Subrogation in Insurance: What it Means for Pennsylvania Residents
Subrogation is a legal concept that is commonly used in insurance claims. It refers to the right of an insurance company to recover funds that it has paid out on behalf of its policyholder from a third party who is responsible for causing the loss. In other words, subrogation allows an insurance company to step into the shoes of its policyholder and pursue a claim against a party that caused the loss.
In Pennsylvania, subrogation is governed by the state’s Uniform Subrogation Statute. This law sets out the rules for how insurance companies can recover money from third parties, including the steps they must take to assert their rights and the time limits that apply.
One of the key provisions of the Uniform Subrogation Statute is the requirement that insurance companies give notice to the third party of their subrogation claim. This notice must be provided within a reasonable time after the insurance company has made a payment on behalf of its policyholder, and it must contain certain information, including the amount of the payment and the reason for it.
If someone other than the employer negligently or intentionally caused an employee’s injuries or illness, the employee may file a third-party injury claim against that individual or entity.
Unlike workers’ compensation claims, third-party claims allow injured workers to collect additional forms of compensation, such as pain and suffering, loss of consortium, and emotional distress.
Examples of third parties include:
- Drivers responsible for causing a motor vehicle accident
- Government entities
- Manufacturers of dangerous or defective parts
- Property owners
- Subcontractors
If an injured worker prevails in their third-party case, the employer’s workers’ compensation carrier may collect repayment for the benefits it paid out in a process called subrogation. Damages awarded to the injured employee by the workers’ compensation insurer can be partly recuperated.
There is no time limit for subrogation, therefore workers’ compensation insurance companies may attempt to recover the benefits they paid years after a claim is filed.
Because injured workers may file for compensation in both workers’ compensation and third-party claims, there is the potential for double recovery. To prevent this, workers’ compensation insurers have an absolute right to subrogation.
Recently, the Pennsylvania Supreme Court ruled that medical expenses are not considered installments of compensation; therefore, workers’ compensation insurance carriers may not subrogate future medical expenses. Excess recoveries may only be used as a credit against future wage loss or disability payments, not future medical payments.
The Pennsylvania Supreme Court also granted public employers immunity from subrogation claims. As such, if your third-party suit is against a government entity such as the Southeastern Pennsylvania Transportation Authority (SEPTA) or the Pennsylvania Department of Transportation (PennDOT), you are entitled to keep the full amount of your recovery through settlement or trial.
Another important aspect of subrogation in Pennsylvania is the concept of equitable subrogation. This is a form of subrogation that applies where there is no contractual agreement between the insurance company and the policyholder, but the insurance company has still paid out on behalf of the policyholder. In these cases, the insurance company may still be able to recover its payment, but it will need to prove that it acted equitably and in good faith.
It’s important for Pennsylvania residents to understand the concept of subrogation and how it may impact their insurance claims. If you have been involved in an accident or suffered a loss, it’s a good idea to talk to your insurance company about your rights and obligations. Your insurance company may be able to help you recover money from a third party, which can help you cover your expenses and get back on your feet more quickly.
In conclusion, subrogation is a key concept in insurance law that can have a significant impact on policyholders in Pennsylvania. Whether you are a homeowner, a motorist, or a business owner, it’s important to understand your rights and obligations when it comes to subrogation, so that you can make informed decisions about your insurance coverage and your claims. If you are in an accident and need an injury attorney, please call the Law Office of Vincent J. Caputo.
