In this episode of On Subrogation: Conflict of Law – Statute of Limitations, Rathbone Group partner Jason Sullivan discusses what to do when a subrogation case involves states with conflicting statutes of limitations on subrogation claims and procedures. Which state’s statutes win out? It’s not always straightforward.

A conflict of law arises where two states may have interest in their law being applied to a subrogation claim. For instance, if an Ohio motorist gets into a car accident in Florida, both states may have an interest in their subrogation procedures being adhered to instead of the other’s. Properly maneuvering through these interstate cases requires a knowledge of each state’s statutes of limitations and which one applies to your claim.

Conflict of law is complicated and nuanced, and makes managing a subrogation claim especially difficult if an attorney does not have state-specific knowledge of their insurance laws. 

In general, though, there are two types of laws: substantive and procedural:

  • Substantive law governs parties and their duties in regular conduct.
  • Procedural law is used to enforce substantive law for proper administration of justice.

In most states, statutes of limitations fall under procedural law. As a rule of thumb, courts often follow the substantive laws of the location of the loss incident and the procedural laws of where the subrogation lawsuit is filed. 

If we call back to our Ohio motorist getting into a car accident in Florida and apply it, let’s consider that Ohio has a 2-year statute of limitations but Florida’s is 4. If the recovery claim is filed in Ohio, the courts will adhere to the 2-year statute. If it is filed in Florida, the 4-year statute of limitations applies. 

Complications & Conflicts: Ensuring You’re in the Right Jurisdiction

The importance of knowing which state’s statute of limitations applies cannot be understated. Fail to follow the correct deadlines, and an otherwise viable subrogation action can be rendered null. In every case involving multiple states, the subrogating carrier’s legal team must quickly determine:

  1. Where did the loss occur?
  2. Where does the defendant(s) live?
  3. What state does the policy cover?
  4. Which state has the shortest statute of limitations? (There can be up to three in this context.)

However, every encounter with conflict of law is not as straightforward as the Ohio driver in the Florida accident. Jason offers an example involving Ohio and New York’s conflicting subrogation statutes:

A New York driver on a cross-country trip gets into an accident on their way through Ohio. Ohio has their 2-year statute of limitations, and New York has a 3-year statute. If the suit is filed in Ohio, they will follow Ohio’s substantive and procedural laws. So, if the lawsuit is filed in New York, the substantive rules of Ohio and procedural rules of New York apply, right?

Not this time. New York has a borrowing statute that considers where the incident of loss occurred, compares both states’ statutes of limitations, and adheres to the shortest one. Therefore, in a subrogation case like this, regardless of where the claim is filed, Ohio’s statute of limitations applies.

Protect Your Carrier’s Claims with Specialized Knowledge of the Subrogation Process

Needless to say, with any of 50 states involved, this is a complex area of insurance law. A subrogation team handling a regional or national automotive insurer’s recovery claims must include attorneys with state-specific knowledge. Know each state involved in the loss and which statute of limitations applies so you can do what you need to protect your claim and maximize your potential recovery.Curious to learn more about how to optimize your clients’ subrogation claims? Find more educational material on subrogation topics that matter to you on Rathbone Group’s blog, video series and podcasts. Visit our Education page more information, and reach out at [email protected] or [email protected] to suggest new topics for our subrogation attorneys to cover.