Subrogation is a term and a legal act that is not well understood even, at times, by other lawyers. Subrogation is an old term and used for hundreds of years in the common law system, essentially substituting one person or entity for another. The most common incidents of subrogation that people are familiar with are car accidents. In a car accident case, the injured party subrogates their rights to the insurance companies in exchange for an immediate payment by the insurance company for their medical bills, loss or work, and other legal areas of compensation. The insurance company will then act as the injured party during the suit and receives their reimbursement from the opposing side. This is common practice and usually goes off without a hitch. However, it is important to have a lawyer look over the subrogation terms, especially where businesses or large amounts are at stake, to better explain your rights to you because it may affect your right in the future to file further claims.
Where subrogation gets a bit messier is when there are government entities involved or when there is a third party. For example, when someone is injured while on the job, there can be multiple entities involved in the accident. Worker’s compensation insurance draws from those funds employers have paid into the insurance system and therefore the employer “pays” the employee who has been injured. However, should there be additional parties involved the employer may use subrogation to file legal claim against the third party entity for the portion of the settlement that the other entity owes as a reimbursement.
Subrogation is how the courts and law insure that someone is paid only once for an injury. The laws on subrogation differ slightly from state to state, but the principle is the same. It can be confusing for anyone who is new to this area of law. Because the act of subrogation removes an injured party’s entitlement to sue, it is important to get all the facts before allowing other parties to sue on your behalf.
Here at Miller, Miller & Menthe we have a great deal of expertise in these matter and can not only explain them to you so that you make correct decisions about how you empower, but we also work with small businesses who may need to use these laws to be reimbursed for payments made to employees or others.