Governor Rick Perry signed Texas House Bill 1869 back on May 25, 2013. This ground shaking bill, which took effect on January 1, 2014, affects the contractual subrogation rights of certain health and disability insurers. It is known as the Subrogation Reform Bill. It places a limit on the amount a health insurer (such as Blue Cross Blue Shield, Aetna, Humana, etc.) can recover out of a personal injury settlement in Texas.
A subrogated insurer’s recovery is now significantly more limited under the new law.
Under the new legislation, a health or disability carrier cannot generally recover from a first party (Uninsured/Underinsured Motorist and/or Medical Payments) coverage.
Additionally, when a covered individual (an insured) is not represented by an attorney, a carrier shall recover the lesser of (1) 50 percent of the gross recovery or (2) the total amount of benefits paid. When an insured is represented by an attorney, a carrier shall recover the lesser of (1) 50 percent of the gross recovery minus attorney’s fees and costs or (2) the total amount of benefits paid minus attorney’s fees and costs.
The Made Whole Doctrine does not apply to a recovery secured under this new law.
When the carrier is not actively represented by counsel, an attorney’s fees shall be apportioned by agreement between the carrier and the insured. The carrier is also to be held responsible for a pro rata share of expenses. If an agreement does not exist, the court shall award fees, not to exceed one third of the carrier’s recovery.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas subrogation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
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