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Chamberlain McHaney, PLLC

Texas Lawyers, Austin & San Antonio

Austin Bar Legislative Update: A Made-Whole Compromise

Bill Would Change Subrogation Rights of Health Insurers in Personal Injury Cases– A Legislative Compromise Between the Fortis Benefits Case and the Made-Whole Doctrine: 

HB 1869 filed by Rep Price would conditionally limit the subrogation rights of a health insurer in a recovery by an injured against a third party tortfeasor.  Under current law, embodied in the Texas Supreme Court’s decision in Fortis Benefits v Cantu, an insurer who pays benefits may contract to recover first money reimbursement out of any recovery realized by a injured party from a party responsible for the injury.  Critics of the Fortis decision say that it unjustly abrogated the long-standing common law “made-whole doctrine,” (the rule that an insurer is not entitled to subrogation of medical benefits unless the insured has been “made whole”) while actually punishing injured parties in some instances.  Although HB 1869 would not restore the “made-whole doctrine,”   it does provide a statutory formula for a balanced division of the monetary recovery between the injured party and his or her health insurer in those cases where there is not enough money to fully compensate the injured party.  The bill has support of both the plaintiffs’ and defense bar.  Supporters of the bill say it will facilitate and speed up settlement of cases when there are limited resources.

HB 1869:  http://www.capitol.state.tx.us/tlodocs/83R/billtext/pdf/HB01869I.pdf#navpanes=0

Fortis Benefits v Cantu:  http://www.supreme.courts.state.tx.us/opinions/HTMLopinion.asp?OpinionID=2001001

The Austin Bar Legislative Update is a membership benefit of the Austin Bar Association