How Subrogation Works in Minnesota Personal Injury Cases
At the conclusion of a successful personal injury lawsuit, many plaintiffs breathe a sigh of relief only to find themselves blindsided by a subrogation request. When insurance companies come knocking in the hope of recovering costs they may have fronted early in the claims process, some accident victims are left with less money than they had originally counted on.
While Minnesota law affords insurers the right to recover certain costs from a settlement award, there are some rules and limitations claimants should be aware of. Here’s a brief explanation of how subrogation functions in personal injury cases and an overview of how an experienced personal injury lawyer can help you maximize your settlement at the end of the day.
What is subrogation?
Subrogation is a legal process that may let insurance companies reimburse themselves for some of the expenses they covered before a settlement award was issued. Subrogation only happens after a claimant receives compensation from another party, to prevent claimants from being compensated twice for the same losses.
When subrogation is warranted, the process usually looks something like this:
- You file a claim with your own insurance company to help cover certain upfront accident-related costs.
- Your insurer compensates you for those upfront costs.
- You file a personal injury claim or other legal action against the alleged at-fault party in your case.
- You receive a settlement award intended to compensate you for your accident-related losses.
- Your insurance company files for subrogation to recover some or all of their upfront payments from the final settlement amount.
This process ensures claimants do not receive compensation from both their insurance company and the at-fault party for the same losses. Even though this process makes sense on paper, some plaintiffs experience significant sticker shock when their insurance company sends along a subrogation request at the end of the day.
Subrogation and insurance in Minnesota personal injury cases
In personal injury cases, accident victims often require immediate medical treatment that they may or may not be able to afford out of pocket. In a no-fault state like Minnesota – where certain economic losses are covered regardless of fault – victims in these situations usually file claims against their personal health insurance (or PIP policies in car accident cases) because these policies allow for payment regardless of fault.
The problem is that PIP policies are limited in both the types and amounts of damages they cover. Specifically, these policies generally do not cover property damage, and medical benefits are almost always limited to $20,000. This is why injured parties often leverage other forms of insurance coverage to fill in the gaps temporarily.
Think of it this way: If you’re rushed to the hospital after a car accident, you’ll likely provide the hospital with your personal health insurance information. You also should file a claim against your PIP which should pay the first $20,000 of medical bills, and another $20,000 of non-medical losses like lost wages and household services.
PIP subrogation is permitted only in limited, statutorily defined circumstances and is far more restricted than health insurance subrogation.
Common subrogation pitfalls for injury victims
Personal injury cases can take months or even years to resolve. By the time a plaintiff finally receives their settlement, they may have forgotten all about the money their insurance company fronted way back at the beginning of their ordeal.
This is when subrogation causes the most problems for settlement recipients. In the midst of all the celebrating, unsuspecting awardees are suddenly asked to reimburse their insurers without having previously considered how subrogation would affect their take-home pay. At this point in the process, accident survivors may be prone to making a handful of common mistakes, including:
- Agreeing to compensate their insurer for an inflated subrogation amount
- Catering to subrogation requests without taking attorney’s fees and other case expenses into account
- Jumping to settle a subrogation request before a case is fully and finally resolved
- Communicating with insurers about subrogation requests without consulting an attorney
Depending on statute or contract stipulations, some insurers in Minnesota are only entitled to subrogation once a claimant has been “made whole” via civil claims or other means. Other types of policies may claim 100% of what they paid. There are numerous complicated formulas that can affect subrogation rights. If a claimant did not receive compensation for the full value of their losses over the course of their personal injury settlement, or if subrogation itself would impede a plaintiff from being fully compensated for their legally recoverable losses, it may be appropriate to challenge the subrogation request under the law.
How a personal injury lawyer can help
An experienced personal injury lawyer can evaluate whether a subrogation claim is valid and determine whether the amount should be reduced to ensure appropriate recovery is secured under the law. Sometimes, attorneys can negotiate directly with insurance companies to help their clients retain more of the funds they need to provide for their post-accident needs.
It’s not uncommon for subrogation demands to be reduced or – sometimes – eliminated with the right blend of circumstances and effective representation. These situations are handled on a case by case basis, so you’ll want to put your faith in a personal injury attorney who understands the complex nature of subrogation negotiations.
No matter what, the best time to start thinking about subrogation is as soon as you file your very first insurance claim. The longer your case proceeds without factoring in the possibility of subrogation, the less prepared you and your legal team may be for addressing these requests appropriately down the line. Careful documentation of all insurance claims, communications and expenses can provide necessary clarity throughout the settlement process and help to ensure you don’t walk away with less compensation than you need to survive.
Final thoughts
Subrogation can be scary – especially if you’re unprepared. Minnesota law provides some important protections for injury victims with respect to subrogation, but many claimants depend on competent legal professionals to help them advocate for their rights. If you’re currently pursuing a personal injury claim after a car accident, slip and fall accident or other incident in Minnesota, you’ll want to get proactive about preparing for the possibility of a future subrogation request.
At Bradshaw & Bryant, we understand how confusing personal injury cases can be, particularly when there are multiple insurers or subrogation requests involved. That’s why our team works tirelessly to provide clear-headed, compassionate support to accident victims and their loved ones throughout every step of the legal process. We don’t wait for surprises; we figure out up-front who’s going to claim what money from your settlements, and we work hard to keep that amount as low as possible.
If you or someone you love received a personal injury settlement and are now facing subrogation demands from an insurance company, give us a call today or fill out our online contact form so we can talk about what comes next.