Don't Wait Too Long to Settle Small Cases with Med Pay: The Rules Regarding Subrogation Change August 30, 2012
We are writing to advise/remind everyone that the Maine Legislature amended the medical payments subrogation statute this session to delete the subrogation exemption for settlements of $20,000 or less. The amendment takes effect on August 30, 2012, which is 90 days after the Legislature’s May 31, 2012 adjournment.
As you will recall, the medical subrogation statute (24-A M.R.S.A. § 2910-A) was amended in 2009 to include the $20,000 exemption. That amendment prohibited insurers from seeking medical payment subrogation where the settlement was $20,000 or less. It proved helpful in getting small cases settled. Unfortunately, the medical payment insurers saw things differently as they viewed the statute as unfairly preventing them from seeking reimbursement thereby resulting in windfalls to the insureds. Those who practice personal injury law in Maine know that a client’s ability to keep a couple thousand dollars in med pay monies in a small personal injury case hardly constitutes a windfall. Nonetheless, every little bit helps, so if you have a small case that involves med pay, you may want to try to resolve it before August 30, 2012. Keep in mind that the 2009 amendment generated much discussion (and differences of opinion) as to what the effective date really meant. Plaintiff’s counsel typically argued that the amendment applied to any settlements that occurred after the effective date. Insurers generally argued that the amendment only applied to polices written after the effective date. This issue was not definitively resolved and we should expect the same debate with this amendment.
Regardless of when you resolve your case, you should carefully review the statute so that you can ensure that the medical payment provision in your policy complies with the remainder of the statute. Please also keep in mind that even with this year’s amendment, insurance companies exercising the right of subrogation must subtract the pro-rata cost of attorney’s fees.
Because we value our referral relationship, we will continue to provide you with this sort of alert as we find something we think may be helpful to you. As always, please give us a call if you have any questions or concerns about the amendment or about any other legal issue on which you would like a second opinion.