What is Subrogation?
If you’ve ever filed a personal injury claim, you might have come across the term “subrogation” and wondered what subrogation is and how it affects your case. When you purchase an insurance policy, it will most likely include provisions for subrogation. Subrogation allows your insurance company to seek reimbursement from the responsible party or their insurer for payments made on your behalf.
As your attorneys, we are legally and ethically obligated to address subrogation claims as part of managing your case. This ensures that any repayments to insurers are handled correctly to prevent future out-of-pocket expenses for you. Let’s take a look at the ins and outs of subrogation in Florida, how it works in different cases, and what steps you can take to maximize your recovery after an accident.
Florida’s Subrogation Law
Under Florida Statute 768.76, insurers that cover expenses like medical bills through health insurance, MedPay, or auto insurance can seek reimbursement if an injured party recovers damages from the at-fault party. Insurers can only claim the amount they originally paid, minus their share of the legal costs and attorney fees incurred by the claimant to secure the settlement.
Claimants are required to notify their collateral source providers before pursuing damages from the at-fault party. This notice must be sent through certified or registered mail, so that all parties are aware of potential reimbursement claims. Florida’s subrogation law protects both the claimant’s right to fair compensation and the insurer’s right to recover paid benefits.
Types of Subrogation in Florida
Florida law recognizes two types of subrogation: equitable and conventional. These categories determine how and when an insurer or other party can recover money they’ve paid on behalf of someone else.
Equitable Subrogation
Equitable subrogation happens when one party pays a debt on behalf of another and then seeks repayment from the responsible third party. It is not based on a contract or agreement but rather on the idea that financial responsibility should fall on the party who caused the harm.
This type comes with clear boundaries that are outlined in the Made Whole Doctrine. The Made Whole Doctrine requires that injured individuals are fully compensated for their losses (e.g., medical bills and lost wages) before anyone else can claim a share of the recovery. For example, if a car accident victim only receives partial compensation for their injuries, an insurer or at-fault party cannot step in and demand repayment.
Equitable subrogation also prevents the negligent party, or tortfeasor, from avoiding full accountability. They cannot assert their right of subrogation until they have fully satisfied their financial obligations to the injured party.
Conventional Subrogation
Conventional subrogation is entirely different because it depends on a contract. It applies when there’s a clear agreement in place, such as an insurance policy, that allows one party to recover funds they paid on behalf of another.
This is commonly seen in situations where an insurance company covers expenses like medical bills or property damage. If the policy includes a subrogation clause, the insurance carrier can recover those payments from the party responsible for the harm.
Unlike equitable subrogation, conventional subrogation doesn’t apply to voluntary payments. For example, if a “good Samaritan” pays off someone else’s debt out of kindness without any legal obligation or contractual basis, they cannot later seek reimbursement.
When Might Subrogation Occur?
An insurer may request reimbursement in many types of accident cases that are caused by negligence. Some examples of personal injury cases where subrogation might happen include:
- A grocery store customer has a slip and fall accident due to a wet floor, and their health insurance pays their medical expenses.
- A pedestrian is hit by a delivery truck, and auto insurance covers their medical expenses.
- A person is bitten by a dog at a public park, and their health insurance covers the treatment.
How Subrogation Works in Florida Car Accidents
Subrogation is common in car accident cases, especially when another driver’s negligence is the cause. However, Florida’s insurance laws can make the process tricky.
Florida drivers are only required to carry Personal Injury Protection (PIP) and Property Damage Liability (PDL) insurance. Bodily Injury Liability (BIL) coverage is not mandatory. Without BIL insurance, it’s harder for injured parties to seek compensation from the at-fault driver’s insurance.
Subrogation typically only applies in Florida car accidents when:
- The injured party suffers a serious injury as defined by Florida law
- The at-fault driver has BIL insurance that can reimburse the injured party’s insurer
Since BIL coverage isn’t required, many injured parties will use their Uninsured Motorist (UM) coverage to cover their losses. After paying UM benefits, the insurer can then use subrogation to recover those payments from the negligent driver or their insurance company.
Under Florida Statute 627.727, UM carriers must act within 30 days of being notified about a proposed settlement with the at-fault driver. They can:
- Approve the settlement and waive their subrogation rights
- Refuse the settlement, pay the injured party the amount offered, and keep their rights
UM carriers also have the right to claim a credit for any payments already made by the at-fault driver’s liability insurance. This prevents injured parties from collecting the same damages twice from health insurance, MedPay, Medicare, or Medicaid.
