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Maryland Subrogation Laws
Sections
State Subrogation
Made Whole Doctrine
Common Fund
Collateral Source Rules
Hospital Lien Act
Medicaid Statute
State Subrogation
YES, recognizes equitable, contractual, and statutory
Roberts v. Total Health Care, Inc., 675 A.2d 995 (Md. Ct. Spec. App. 1996) for a description of all three
Md. Code Ann., Cts. & Jud. Proc. §11-112: unless a subrogee files a petition to intervene in the personal injury action and is independently represented by counsel, the amount permitted to be recovered by a payor for health care benefits/services shall be reduced by:
- Dividing the amount of the total recovery in the claim for personal injury into the total amount of the attorney’s fees incurred by the injured person (may not exceed 1/3); AND
- Multiplying the result by the amount of the payor’s subrogation claim
Made Whole Doctrine
NO
Not explicitly rejected in medical benefits cases specifically, but Stancil v. Erie Ins. Co. rejects it in a homeowners’ insurance case (Stancil v. Erie Ins. Co., 740 A.2d 46 (Md. Ct. Spec. App. 1999)). The court distinguished Stancil from those cases involving health care claims, recognizing that the principles of equity might demand that the insured be made whole before insurer would be entitled to subrogation in the context of health care claims.
Common Fund
YES, as long as insurer doesn’t get its own attorney and intervene in the proceedings.
See reduction formula from 11-112 above
- In Maryland there can be a reduction of a subrogation claim for medical payments made by a health insurance carrier for a pro rata share of attorney fees. The statute allows a 1/3 reduction (See Ann Code Courts and Judicial Proceedings Title 11 Judgments Subtitle 1 §11-112).
- Relevant section is:
“(c)(1) Unless a subrogee files a petition to intervene in the personal injury action and is independently represented by counsel, in a subrogation claim arising out of a claim for personal injury, the amount permitted to be recovered by a payor for health care benefits or services paid or payable on behalf of the injured person shall be reduced by the amount that is determined by:
(i) Subject to paragraph (2) of this subsection, dividing the amount of the total recovery in the claim for personal injury into the total amount of the attorney’s fees incurred by the injured person for services rendered in connection with the injured person’s claim; and
(ii) Multiplying the result under subparagraph (i) of this paragraph by the amount of the payor’s subrogation claim.
(2) The percentage under paragraph (1)(i) of this subsection may not exceed one-third.”
- Md Code Ann, Cts & Jud Proc 11-112 (West).
Collateral Source Rules
Generally evidence will not be admitted, but there are exceptions
Md. Code Ann., Cts. & Jud. Proc. §3-2A-06(f) says that a party may request a special verdict from the judge that itemizes any damages assessed for incurred medical expenses/costs, etc. If the findings/verdict include any amount for such expenses, a party filing a motion for a new trial may object to the damages as excessive on the ground that the plaintiff has been or will be paid, reimbursed, or indemnified for these expenses. The court will then hold a hearing and receive evidence on the objection. If the court finds that the damages are excessive, it may grant a new trial as to damages or deny a new trial if the plaintiff agrees to a remittitur of the excess damages.
Hospital Lien Act
- Code Ann., Com. Law §16-601: A hospital shall have a lien for reasonable and necessary charges on 50% of the recovery/sum which the patient collects in judgment/settlement
- The charges may not exceed those allowed by the State Workers’ Compensation Commission for medical services rendered to individuals coming under the Maryland Workers’ Compensation Act
- The hospital lien is subordinate to an attorney’s lien, the attorney gets paid before the 50% is determined
- Code Ann., Com. Law §16-602: a lien is not effective unless the hospital files notice with the clerk of the circuit court and sends a copy of the notice to the interested parties
- Code Ann., Health-Gen. §19-710: outlines ban on balance billing for HMOs
Medicaid Statute
- Code Ann., Health-Gen. §15-120(a): the department shall be subrogated to the cause of action to the extent of any payments made by the department
- Code Ann., Health-Gen. §15-120(b): an attorney representing a benefits recipient must inform the department before filing a claim against a third party
- Code Ann., Health-Gen. §15-120(c): attorney’s fees must be deducted out of the settlement before the department gets its recovery, the department is not liable for payment or contribution to any attorney’s fees or litigation costs