Subrogation Laws in All 50 States - Interactive Map

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Click on your state for a brief summary of that state's laws affecting or impacting subrogation recoveries.

 

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Arkansas Subrogation Laws

State Subrogation Statute

ACA §23-79-146 establishes a statutory right for the insurer to recover subrogation benefits if there is a provision for subrogation in the insurance contract, less reasonable cost of collection and attorney’s fees. Daves v. Hartford Acc. & Indem. Co., 788 S.W.2d 733 (Ark. 1990). Ryder v State Farm Mut. Auto. Ins. Co., 268 S.W.3d 298 (Ark 2007).

In the absence of a specific subrogation clause, medical expense insurer has no right to share in proceeds of insured’s settlement (American Pioneer Life Ins. Co. v. Rogers, 753 S.W.2d 530 (Ark. 1988). (Appears to apply to medical insurance cases only)

Equitable right to insured’s subrogation takes precedence over contractual agreements regarding subrogation when the insured hasn’t been made whole.  Only after the insured has been made whole can contractual subrogation provisions apply. Franklin v. HealthSource of Arkansas, 942 S.W.2d 837 (Ark. 1997).

Made Whole Doctrine

Yes.

  • Green v. Ford Motor Co. 2011 WL 2666198 (W.D. Ark. 2011). Under Arkansas law, the Made Whole Doctrine is recognized and dictates whether an insurer has a subrogation right in settlement proceeds. An insurer’s subrogation right is secondary to the right of the insured. Arkansas courts are permitted to determine whether an insured has been made whole based upon the facts presented and the insured and insurer are not entitled to a trial by jury on this issue.
  • Franklin v. HealthSource of Arkansas, 942 S.W.2d 837 (Ark. 1997). An insurer is entitled to enforce its contractual right of subrogation after the insured has been fully compensated for his total loss, aka when the insured receives more than the total of his or her loss.

Common Fund

Yes. ACA §23-79-146 provides a statutory right for the insured to take reasonable cost of collection and attorney’s fees out of insurer’s subrogation.

However, if an insurer actively involves itself in the case and tries to work with the tortfeasor to resolve the issues, it will not be liable for attorney’s fees. Cockman v. State Farm Auto. Ins. Co., 854 S.W.2d 343, 344 (Ark. 1993).

Cockman v. State Farm Auto. Ins. Co. appears to indicate that you can contract around attorney’s fees.  In this case, the insured had signed an insurance contract that included subrogation provision stipulating that arbitration must be used before litigation and that the insurer must consent to allow litigation to proceed.  The insured did not follow these provisions and thus the insurer was not obligated to pay attorney’s fees out of the subrogation settlement. Cockman v. State Farm Auto. Ins. Co., 854 S.W.2d 343 (Ark. 1993).

Collateral Source Rule

Applies, evidence not admissible

  • There are only four situations in which a collateral source may be introduced: (1) to rebut the plaintiff’s testimony that he was compelled by financial necessity to return to work prematurely or to forego additional medical care; (2) to show that the plaintiff had attributed his condition to some other cause, such as sickness; (3) to impeach the plaintiff’s testimony that he had paid his medical expenses himself; (4) to show that the plaintiff had actually continued to work instead of being out of work, as claimed. Evans v. Wilson, 650 S.W.2d 569 (Ark. 1983).

Hospital Lien Act

ACA §18-46-101-117

  • ACA §18-46-104: A hospital shall have a lien on any claim, right of action, and money to which the patient is entitled because of injury the hospital is treating the patient for and to costs and attorney’s fees incurred in enforcing that lien
    • Case law has held that this provision is to be interpreted liberally and that the hospital’s lien is still enforceable even if the hospital did not first seek recovery from the health insurer (Stuttgart Regional Medical Center v. Cox, 33 S.w.3d 142 (Ark. 2000)).
  • ACA §18-46-103: Liens given in this chapter don’t affect the statutory liens provided for attorneys
  • ACA §18-46-105: Notice is required. The hospital must serve on the patient a written notice of the lien claims as well as on the tortfeasor/their insurer.  Confirmation of the notice must be filed and recorded. There is no timetable for notice as long as the hospital’s claim is not barred by the statute of limitations.  If the hospital knows that the patient is filing a claim against on the tortfeasor, the hospital can, in lieu of or in addition to serving notice, file a notice of claim directly with the court.
  • ACA §18-46-106: If after 180 days following notice/filing in court the lien remains unsatisfied and unreleased and no suit to enforce the lien is pending in any court, then the lien shall be void
  • ACA §18-46-116: a court handling a personal injury case may receive and impound the amount claimed by the hospital lien; or if no amount is named in the notice of the claim of lien, then the court may receive and impound the entire amount claimed by the patient from the tortfeasor or from the insurer or any less amount that the court deems sufficient to pay the amount claimed under the claims of lien.
  • ACA §18-46-117: if the settlement is not sufficient to pay in full the hospital liens, then each hospital or service provider shall share in the amount payable to the patient proportionately
  • ACA §18-46-112: A tortfeasor may not settle the third-party claim within 60 days of receiving notice of the lien, nor at any time after the lien has been recorded, unless the lien has been paid to the provider or has received written notice of a release of the lien.

Medicaid Statute/Code

  • ACA §20-77-301 gives the department the right to recover the costs of services provided to a recipient by instituting legal proceedings against the liable third party, as well as the right to reimbursement for the benefits provided from a third-party liability settlement
    • Ahlborn makes it clear that Arkansas Department of Health Services cannot recover more than the part of the settlement that is for medical expenses
    • ACA §20-77-315(b): The department is entitled to receive the full amount of its medical assistance claim unless the portion of the settlement that compensates for medical expenses is less than the full amount of the department’s claim
  • Attorney’s fees rule: ACA §20-77-303 provides that the court will first order the reasonable litigation expenses and attorney’s fees to be paid from the settlement. Only after can the court then reimburse the ADHS, and then the remainder goes to the recipient
  • ACA §20-77-304 requires that if the recipient brings a suit against a third party, it is the recipient’s job to notify the Director of the Department of Human Services
  • ACA §20-77-312: General exclusion or reduction provisions relating to benefits paid by or eligibility under governmental programs, whether state or federal, shall not be construed to apply to the Medicaid program

Cases

Sentry Ins. Co. v. Stuart 439 S.W.2d 797 (1969). Here, the insured was a passenger in a car driven by Driver. Insured purported to release Driver from liabilities following an accident they were involved in. Insured did this without telling its insurance company, and while Driver knew or should have known that Insured’s insurance company had subrogation rights as a result of the accident. The Supreme Court of Arkansas says that the release by the Insured has no effect on the Insurer’s rights to subrogation. It cites a Maryland case, Cleveland v. Chesapeake & Potomac Telephone Co 225 Md. 47 (1961) where the Maryland Court of Appeals said such an action is a fraud on the insurer.

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