Florida Statutes for Car Insurance Contracts
Additional state laws that set the rules for when insurers can recover costs can further complicate the recovery process. Under Florida Statute 627.7405, insurers that pay PIP benefits can seek reimbursement, but only under specific conditions. For example:
- If the injured person was riding in a commercial vehicle
- If the injured person was hit by a commercial vehicle while walking or biking
In these cases, the insurer can pursue reimbursement directly from the commercial vehicle’s owner or their insurance.
Additionally, Florida Statute 627.737 limits when an injured person can sue after a car accident. However, if the injuries are serious, such as permanent damage, severe scarring, or death, the injured party may pursue additional damages. The subrogation process may then come into play and allow insurers to recover what they’ve paid out.
How Subrogation Affects Personal Injury Compensation
The process of recovering payments can directly affect how much compensation an injured party retains from a personal injury claim. Most insurance policies include a subrogation clause, which gives insurers the right to seek reimbursement. This means that part of the settlement or verdict may go back to the insurer.
For instance, when an insurer pays for medical expenses related to an accident, they may later assert their right to reimbursement. This will often reduce the net recovery for the injured party. While the gross settlement reflects the total award or settlement amount, the net recovery is what remains after deductions for attorney fees, costs, and subrogation claims.
This process also prevents double recovery for the same damages. If both the insurer and the at-fault driver’s liability insurance cover medical bills, the insurer can recover its portion to avoid duplicating payments. However, in Florida, PIP benefits are exempt from subrogation (unless they meet the requirements mentioned above), which allows the injured parties to keep more of their compensation.
Can You Negotiate a Subrogation Claim?
Yes, negotiating subrogation claims is possible and often beneficial. When you file a claim, insurance companies will want to resolve it and recover their expenses as quickly as possible, so they will most likely be open to discussion.
For example, if a settlement or verdict doesn’t fully cover the injured party’s damages, insurers are often willing to accept a reduced reimbursement amount. An experienced lawyer can advocate on behalf of the injured party and negotiate a lower subrogation lien to help them retain more of their compensation.
Subrogation Waivers in Personal Injury Settlements
A waiver of subrogation is an agreement that stops an insurance company from asserting its subrogation rights. This means the insurer waives its right to seek reimbursement for payments it made on behalf of the injured party. This can also make a difference in how much of the settlement the injury party ultimately retains.
A waiver of these rights can occur in a couple of different ways:
- Negotiated waivers, or agreements made during settlement discussions to waive rights
- A waiver of subrogation clause that may be found in an insurance policy
When a waiver is in place, the injured party keeps more of their settlement since they don’t have to repay the insurer for benefits already paid.
Get Expert Help From Fine, Farkash & Parlapiano, P.A.
After an accident, it can be stressful not knowing how you’ll cover expenses or pay for damages. Now that you understand what subrogation is and how it can affect your settlement, you can move forward with confidence as you protect your financial recovery. Whether you need help negotiating liens or understanding Florida’s insurance laws, our Gainesville personal injury lawyers are here to help.
At Fine, Farkash & Parlapiano, P.A., our team will work to protect your compensation, handle insurance claims, and ensure that the at-fault party is held responsible. Contact us today for your free consultation.
Sources:
768.76 Collateral sources of indemnity. | The Florida Legislature
Navelski v. Int’l Paper Co. | casetext
Florida Insurance Requirements | Florida Department of Highway Safety and Motor Vehicles
627.7405 Insurers’ right of reimbursement. | The Florida Legislature
627.737 Tort exemption; limitation on right to damages; punitive damages. | The Florida Legislature
Mr. Fine was born in New York, New York, and was raised in the northeast, where he studied sociology at Colby College in Waterville, Maine. He then graduated with honors from the University of Florida Levin College of Law in 1976. In law school, he was a member of Phi Kappa Phi Honor Society, was inducted into the Order of the Coif, and graduated in the top 10 percent of his class. Mr. Fine was admitted into the Florida Bar in 1976, the United States District Court for the Middle District of Florida in 1977, the United States District Court for the Northern District of Florida in 1991, and the United States Court of Appeals 11th Circuit in 1982.