My client suffered horrible and permanent injuries. The motorist who struck her had minimum limits of insurance. My client’s father, however, being a conscientious and responsible family man, had purchased a substantial policy of UM/UIM (uninsured/underinsured motorist) benefits to protect his family in just such a nightmare scenario. My young client’s Father also paid for a policy of health insurance that covered his child.
Dad was feeling okay about his daughter’s insurance situation until I had to pick up the phone and deliver the bad news. “As the law in Texas stands right now your daughter may not receive any of her UM benefits,” I told him. After a long and painful silence over the phone, Dad managed only to say, “How is this possible?” It’s called Subrogation. I call it a “subrogation interest.” The insurance company usually frames it as a “subrogation right.” The extent of this injustice may largely depend upon the law of your State.
Sadly, the law in Texas suggests that a health insurance plan that pays your medical bills and is governed by a law scarcely known to the public called ERISA, is entitled to FIRST dollars from any and all insurance policies until they are “made whole.” This law comes courtesy of our current Texas Supreme Court in their opinion Fortis Benefits v. Cantu, 234 Sw3d 642 (Tex. 2007). Read it and weep.
The grim irony is that the “made whole doctrine” in Texas at one time rightfully stood for the proposition that the UM policy holder did not have to part with any of her UM benefits unless and until SHE was “made whole.” Now, in their infinite wisdom, the Texas Supreme Court has decided that it is the insurance companies that should be made whole before my client is entitled to receive any of her benefits that her family has dutifully paid for in premiums for years.
So Dad is paying for two policies of insurance. But unbeknownst to him he bought one policy only to pay back the other one. Robbing Peter to pay Paul? More like robbing YOU to pay Peter AND Paul.
Welcome to Texas law. It’s nothing personal according to the powers that be. Just business…and politics. If you wish to change this injustice you might consider voting against the politicians and Judges (yes, they are elected in Texas and other States) who are earnestly reshaping the law to protect insurance companies and hurt you and your family. I know I did.
In the meantime I will continue fighting for every last nickel owed to my client. All is not lost. There is ample legal authority to be marshaled against the Fortis opinion, which is unfair, unjust and plain wrong. The only fair and just result is that my client’s health insurer agrees to waive its “subrogation interest” to recover health benefits paid on behalf of my client and take nothing (except my client’s premiums). The latest court opinion that agrees with me comes from the Federal Third Circuit Court of Appeals in a case pending in the Western District of Pennsylvania. The Third Circuit declares that my client has an equitable defense against the “smash and grab” tactics of her health plan to swipe her UM benefits. Put simply, the Court holds that my irrevocably, permanently and catastrophically damaged and disabled client should be made whole FIRST.