Idaho Subrogation Laws

State Subrogation

Recognizes contractual subrogation in auto insurance context (Smith v. USAA Property and Cas. Ins., 974 P.2d 1095 (Idaho 1999), auto insurance case)

• Idaho Code section 41-2505- subrogation rights of insurer. Rinehart v. Farm Bur. Mut. Ins. Co. of Idaho, 524 P.2d 1343 (Idaho 1974).

• When there is a known contractual subrogation right, the insured must separate from the amount recovered from third party in settlement/judgment the sum it owes to the insurer (Cedarholm v. State Farm Mut. Ins. Companies, 338 P.2d 93 (Idaho 1959))
• Does not appear to be case law regarding subrogation in the medical benefits context.

Made Whole Doctrine

Not recognized subrogation context

The 9^th Circuit has adopted the Made Whole Doctrine into federal common law as a default rule, but only as to ERISA health insurance subrogation. Barnes v. Indep. Auto Dealers Ass’n of Cal. H&W Benefit Plan, 64 F.3d 1389 (9^th 1995).

Common Fund Doctrine

YES (Seiniger Law Office, P.A. v. North Pacific Ins. Co., 178 P.3d 606 (Idaho 2008))

Requirements: “Notice to the insurer that the insured is pursuing an action or settlement that includes the subrogation interest, and that the efforts of the insureds or their attorney resulted in an actual benefit to the insurer. If the insurer declines to participate in the action, it is on notice that it will be required to pay a proportionate share of the attorney fees out of any money recovered on its behalf.”  (Boll v. State Farm Mut. Auto. Ins. Co., 92 P.3d 1081 (Idaho 2004); Miner v Farmers Ins. Co. of Idaho, 116 Idaho 656, 658, 778 P.2d 778, 780, (1989)).

“The insured may retain out of the fund recovered, after the payment of the policy, the costs and reasonable expenses incurred in the litigation.” (Cedarholm v. State Farm Mut. Ins. Companies, 338 P.2d 93 (Idaho 1959)).

Collateral Source Rules

Idaho Code §6-1606: in personal injury actions, judgment may be entered only for damages which exceed amounts received by claimant from collateral sources as compensation for the injury.  Collateral sources shall not include benefits paid under federal programs which by law must seek subrogation,…, and benefits paid which are recoverable under subrogation rights created under Idaho law or by contract

Hospital Lien Act

• IC §45-701: Hospitals are entitled to a lien for the reasonable charges for hospital care, treatment, and maintenance of an injured person
• IC §45-702: Hospital must, within 90 days after the patient has been discharged from the hospital, file in the office of the recorder of the county a verified statement in writing and mail a copy to the interested parties
• Common fund doctrine does not apply – “hospital lien creditors are entitled to payment regardless of the outcome of the litigation and therefore are not required to share in the litigation costs.” (Kenneth F. White, Chtd. V. St. Alphonsus Regional Medical Center, 31 P.3d 926, 932 (Idaho Ct. App. 2001)).
• No statutory or case law mentions of hospital balance billing

Medicaid Statute

• IC §56-209b(4): Recipient shall reimburse department to the extent of the settlement/judgment, minus attorney’s fees and costs, the amount of medical assistance paid by the department
  • Burden is on the recipient to notify the department whenever there is a claim they might be subrogated on
• Reduction: IC §56-209b(6) amount department recovers will be reduced by an amount which bears the same relation to the total amount of attorney’s fees and costs actually paid by the recipient bears to the total amount of the settlement
  • If the settlement does not delineate what portion is medical expenses, it will be presumed that the settlement applies first to the medical expenses in an amount equal to the expenditure for medical assistance paid by the department
  • Court may use the formula set out in Ahlborn if it desires in determining an allocation (State Dept. of Health and Welfare v. Hudelson, 196 P.3d 905 (Idaho 2008), abrogated on other grounds, Verska v. Saint Alphonsus Regional Medical Center, 265 P.3d 502 (Idaho 2011))
• IC §56-209b(5): Department will be reimbursed regardless of whether recipient is made whole