This article is a companion piece to this video.
In the above episode of On Subrogation: Involuntary Plaintiff Actions, subrogation lawyer and experienced litigator Jason Sullivan discusses what to do when you receive one of these documents in the course of a subrogation pursuit.
Admittedly, these are some of the most annoying and inconvenient actions to deal with over the course of an insurance dispute. However, how a subrogation professional handles an involuntary plaintiff action can make or break a carrier’s right to make a subrogation claim in the first place.
What is an involuntary plaintiff action? It is an action which compels a party to become a plaintiff in a lawsuit, even if they do not want to be. It is enacted when a court decides that the person/carrier is a necessary party to the lawsuit for said lawsuit to proceed fairly and efficiently.
In the context of subrogation, an involuntary plaintiff action may arise even in the middle of intercompany arbitration, mediation, good-faith negotiations, etc. Unfortunately, when this document comes across your desk, paying it immediate attention and pushing those other efforts to the backburner is critical to preserving the viability of your subrogation claim.
How Does a Court Compel a Subrogating Party to Switch Legal Lanes?
Say you are seeking subrogation for Medpay benefits and have already filed arbitration with the opposing carrier. During this process, a complaint comes to your desk and it is from your insured. There are no UM or UIM exposures in the claim, so why are you and your insured named?
Chances are, this is an involuntary plaintiff claim. And even though you are already in arbitration, this piece of paper has now changed and determined the future of your subrogation claim process. Failing to answer this action may effectively serve as a subrogation waiver, as you will lose the right to pursue reimbursement.
The statutes for involuntary plaintiff actions are set out in Federal Rule 19 of the Federal Rules of Civil Procedures. Per Rule 19, a party can be compelled to become a plaintiff in a subrogation case if:
- in that party’s absence, the court cannot accord complete relief among existing parties; or
- that party claims an interest relating to the subject of the action and is so situated that disposing of the action in the party’s absence may:
- act as a practical matter that impairs or impedes the person’s ability to protect the interest; or
- leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.
What Is the Purpose of Federal Rule 19?
In simple terms, Federal Rule 19 gives the court jurisdiction if there are multiple parties with either an interest in the action, or if the defendant is going to be subject to multiple lawsuits/claims against them for a single incident. Federal Rule 19 serves as a means for the court to combine claims involving multiple parties, which avoids crowding the docket with redundant subrogation lawsuits.
Take the example of a property dispute. Party A says they have claim to the land over Party B and file a lawsuit. However, there are several other parties (C, D, E, etc) that may also have interest in the dispute. To avoid multiple/subsequent lawsuits to the initial A vs B suit, the court may utilize involuntary plaintiff action.
Applying Involuntary Plaintiff Action to the Subrogation Process
How does this legal concept apply to your subrogation claims? Because Federal Rule 19 does not lay out clear guidelines for the niche facet of law that is subrogation, states have expanded upon the statute in order to streamline insurance lawsuits. For instance,
- Ohio adds additional clause that “if a party has an interest to an assignor or assignee, or as a subrogor or subrogee, they can be joined into a party in the lawsuit”.
- Wisconsin requires the plaintiff to bring in any known subrogated parties.
As with most mechanisms in subrogation, understanding state-specific jurisdiction is key to maximizing the potential for subrogation recovery. That requires law firms with counsel experienced in insurance subrogation and licensed in all relevant states.
Protect Your Right to Subrogation: Never Avoid These Annoying Roadblocks
The major thing to understand about involuntary plaintiff actions is that, per Federal Rule 19, they effectively supersede whatever else is going on in a given subrogation lawsuit. Whether you are already in intercompany arbitration, mediation, good-faith negotiation, etc, the moment one of these complaints crosses your desk, your subrogation strategy must shift.
Federal Rule 19 demands that if a party has a subrogation claim and they want to bring their claim they have to do it in the specified litigation forum. What happens if you fail to comply with an involuntary plaintiff judgment?
- Any other avenues of recovery pursuit are nulled, and
- the court can issue a default judgment claiming you did not show up to bring your claim in the appropriate forum so, in effect, there is no claim.
And by ignoring this single document, you have now effectually waived your right to pursue subrogation recovery.
It is also better to cooperate with involuntary plaintiff actions because of the culture of the legal system. Many state judges will not understand subrogation-specific legal tools like intercompany arbitration. From their perspective, it is easier to bring all parties together and have you advocate for your own portion of the claim than it is to let you deal with your specific claim apart from the lawsuit.
In addition to outsourcing subrogation efforts to a dedicated law firm, choosing to become a member of Arbitration Forums allows subrogation claims to be heard in settings where arbitrators are educated in insurance subrogation. This can be especially useful in complex multiparty cases and often offers more finality with less investment (time and money) and less contention.
Get More Resources on Subrogation Process & Procedure with Rathbone Group
For more on this and other important subjects in insurance law and subrogation strategy, visit Rathbone Group’s Education page for access to our free YouTube and podcast series, On Subrogation, where our attorneys break down the nuances of subrogation in concise discussions. If you can’t find what you’re looking for, email us at video@rathbonegroup.com or podacast@rathbonegroup.com to suggest a topic for a new episode.For more information about Rathbone Group and our subrogation services, inquire at info@rathbonegroup.com.