In this episode of our educational video series, On Subrogation: Subrogation Rights Even if No Bodily Injury Claim, Rathbone Group Partner Jason Sullivan discusses the viability of Medpay and PIP subrogation when the subrogee’s insured has not submitted a bodily injury claim. 

This episode’s subrogation subject came from one of our viewers, Scott, who asked:

“What do you do when another carrier claims that there is no subrogation right because your insured has not presented a bodily injury claim?”

As Jason explains, the answer is different depending on where your subrogation action began:

Navigating a Subrogation Denial in Different States

To illustrate how the process of subrogating this type of Medpay or PIP claim differs by state, Jason poses a common scenario subrogation professionals encounter, and explains how subrogation rights and routes to recovery without a bodily injury claim are handled in 3 different states.

Scenario: Your insured is in an accident and is injured. You pay out Medpay and PIP coverage to them. Then you send a subrogation demand to the tortfeasor’s carrier and receive a denial. The denial is not based on causation, liability or their policy; it states your insured has not presented a bodily injury claim, so you as their carrier have no right to subrogate and recover losses from them.

How should the subrogating attorney proceed?

The first thing to do is understand the adverse carrier’s economic motivations for refusing the subrogation claim. A claims adjuster on liability side has an ethical duty to lower/mitigate risk. If you have paid out an injury via Medpay or PIP without an associated bodily injury claim, it is a vast, unknown risk. 

The other carrier likely wants to put off the decision until they find out if there will be a BI claim, as it carries less risk. As the subrogating party, this is not ideal, but understanding why an opposing insurer denies a claim can help you better navigate the process of settling the insurance dispute.

Ohio Allows Subrogation without a BI Claim

Subrogation attorneys licensed in Ohio have legislation to lean on in Medpay cases where there is no BI claim. The first thing a subrogee should do after receiving a denial is to reach out to their insured. This is an opportunity to provide positive customer service, as well as find out if their insured has incurred any additional losses through treatment, damages, pain and suffering, etc. that are not included in their policy.

If the insured confirms they did have additional losses, there will eventually be a bodily injury claim, so the reason for the denial will become null. If it is impossible to confirm additional losses or the insured is not interested in submitting a BI claim, subrogating carriers still retain a direct right to pursue recovery from the tortfeasor’s carrier in Ohio, all the way up to litigating the subrogated matter in court.

Washington State Subrogation Laws are Less Clear

In Washington, where PIP subrogation is most common, whether or not a denial to a subrogation letter stands depends on the Made Whole Doctrine:

Say the adverse carrier is a member of intercompany arbitration. You send your subrogation demand. The other carrier argues you have no right to recover losses from them because your insured has not been made whole. The arbitration panel hearing the subrogated matter throws out the claim and affirms that you have no right to subrogation in this case.

What do you do?

Jason advises subrogation counsel handling a matter in Washington state first reach out to their insured to find out do they have a claim and are they made whole. If a carrier can get their insured to sign an affidavit stating that they have been made whole, that will suffice as proof the carrier has the right to subrogate against the tortfeasor’s carrier, even with no bodily injury claim.

However, if the carrier cannot recover that information, subrogation counsel should resubmit the arbitration claim closer to the date that the statute of limitations runs out. Once the statute of limitations expires, the carrier now has presumptive evidence their insured has been made whole, and they should have the right to subrogate against the adverse insurance company.

California Legislation Provides No Direct Cause

California’s subrogation laws regarding Medpay claims without a bodily injury claim are the least-friendly to insurers of these three states. In California, there is no cause for direct action against a tortfeasor in Medpay claims without BI claims. If the adverse carrier sends back a denial to a subrogation lien letter, the court would likely uphold the denial, citing there is no legislated right to subrogate this type of case. 

In California, as the carrier who paid out the claim, you only have the right to reimbursement if it is included in the policy and your insured has pursued a bodily injury claim.

Learn More About Important Topics in Insurance Dispute Law & the Subrogation Process

Rathbone Group is dedicated to remaining at the forefront of subrogation education and technology, advocating insurer’s subrogation recovery rights nationwide. For more information, email us at [email protected]. If you are interested in learning more about subrogation law, visit our YouTube channel and podcast library. Have a question we have not yet answered? Email us at [email protected] to have one of our subrogation attorneys explain it in a future episode of RG’s On Subrogation