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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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Iowa Subrogation Laws
Sections
State Subrogation
Made Whole Doctrine
Common Fund
Collateral Source Rules
Hospital Lien Act
Medicaid Statute
State Subrogation
YES, equitable and contractual
Ludwig v. Farm Bureau Mut. Ins. Co., 393 N.W.2d 143 (Iowa 1986).
Made Whole Doctrine
YES, but only as applies to medical expenses; can contract around
- Iowa recognizes the Made Whole Doctrine but calls it the Full Recovery Rule. The Full Recovery Rule requires that an insurance company’s claim for reimbursement or subrogation is not effective until the insured has been fully compensated for his damages. Brandon v. West Bend Mut. Ins. Co., 681 N.W.2d 633 (Iowa 2004). Iowa recognizes that the resolution of subrogation issues is guided by the equitable principle that an injured party is entitled to be made whole. Allied Mut. Ins. Co. v. Heiken, 675 N.W.2d 820 (Iowa 2004).
- The insured does not have to be made whole with respect to the entire claim – i.e. they don’t have to be made whole with respect to categories of damages such as pain and suffering. As long as the insured is made whole with respect to medical expenses, then the doctrine will apply and the insurer can recover (Ludwig v. Farm Bureau Mut. Ins. Co., 393 N.W.2d 143 (Iowa 1986)).
- “Contract-based subrogation rights…are not subject to the rule which stays their enforcement until the subrogator…is made whole.” Kapadia v. Preferred Risk Mut. Ins. Co., 418 N.W.2d 848, 851 (Iowa 1988).
Common Fund
YES – Iowa Code §668.5(3) states that subrogated persons shall be responsible for a pro rata share of the legal and administrative expenses incurred in obtaining the judgment or verdict.
Collateral Source Rules
Iowa Code §668.14 – Evidence will be admitted in actions under the Comparative Fault Act
Hospital Lien Act
- Iowa Code §582.1A(1): hospital shall have a lien to the amount of the reasonable and customary charges of such hospitals for the treatment, care, and maintenance of patient
- Iowa Code §582.1A(2): if patient provides proof of insurance, the hospital shall submit all charges to patient’s health plan prior to filing notice of the lien
- Iowa Code §582.1A(5): hospital shall be responsible for the pro rata share of the legal and administrative expenses incurred in obtaining judgment/settlement
- Iowa Code §582.2: no lien shall be effective unless written notice is filed prior to the payment of any money to injured person; also must mail a statement to all interested parties
Medicaid Statute
- Iowa Code §249A.54(2): when payment is made by the department for medical care, the department shall have a lien upon all monetary claims the recipient may have against third parties
- Not effective without filing of notice
- Iowa Code §249A.54(5): Procedure for distributing settlement/judgment
- Upon receipt of the judgment or settlement, the court costs and reasonable attorney’s fees shall first be deducted
- 1/3 of the remaining balance shall then be deducted and paid to the recipient
- From the remaining balance, the lien of the department shall be paid
- Any remaining balance will go to the recipient
- Iowa Code §249A.54(3): recipients, medical care providers, and attorneys must notify the department if there is a possible claim against a third party
- Iowa Code §249A.54(1): as a condition of eligibility for medical assistance, a recipient must assign to the department any rights to payments from third parties and cooperate with the department in identifying and providing information to assist the department in pursuing third parties who may be liable
- Any amount collected by the department through an assignment shall be retained by the department as reimbursement