In this episode of Rathbone Group’s informational YouTube series, On Subrogation: Comparative vs Contributory Fault, attorney Jason Sullivan explains how to navigate a subrogation case where your insured may be partially at-fault along with the tortfeasor. It is a dual legal question of (1) whether or not your insured deserves to recover despite sharing fault and (2) how much recovery they should be allowed to pursue.
This article also includes content from our subrogation podcast episode Comparative v Contributory Negligence, where RG attorneys Rebecca Wright and Steven Alsip unpack this important subrogation topic in more detail.
For more On Subrogation podcast episodes, visit our podcast library.
Weighing Fault in a Subrogation Case: Where’s the Line?
Most subrogation claims arise from tort law – a fault-based system aimed to determine which party in an incident neglected its duty of care that led to or directly caused damages. Liability hinges on proving negligence, which is when a party fails to exert reasonable care and it results in physical and/or medical damages to another.
In subrogation, proving negligence is crucial to assessing potential for subrogation recovery, which is why insurance investigations are so thorough. Understanding the case’s jurisdiction is also crucial, because state laws differ on how fault is determined in a subrogation claim.
Pointing Fingers: Who’s More to Blame in a Subrogation Case?
Naturally, the common defense to a plaintiff’s claim is, “Sure, I’m at fault, but you are, too”. And maybe the plaintiff was partially at-fault. How at-fault does the plaintiff need to be to lose the right to subrogation recovery? In these subrogation cases, there are two ways this is handled, and it varies by state:
Contributory Fault System
This is the less common of the two fault systems. In contributory fault, if the defendant proves the plaintiff is even 1% responsible for their own damages, the plaintiff is barred from seeking any recovery. Its roots trace back to English common law, and for much of history, it was the main fault system used by states.
However, the climate shifted in recent decades, as most courts now view contributory fault as unfair for plaintiffs who have only minor fault in an incident. This has led to many states switching to comparative fault in subrogation claims for negligence. Only Washington DC and 4 states still use a contributory fault system for insurance lawsuits: Alabama, Maryland, North Carolina, and Virginia.
Comparative Fault System
This is the most common of the two fault systems. In comparative fault, the responsibility of the plaintiff is weighed against the contested damages. There are two types of comparative fault:
- Pure Comparative Fault: The plaintiff can pursue recovery even if they were at fault, but the damages awarded are diminished in proportion to the amount of fault the plaintiff carries.
- Modified Comparative Fault: The plaintiff can pursue recovery even if they were at fault, but only if the fault was less than 50-51% theirs. If the court determines the fault is less than half theirs, the plaintiff can pursue recovery, but, like pure comparative fault, the award is diminished in proportion to the fault.
Jurisdictions that use modified comparative fault present opportunities for pre-suit resolution of subrogation claims. This is because the 50-51% is such a precise threshold to risk an all-or-nothing judgment, opposing carriers may be more likely to settle the subrogation claim without litigation.
States like Ohio and Indiana are two states who adhere to modified comparative fault when deciding subrogation settlements. Nationwide subrogation law firms like Rathbone Group have the resources to manage subrogation efforts for clients in any state, with attorneys that are familiar with the complexities of subrogation laws by jurisdiction.
A Hypothetical Subrogation Case Illustrating Fault Systems
Say your insured is speeding through a residential neighborhood. The defendant pulls out of a private drive and causes a collision. The defendant saw your insured and thought they had time to pull out, but miscalculated. Let’s not forget, though, that your insured was speeding.
So, how does this subrogation situation play out in the courts?
- In a contributory fault system, if the court thinks that your insured speeding was a part of why the incident occurred – even just 1% – you will be barred from pursuing recovery.
- In a pure comparative fault system, say the court finds that speeding actually makes your insured 75% at fault. You may still pursue recovery, but the damages awarded will be diminished by 75%. For example, a $10000 subrogation claim will result in a $2500 award.
- In a modified comparative fault system, if the court finds your insured 75% at fault, you are barred from pursuing recovery. But if the court finds that your insured is only 25% responsible for the incident, you may still pursue the defendant in subrogation, but the award will be diminished proportionally – by 25%. So, that $10000 claim will result in a $7500 award.
Understanding How Different Fault Systems Affect Subrogation Outcomes
It is important for subrogating counsel to know which fault system the case jurisdiction adheres to, and what it means for the viability of pursuing a subrogation claim against the defendant.
- In a contributory system, it is overwhelmingly likely there is no chance of recovery if there is even a small amount of unsurety about your insured’s negligence.
- A pure comparative system is the opposite. Since you can pursue recovery even if your insured is more than 50% at fault, recovery can happen in most any case. The question then becomes whether the reduced damages are worth the cost of pursuing.
- Modified comparative fault systems are a bit trickier. The subrogation team has to consider the exact circumstances and how much a court may view your insured responsible for the incident. If it is definitely less than half, the recovery claim is likely still worth pursuing.
To add another complication to the mix, attorneys subrogating a case of shared fault in South Dakota have muddy waters to navigate. South Dakota has adopted a slight comparative fault system, where as long as your insured was only slightly negative, you may still pursue the defendant for recovery. This is an unclear legality, but there is case law in the state that narrows down what slight vs gross negligence is.
As with many nuances in insurance law, knowing which fault system is at play in the state your subrogation claim was brought is important for maximizing chances of recovery. Attention to detail and skilled negotiation of fault percentages are crucial skills in a subrogation attorney.
For additional resources on subrogation topics that are important to you, visit Rathbone Group’s media and blog pages to find YouTube videos, podcasts and educational articles that break down complicated subrogation concepts in easy-to-understand ways.