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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Michigan Subrogation Laws

State Subrogation

YES, equitable and contractual

  • Supports subrogation contracts in insurance policies, will construe them narrowly against their drafters. The court has been strict in their interpretation of provisions, holding that when the contract uses the term “subrogation,” the insurer will have only subrogation rights, not reimbursement rights (Seinmann v. Dillon, 670 N.W.2d 2181 (Mich. Ct. App. 2003)).
  • Prior to July 2020 – “The Michigan No-Fault Act, M.C.L. § 500.3103 et seq., bars recovery of medical expenses from third-party tortfeasors arising out of the ownership, maintenance, or use of a motor vehicle.” Steinmann v. Dillon, 258 Mich. App. 149, 153 (2003).
  • The three (3) year personal injury statute of limitations runs from date of insured’s accident. M.C.L.A. § 600.5805. The statute of limitations runs one year after accident to make first-party PIP claim. M.C.L.A. § 500.3145.
  • After July 2020 – Now a tort claim where PIP benefits are not paid is a viable way to seek reimbursement. Sections 500.3116 and 500.3109 would not apply because the tort recovery would not be considered PIP benefits.
    • Out-of-state residents are no longer eligible to recover Michigan no-fault benefits unless they register and insure a motor vehicle in Michigan. M.C.L.A. § 500.3113(c) Out-of-state residents will have to file suit to recover damages, but will still have to prove a “threshold” injury. This change transforms such accidents from first-party PIP claims to third-party tort claims to which §§ 500.3109(1) and 500.3116 are not applicable.
    • Previously, If the out-of-state insurer was certified under § 500.3163, the out-of-state insurer’s policy was conformed to Michigan law to provide Michigan benefits. Now, such policies will not be reformed, and insureds will have to institute tort actions to be compensated. These recoveries are also not subject to § 500.3109 and § 500.3116

Made Whole Doctrine

YES, no indication on contracting around

  • Insurer has no right of subrogation against insured, where insured’s loss exceeds his recoveries from insurer after deducting attorney’s fees and costs (Washtenaw Mut. Fire Ins. Co. v. Budd, 175 N.W. 231 (Mich. 1919)).
  • Currently there is no authority indicating that a Plan/Insurer can contract around the Made Whole Doctrine but there is also no authority indicating that they cannot. The court in Uber emphasized that the Made Whole Doctrine is merely a default rule if the agreement is silent or ambiguous. Uber v TIG Specialty Ins Co, No. 232687, 2003 WL 231321, at *1 (Mich Ct App January 31, 2003). In light of the Made Whole Doctrine being a default rule it seems that one would be able to contract around the doctrine.

Common Fund

YES, common fund applies to insurance subrogation cases, insured must pay pro rata share of reasonable attorneys’ fees (Foremost Life Ins. Co. v. Waters, 337 N.W.2d 29 (Mich. Ct. App. 1983)).

Abston v Aetna Cas & Sur Co, 131 Mich App 26, 31; 346 NW2d 63, 65 (1983).

“The general rule in Michigan prohibits an award of attorney fees as an element of costs or damages absent express authorization by statute or court rule. Among the recognized exceptions to this rule is the award of attorney fees to a party who has created or protected a common fund for the benefit of others as well as himself. The common fund exception is based upon equitable principles.”

Collateral Source Rules

Evidence of collateral source payments IS admissible (MCL 600.6303)

  • Medical Malpractice: C.L.A. § 600.1482 limits recovery to amounts actually paid.
  • Private Insurance: A write-off “has not been paid, nor is it payable, such that it is not a collateral source.” Detary v. Advantage Health Physicians, PC, 2012 WL 6035024 (Mich. App. 2012) appeal denied, 829 N.W.2d 862 (Mich. 2013).
  • Medicare/Medicaid: Medicaid payments are not a collateral source. Shinholster v. Annapolis Hosp., 660 N.W.2d 361 (Mich. App. 2003), aff’d in part, 671 N.W.2d 539 (Mich. 2004).

Hospital Lien Act

Michigan does not have a hospital lien act

Medicaid Statute

  • MCL §400.106(5): The department shall recover the full cost of expenses paid unless they agree to accept an amount less than the full amount. If the individual would recover less against the proceeds of the net recovery than the expenses paid under the act, the state and the individual shall share equally in the proceeds of the net recovery
    • Net recovery means the total settlement/judgment less the costs and fees of litigation
  • MCL §400.106(3): an individual receiving assistance shall notify the state department when filing an action in which the department may have a recovery right
  • Attorneys’ Fees/Reductions: Unclear
    • Abston v. Aetna Cas. & Sur. Co., 346 N.W.2d 63 (Mich. Ct. App. 1983): restates the general Michigan rule that attorney fees are generally not an element of costs or damages absent express statutory authorization, but then states that the common fund doctrine is an exception. The case mentions that some states apply the common fund principle to Medicaid actions/actions against the state department, but did not reach the issue here.  The benefits recipient was not entitled to any attorneys’ fees because they did not provide the statutory notice to the department as required.  Seems to indicate though that attorneys’ fees could be awarded in the proper circumstances.
  • For self-funded Plans, ERISA preempts the No-Fault Act. Glover v. Nationwide Mut. Fire Ins. Co., 676 F.Supp.2d 602, 613 (W.D. Mich. 2009). – For insured Plans, the No-Fault Act is not preempted. See American Medical Sec., Inc. v. Auto Club Ins. Ass’n of Michigan, 238 F.3d 743 (6th Cir. 2001).
  • Recovery from a participant’s settlement or judgment depends on Plan language. – If only subrogation language, then the Plan cannot recover from a participant’s third-party recovery. See Glover, 676 F.Supp.2d at 613 (6th Cir. 2009); Ward v. Wal-Mart Stores, Inc., 194 F.3d 1315, fn. 2 (W.D. Mich. 1999) (unpublished decision) (upholding trial court’s reasoning that subrogation would not entitle Plan to recover).

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