Two of Rathbone Group’s subrogation attorneys, Jason Sullivan and Rebecca Wright, presented an automobile track session called “Common Fund: Uncommon Strategies to Account for This Doctrine”. The program focused on how to preserve and maximize subrogation recovery, even when lien reductions may be appropriate.
What is the Common Fund Doctrine?
Sullivan and Wright explain the Common Fund Doctrine and how to use creative approaches to effectively subrogate when this doctrine comes into play. The Common Fund Doctrine states that whenever there is a fund that more than one party lays claim to, that each involved party must share in the pro rata and expense costs. This doctrine becomes especially prevalent in cases of MedPay and PIP subrogation.
In MedPay and PIP subrogation, the insured will pursue a personal injury claim via litigation or alternative dispute resolutions. In the end, there will be a fund set up to pay all the parties with a subrogation lien on the matter. This is the common fund. If the fund is not enough to cover each lien holder’s loss, they will all have to settle on a pro-rata distribution.
Navigating the Nuances of the Common Fund Doctrine
There are distinct differences in subrogation law by state with regard to the Common Fund Doctrine. Some states haven’t adopted the Common Fund Doctrine, while others have “established” it via case law, and still others have set specific statutes.
Insurance companies navigating a common fund require effective subrogation case management that takes into account these legal nuances and uses a creative approach to ensure insurers don’t pay expenses that aren’t applicable to their pursuit of recovery.
If you would like us to present this information to your group, please email us.