Copyright 2009 Strafford Publications, Inc.All Rights Reserved Insurance Law & Litigation Week

February 23, 2009

Pg. 31

495 words


Insurer has subrogation rights to recover medical expenses despite pedestrian's settlement; Group Health Inc. v. Mid-Hudson Cablevision Inc., No. 00273 (N.Y. App. Div. Jan. 22, 2009)

The New York Supreme Court, Appellate Division, Third Department, reversed a trial court's judgment, finding a settlement agreement had no effect on an insurer's subrogation rights to recover the amounts it had paid for a pedestrian's medical expenses from a driver and owner.

Stephanie Weaver was struck and injured by a vehicle while she was walking. The vehicle was driven by Charles Goodman Jr. and owned by Mid-Hudson Cablevision Inc., Group Health Inc., which had issued Weaver a health insurance plan, indicated that it paid approximately $71,000 on her behalf for medical and hospital services rendered.

Weaver brought a personal injury action against Goodman and Mid-Hudson, ultimately settling for $2 million. The settlement agreement contained a general release of all claims that Weaver had or could have against the defendants, and Weaver's agreement to "indemnify and save harmless" the defendants "against any and all further claims for damages, costs, expenses and liens, including but not limited to ... health insurance liens."

It was undisputed that the defendants were aware of Group Health's claim that it had a lien and subrogation rights prior to settlement of the personal injury action. Weaver's counsel, however, indicated to the defendants that the "purported lien[ ] will be satisfied[;] ... I and my client[ ] specifically agree to hold back sufficient funds in my escrow account and to satisfy" the lien. Moreover, the record revealed that although Weaver's counsel informed Group Health of the possibility that the personal injury action would be settled and notified Group Health of the date when the "settlement hearing" would take place, he stated that the settlement would be for pain and suffering only, not damages for medical expenses.

Thus, Group Health did not attempt to intervene in the personal injury action. After Weaver failed to satisfy Group Health's claim, it brought a subrogation action against Goodman and Mid-Hudson to recover the amount paid in connection with Weaver's medical expenses. The defendants moved to dismiss based upon the general release executed by Weaver in their favor. The trial court granted the motion and dismissed the complaint. Group Health appealed.

The appellate division reversed the trial court's judgment. Inasmuch as it was undisputed that the defendants, the third-party tortfeasors, had knowledge of Group Health's subrogation rights, the settlement had no effect on its right to recover against them, and the trial court erred in dismissing the complaint.

Counsel for Group Health : Scott S. Levinson, Korybski & Levinson L.L.P., 212-766-3700, New York.

Counsel for Mid-Hudson : Leah W. Casey, Carter Conboy, 518-465-3484, Albany, N.Y.

Source: Insurance Law and Litigation Week, 02/23/2009

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February 24, 2009

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