Monday, January 30, 2012

PA Subrogation Rules of Thumb- Part II

Continuing the Rules of Thumb for Pennsylvania Subrogation Issues.

Cases Involving Political Subdivisions

As I have written about before, the purpose of the Political Subdivision Tort Claims Act is to insulate local agencies like cities, schools, townships municipalities, etc, from liability except for injuries sustained under a number of exceptions.

Per 42 Pa.C.S.A. §8553(d) any insurance benefits (other than life insurance) received by the injured party are set off in any recovery from a political subdivision. This means that instead of there being a subrogation situation, a claimant simply cannot claim any damages that have already been covered by a policy of insurance. Thus, a person injured by a subdivision action must first collect and exhaust benefits for losses from his insurance company before he can recover damages from the local agency. This does NOT apply to Commonwealth agencies.

Medicare

The omnipotent subrogor. If Medicare pays any benefits related to a claim for damages from a third party, Medicare is subrogated to any individual, provider, supplier, physician, private insurer, state agency, attorney, or any other entity entitled to payment by a third party payer, and can join or intervene in any action related to the events that gave rise to the need for Medicare benefits. Medicare’s right to recover trumps all other sources of benefits. Thus, if you think there is any chance, no matter how slight, that your client received Medicare benefits for their injuries or in that time frame, you must find out from Medicare if they have a claim or risk their wrath.

Medical Malpractice

Governed by the Medical Care Availability and Reduction of Error (MCARE) Act 40 P.S. § 1303. MCARE modified the collateral source rule. Specifically, MCARE has abrogated the collateral source rule except for the following exceptions:

1.  Life insurance, pension or profit-sharing plans or other deferred compensation plans, including agreements pertaining to the purchase or sale of a business.
2.  Social Security Benefits.
3.  Cash or medical assistance benefits subject to repayment by Medicaid/DPW.
4.  Public benefits paid under a Federal statute (Medicare) that provides for a right of reimbursement that supersedes state law. MEDICARE!!!

For example, if a plaintiff suffers injuries due to medical malpractice that were covered, in part by DPW, the plaintiff can (and must) claim and plead the actual benefits paid out by DPW in the malpractice action. Private insurance claims, however, would not be permitted to be recovered or claimed.

The general rule: A claimant who brings a medical malpractice lawsuit is precluded from recovering damages for past medical expenses or past lost earnings incurred up to the time of trial to the extent that such loss is covered by private or public benefit or gratuity that the claimant received before trial. However, if the claimant is legally responsible for paying the incurred medical bills, then he can plead, prove and recover them.

For more on all of these issues, go by the SubrogationHandbook here.

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