to maintain its own lawsuit. The only cost involved is the filing fee.
Indiana Code 34-51-2-19, Diminishment of Subrogation Claims
The other Indiana statute to keep in mind when dealing with the medical payment liens is Indiana Code 34-51-2-19, “Diminishment of Subrogation Claims.” This statute addresses when the amount of a medical payments lien can be diminished in a personal injury case. The first factor is if an insured is comparatively negligent. This would cause his claim to be reduced by the proportion of his negligence which in turn would cause his recovery to be reduced by the same proportion. The lien can also be reduced “by reason of the uncollectibility of the full value of the claim for personal injuries or death resulting from limited liability insurance or from any other cause; the lien or claim shall be diminished in the same proportion as the claimant’s recovery is diminished.”
Indiana Subrogation Laws
It’s important to note here that “recovery” has been determined to mean recovering at trial or through settlement. Meaning, if an insured’s attorney thinks the insured’s case is worth $100,000.00 but settles for $80,000.00, he will argue the insured’s recovery was diminished by 20 percent and therefore the carrier should reduce its lien by 20 percent. Then the carrier should pay its costs and fees after that 20 percent reduction. Courts have acknowledged that this statute provides very little direction as to how this reduction should be disputed. The issue is further complicated by the fact that the carrier is not technically named as a party to the lawsuit for its medical payments lien. As a result, the first notice regarding the settlement in the claim may be the insured’s attorney explaining the case is settled and here is your “recovery”, minus the 20 percent reductions, fees, and costs. When this happens, the courts have stated that a declaratory judgment action is the proper means by which to determine whether the reduction is appropriate. In such an action, it is appropriate for the declaratory judgment court to assess whether the insured was reasonable in reaching a settlement for less than the full damages. The primary issue is not whether the insured’s settlement equaled what would have been awarded in the event of trial but whether the settlement was reasonable under the circumstances. Clearly, this test is subjective and it can be difficult to anticipate the outcome of such an action. If you have questions regarding the Indiana Medical Payment Subrogation Statute, contact one of our Indiana subrogation attorneys.