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Subrogation Secrets: From Claims to Collection

Subrogation permits a company to temporarily possess the rights and duties of another by operation of law or contract and recover a debt against another. Vehicle accidents, product manufacturer negligence, and construction claims are all common forms of subrogation. With so many details and nuances, subrogation cases tend to bring up a lot of questions.

In a recent episode of our popular #AskaPro webinar series, attorneys Michael Chapman, Cameron Deane, and Tiffani Williams spilled the beans on all things subrogation for Ohio, Pennsylvania, New Jersey, Indiana, Kentucky, and Michigan. Moderating this episode was shareholder and Subrogation Group chair Ted Traut. Questions were submitted by registrants, so this session hits on some of the most burning and timely topics.

It’s worth noting that several pieces of valuable information were dropped in this webinar. If you want to dig deep, watching the webinar is your best bet. 

WATCH THE WEBINAR HERE.

Now, let’s dive into our team’s top takeaways!

What are the key things you should have in your subrogation file to increase recovery potential?

Ideally, the insurer hands the attorney their entire file. It’s always better to provide your attorney with more information than less. That allows them to fully evaluate and determine all possible subrogation claims. 

At the minimum, your subrogation file should contain all elements corresponding to liability determination and proof of damages. Being able to prove who is at fault is essential. You’ll want to include documentation and any information you’ve gathered, such as witness statements or police reports. You also want to include your proof of damages, whether that’s vehicle evaluations, appraisal reports, estimates, and photographs. The idea is to support the damages you’re trying to recover. 

If you have external evidence, be sure to include your chain of custody. For example, if you obtained photographs, document how you got them. While it may seem obvious, don’t forget to include contact information for everyone involved. And we mean everyone! This helps your attorney guarantee that everyone can be contacted and helps them arrange for court appearances when necessary.


How should you preserve evidence for your subrogation claim?

Preservation of information is paramount. For all claim types, you’ll want to keep every single correspondence and piece of paperwork. Specifically for product claims, make sure you keep the product and all documentation, from instruction manuals to warranty coverage. Photos are great — video is better. Recorded statements of involved parties are perfect since sometimes the actual litigation doesn’t happen until years after the incident. The earlier you engage an attorney, the better. 

For vehicle cases when you may be going after a manufacturer for a defect, remember that the evidence includes the vehicle. Getting everyone involved prior to the vehicle being repaired or going to salvage can make or break your subrogation case.


How does the determination of fault affect the subrogation claim?

Often times fault is initially determined by the responding officer and handling claims adjuster. This is just the starting point for a subrogation attorney because they’ll look to gather their own evidence. The ultimate determination of fault is the fact-finder, so the judge and jury.

Depending on the type of claim, there can be numerous parties involved, and we want to include everyone. This is especially true when a manufactured product causes harm. The retailer is just one party. There are often several others behind the scenes.

Each state has its own fault/no-fault laws. Since Michigan is a no-fault state, for example, there are some subrogation nuances that don’t apply to surrounding states. This is one of the main reasons hiring an attorney is important. 


What are the applicable statute of limitations for each footprint state?

The statute of limitations can be confusing. It’s not as cut and dry as you may think. Each state has its own laws, and each type of claim has its own statute. If you’re going to remember one message, it’s this: don’t wait before initiating an action. Do it as soon as you can.

If you’re from Michigan, you’ll definitely want to consult an attorney. The statute of limitations on a traditional, uninsured motorist’s action is three years. There are situations, however, where we can go after an uninsured owner of a motor vehicle, regardless if the involved vehicle caused the accident. The applicable statute of limitations is six years. There are different statutes of limitations when insurance companies are involved. They range from one to six years. 

In Pennsylvania, it’s generally a two-year statute of limitations. For bodily injury, in New Jersey, it’s two years, and for property, it’s six years. In Kentucky, product liability and personal injury litigations must be brought within one year. For vehicle accidents, it’s two years. In Indiana, for everything, it’s two years. Ohio, for bodily injury and property, it’s two years. It’s four for damage to real property. Clearly, seeking expert advice is key.

Lastly, remember in many states, construction and product liability claims have a 10 year statute of repose which means no claim exists more than 10 years after the manufacturing of the part, regardless of the applicable statute of limitations. 


What is a good settlement offer?

Your attorney should always start with going after 100%. Maximizing the recovery on every single file is the goal. For uninsured claims, the facts can vary widely, which makes judging an offer as good or bad nearly impossible. That being said, offers around 75-85% are generally the best because going to court comes with its own costs and productivity losses. Your attorneys should always try to get the maximum they can get, accounting for diminishing returns.


What is included in recoverable court costs?

Attorney fees, court costs, and litigation costs are three different concepts. The costs we can recover in Ohio, Indiana, Kentucky, Michigan, Pennsylvania, and New Jersey relate to the filing fees. Most other costs are not recoverable in these states without extensive motion practice


Are self-insurers entitled to subrogation recovery?

Self-insured claims are tricky, to say the least. Ohio, Indiana, and Pennsylvania allow recovery of damages. However, Michigan limits recovery to mini-tort only when the claimant is insured. The issue of mini-tort and self-insured entities is not well settled law and the results could differ from court to court. As a result, it is best to seek counsel for analysis on whether recovery is likely in your specific claim. 


How do you recover court order restitution payments?

In all states, we recommend you seek civil judgment against the at-fault party, regardless of the presence of a restitution order. In Ohio, insurance companies are not eligible to receive restitution payments. In Indiana, Pennsylvania, and New Jersey, an insurer is permitted to recover restitution payments. Despite that you can recover, it’s difficult to monitor collection. In Michigan, technically, the insurance company can recover, but often the payments go to the insured. It depends on the judge’s awareness. In Kentucky, insurance companies are not considered the victim; therefore, recovery of restitution payments is restricted.


What collection activities are available against an uninsured at-fault driver?

In most cases, except Michigan, not having insurance and driving around doesn’t automatically make someone negligible. All states can suspend a driver's license. Frequently, we’ll look at assets and income, garnish wages and attach bank accounts for collect recoveries. 


Are the courts maintaining COVID-19-era remote hearings or have they returned to in-person hearings? How is this impacting insurers?

Most are back in person. Pre-trial or settlement conferences can still be virtual but most other types are in-person. It really depends on the county, judge, and type of trial. Often the attorneys are in-person and other witnesses may appear virtually.
For more, make sure to watch the full Ask a Pro: Secrets of the Subrogation Attorney webinar here. If you have additional questions or want to learn more about Weltman’s subrogation recovery solutions, contact Michael, Cameron, Tiffani, and/or Ted at any time. 

These blogs are not a solicitation for business, and they are not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.

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