Pennsylvania Subrogation Laws

State Subrogation

YES, equitable and contractual. Equitable principles will apply even to contractual subrogation provisions (Valora v. Pennsylvania Employees Benefit Trust Fund, 939 A.2d 312 (Pa. 2007)).

Contractual subrogation can be waived if the insurer does not act diligently to assert its subrogation rights (Valora v. Pennsylvania Employees Benefit Trust Fund, 939 A.2d 312 (Pa. 2007))

75 Pa. Cons. Stat. Ann. §1720: no right of subrogation in motor vehicle accidents

Made Whole Doctrine

YES, no mentions of contracting around (See e.g. Nationwide Mut. Ins. Co. v. DiTomo, 478 A.2d 1381 (Pa. Super. Ct. 1984)).

Pennsylvania recognizes and applies the Made Whole Doctrine, although not very aggressively. (Nationwide Mut. Ins. Co. v. DiTomo, 478 A.2d 1381 (Pa. Super. 1984)). When the insured settles a case, he waives his right to a judicial determination of his losses and establishes the settlement as full compensation for his losses (Associated Hospital Service of Philadelphia v. Pustilnik, 396 A.2d 1332 (Pa. Super. Ct. 1979)).

Valora established that the Made Whole Doctrine is an equitable doctrine. When subrogation claim arises out of a contract, equitable principles continue to apply. (Valora v. Pennsylvania Employees Benefit Trust Fund, 939 A.2d 312 (Pa. 2007)).

Common Fund

YES, 42 Pa. Cons. Stat. Ann. §2503 codifies the common fund doctrine

Parties themselves may agree contractually for the award of counsel fees – Norris v. Com., 634 A.2d 673 (Pa. 1993) (not a subrogation case)

Collateral Source Rules

Applies, evidence is inadmissible

Hospital Lien Act

Pennsylvania does not have a hospital lien act

Medicaid Statute

• 62 Pa. Cons. Stat. Ann. §1409(b)(1): the department shall have the right to recover from such person or insurer the reasonable value of benefits so provided
• CAP: 62 Pa. Cons. Stat. Ann. §1409(b)(11): except as otherwise provided, the entire amount of any settlement is subject to the department’s claim for reimbursement, but in no event shall the claim exceed ½ of the beneficiary’s recovery after deducting for attorney’s fees/costs
• 62 Pa. Cons. Stat. Ann. §1409(b)(2): the department may waive a claim, in whole or in part, or if the department determines that collection would result in undue hardship upon the person who suffered the injury
• 62 Pa. Cons. Stat. Ann. §1409(b)(4)(iii)(C): where the action is brought by the beneficiary and the beneficiary incurs a personal liability to pay attorney’s fees and costs, the department’s claim for reimbursement of the benefits shall be limited to the amount of the medical expenditure for the services to the beneficiary
• 62 Pa. Cons. Stat. Ann. §1409(b)(5): there must be notice to all relevant parties
• 62 Pa. Cons. Stat. Ann. §1409(b)(7): attorney’s fees will be paid first, then the lien will be satisfied