Articles Posted in Subrogation

Here is an insurance subrogation case from the U.S. Southern District of Texas, Houston Division.  It is a 2018, opinion styled, AXA Insurance Company a/s/o The Museum Of Printing History v. Yoau Electric Co. Ltd., LG Electronics U.S.A., Inc., and Chocolates El Rey Inc.

The museum leased a portion of the place of business to El Rey.  A fire occurred at the subject premises on or about May 10, 2016, resulting in extensive smoke, fire, and water damage to Chocolates’s historical collection and the premises.  AXA, as subrogee, made payments on the loss.  Investigators determined the fire resulted from faulty wiring of an LG air conditioning unit used by El Rey at the premises.  The air conditioning unit was designed and manufactured by LG and Yoau.  AXA as subrogee, asserts that defendants LG and Yoau and Chocolates are responsible for the fire loss sustained by AXA due to breach of express and implied warranties, negligence, and strict products liability.

This is a Rule 12(b)(6) motion to dismiss opinion.  In considering a Rule 12(b)(6) motion, courts generally must accept the factual allegations contained in the complaint as true.  While a complaint attacked by a Rule 12 (b)(6) motion does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.  The factual allegations must be enough to raise a right to relief above the speculative level.  The supporting facts must be plausible enough to raise a reasonable expectation that discovery will reveal further supporting evidence.

The 14th Court of Appeals issued an opinion recently dealing with Texas Workers Compensation law and subrogation.  The opinion is styled, Liberty Mutual Insurance Company v. Buddy J. Trahan.

When as in this case, a person suffers an injury due to the actions of a third party and the injured person is on a job that is covered by Texas Workers Compensation benefits and those benefits as paid, as a general rule the workers compensation carrier has subrogation interests in any recovery made by the injured employee against the responsible third party.

It is important that these subrogation interests are handled properly to keep the injured employee and others from being sued by the workers compensation carrier for monies recovered from the third party.

The United States Southern District of Texas, Houston Division, issued an opinion on July 3, 2018, that is not usually relevant to most claims but in case a situation arises where it is relevant, it is good to know.  The opinion is styled, Zurich American Insurance Company a/s/o Precision Castparts Corp. v. Rajwant Kaur d/b/a Lifetime Cargo, et al.

This case is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction.  The motion was denied.

Precision Castparts (PCC) manufactures structural castings and forged components and owned a Behringer HBM-540A automatic horizontal bandsaw machine used in its business.

Many situations involving insurance claims also involve issues dealing with subrogation and liens.  Here is a little information for insurance lawyers who might have to deal with subrogation.

Subrogation is an element of insurance law.  In 1944, the United States Supreme Court in the case styled, United States v. South-Eastern Underwriters Association, determined that insurance is a form of interstate commerce subject to federal regulation.  Shortly thereafter, Congress passed the McCarran-Ferguson Act, which is found in U.S.C.S., Section 1011.  The McCarran-Ferguson Act granted authority to the states to regulate the “business of insurance.”  Various federal laws continued to govern the “peripherals of the industry”  These peripherals included labor, tax, and securities.  State laws which regulated the core nature of the insurance business thereafter overrode most federal laws to the contrary.  There are numerous papers written designed to analyze the myriad of state and federal statutes and cases on the subject of subrogation, from the standpoint of lawyers and in particular lawyers handling cases involving personal injury.

In an attempt to harmonize the proliferation of insurance policies and laws to protect workers, Congress passed the Employee Retirement and Income Security Act, commonly known as ERISA, in 1974.  ERISA did not vitiate the McCarran-Ferguson’s grant of state regulation; it did spawn a spate of lawsuits trying to determine which state laws qualify as state regulation, which is not pre-empted by ERISA, and which laws deal with peripheral issues, which are preempted by ERISA.  ERISA also recognized that some health plans are self-funded, not funded by insurance premiums, and those plans are exempt from state regulation.

What is subrogation?  This is discussed in a Claims Journal Article.  The Article is titled, Navigating the Anti-Subrogation Rule.

Insurance lawyers understand subrogation policies.  Courthouse News Service published an article on April 18, 2017, that should be read.  It is titled, Justices Back Insurance Subrogation Policies.

Reinforcing insurance subrogation provisions, the U.S. Supreme Court was unanimous Tuesday that federal regulations clearly put state laws second to such policies.

The case stems from efforts by Missouri postal worker Jodie Nevils to keep the proceeds of his car-crash settlement out of the hands of the insurance company that already paid him $6,000.00.

Subrogation is a big issue to be dealt with by Dallas insurance attorneys. The efforts to collect on subrogation rights is discussed in an article published by Bloomberg News in June 2015. It tells of a lawyer instrumental in the collection efforts, George Rawlings.

The article tells us George Rawlings grabs a stack of computer printouts and stretches them six feet across his office, admiring data from police reports of Florida auto accidents: the names of those hurt and the severity of their injuries.

For Rawlings, this information is gold. It’s his job to track these injured people down and collect money from them.

Dallas insurance attorneys will sometimes run across semi-complicated subrogation issues. One of these situations arose in a 1998, Dallas Court of Appeals case styled, Universal Underwriters of Texas v. Transamerica Insurance Group, et al. Here is some of the relevant information from that case.

The case is a subrogation case between two insurance companies who settled a case. Morris was an employee of Race Promotions Management, Inc. d/b/a the Dallas Grand Prix. The Grand Prix had borrowed a 1988 Corvette owned by Young Chevrolet for promotions. Morris was involved in a single car accident which killed his passenger, Bradshaw. Morris was legally intoxicated. Bradshaw’s parents sued Morris and Young Chevrolet alleging negligence and negligence per se against Morris, and negligent entrustment and strict liability against Young Chevrolet. Young Chevrolet brought a third party action against Grand Prix as Morris’ employer. Universal insured Young Chevrolet and Transamerica insured Grand Prix. Transamerica, Universal and others settled with the Bradshaws for $695,000. Universal paid $275,000 on behalf of Young Chevrolet. Allstate paid $20,000 on behalf of Morris under his personal auto policy. Transamerica paid $400,000 in return for which the Bradshaws released Morris, Race Promotions Management, Southway Management Corporation, Grand Prix, Ronald Scott Wheeler, Darryl Snaden, Southern Sports Management, Allstate, Transamerica, and the adjuster. In all, the Bradshaws released ten individuals and entities.

After settling with the Bradshaws, Transamerica brought a declaratory judgment action against Universal asserting that Morris was insured under Universal’s policy. Transamerica’s policy provided that it was excess over any other collectable insurance. The trial court concluded that Transamerica proved that Morris was an insured under Universal’s garage policy, granted Transamerica judgment for the remainder of Universal’s policy limits of $225,000, as well as $30,000 in attorney’s fees. Universal filed this appeal.