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									                            Subrogation Law Update – Auto
                                     Jeff J. Ricke

Auto Owners Ins. Co. v. Omni Indem. Co., 2008 Ky. App. LEXIS 247 (Ky. 2009):
Bankruptcy of tortfeasor does not bar right of perfected Underinsured Motorist
subrogation claim against adverse insurance carrier.

Underinsured Motorist carrier paid $25,000.00, pursuant to the UIM statute, to preserve
its right of subrogation against tortfeasor and adverse insurance carrier. Subsequently,
UIM carrier filed suit against tortfeasor and adverse carrier for subrogation of UIM
payment made to subrogee. During the course of litigation, tortfeasor filed bankruptcy
and UIM carrier failed to file a proof of claim in the bankruptcy case. Tortfeasor was
then dismissed from the UIM case and the adverse carrier remained the only defendant.
Adverse carrier filed a Motion to Dismiss claiming that since tortfeasor had filed
bankruptcy and was dismissed from the pending subrogation action, further litigation
against the adverse carrier was improper and must be dismissed. Trial court and appellate
court agreed and dismissed adverse carrier. Kentucky Supreme Court reversed, stating
that “Auto Owners’ inability to seek subrogation from the tortfeasor has no bearing on its
statutory right to seek subrogation from Omni. The language of the statute does not
inextricably link these two subrogation rights together such that if one is lost, the fate of
the other is determined (citing Coots v. Allstate Ins. Co., 853 SW2d 895 (Ky. 1993).”
Furthermore, “…the bankruptcy of a tortfeasor does not prevent the plaintiff’s claim from
being heard. Once the tortfeasor files bankruptcy, the judgment, if obtained, would be
collectible only by claiming against the insurance company. Just as in the case at bar, the
plaintiff in Padgett had not filed any claims in the tortfeasor’s bankruptcy proceedings,
but was still entitled to recover from the liability insurance carrier up to the limits of the
policy (citing Padgett v. Long, 453 SW2d 272 (Ky. 1970).”

Coburn v. Auto Owners Ins. Co., 2010-Ohio-3327 (Oh 10th D.C.A. 2010): Summary
Judgment/Med-Pay subrogation/Release

Subrogor’s policy provided that if subrogor made payment under the policy for which
right of subrogation is available, subrogee shall cooperate fully with subrogor and do
nothing to prejudice the right of subrogation. “Auto-Owners asserted, to the extent of
any payments made to or on behalf of Coburn, that it had either a subrogation claim or a
contractual right to full reimbursement for the $5,000 in medical payments Auto-Owners
paid Coburn under the policy. Auto-Owners sought summary judgment on its
counterclaim, but when Auto-Owners learned Coburn signed a release with Nationwide,
Auto-Owners filed a supplement to its motion for summary judgment alleging Coburn
prejudiced Auto-Owners' subrogation rights when he signed the release without Auto-
Owners' consent.” (¶ 37) “Coburn nonetheless argued that to recover Auto-Owners had
to prove the money was used to pay medical bills proximately related to the accident. The
trial court rejected Coburn's argument, concluding Coburn impliedly certified the medical
bills he submitted were proximately related to the accident, as Coburn knew he would
commit fraud under R.C. 3999.21 if the bills were not.” (¶38) “See James at 388 (stating
that "[w]here an insured has not interfered with an insurer's subrogation rights, the insurer
may neither be reimbursed for payments made to the insured nor seek setoff from the
limits of its coverage until the insured has been fully compensated for his injuries").
(Emphasis added.)” (¶39) “if Coburn either settles with the alleged tortfeasors without
Auto-Owners' consent and in that way interferes with Auto-Owners' subrogation rights or
he receives payments from a judgment arising from this case, then judgment would be
entered for Auto-Owners in the amount of $5,000 against Coburn.” (¶40) “Coburn also
asserts that, if he is deemed to have settled the case, Auto-Owners had no legal obligation
to pay him after the case was settled, making Auto-Owners a volunteer. The right of
subrogation does not extend to a mere volunteer, but only to one who is obliged to pay
the debt of another. PIE Mut. Ins. Co. v. Ohio Ins. Guar. Assn. (1993), 66 Ohio St.3d 209,
213. Because the validity of the release poses a genuine issue of fact regarding Coburn's
volunteer argument, the trial court prematurely granted Auto-Owners' summary judgment
motion.” (¶41)

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