- August 15, 2012 – Exploring the Fiduciary Duties of Plan Administrators Flyer
- August 27, 2012 – The Subrogation Professional’s Guide to Workers’ Compensation Subrogation (Young Professionals Committee – Introductory Level Webinar) Flyer
- August 28, 2012 – End-of-Life Product Liability Losses and Recovery Opportunites Flyer
- August 29, 2012 – How process improvements can increase subrogation recoveries Flyer
- August 30, 2012 – Subrogating Farm Machinery Losses Flyer
- September 04, 2012 – Healthcare Subrogation Law Update Details Coming Soon
- September 11, 2012 – The Past, Present and Future of Using the Process of Elimination Methodology to Prove the Cause of a Fire. Flyer
- September 12 – November 7, 2012 – CSRP Webinar Series Flyer
- September 13, 2012 – Pressurized Tank Explosions Flyer
- September 26, 2012 – Alternative Dispute Resolution – Litigation is not always the only option Flyer
Subrogation attorneys dealing with a high volume of automobile cases often have to litigate cases “on the fly.” Policyholders can be tough to reach and often all the attorney has going into trial is the adjuster’s notes, which range in depth and quality of description. However, occasionally the job is made easier by a traffic case having arisen out of the same incident. The internet provides the Virginia subrogation attorney with a powerful tool: online case records search. A quick search before trial will reveal whether the defendant plead guilty, or was found guilty, of a traffic offense. So what can the Virginia subrogation attorney do with the judgment? VA Code §8.01-389(A1) allows the introduction of said judgment as prima facie evidence. The statute requires the records be “authenticated” by the clerk of the court where it was preserved.
Practically, in most instances if the trial time gives the attorney some time to get into the clerk’s office before court then getting to court 30 minutes early or more will allow time to get a certified copy from the clerk. Most of the time the citation or case was litigated in the traffic court of the same jurisdiction in which the present civil case is being tried. Obviously, if it is a different court, or if trial time is first thing in the morning, counsel may have to go by court before he trial on another day or request it by mail if the clerk’s office obliges.
Subject of the Subrogation Statute
One of the few codified mentions of subrogation in Virginia deals with medical services rendered arising out of negligence. VA Code § 8.01-66.4 allows for subrogation where “any person, firm or corporation who may pay the charges for which a lien is provided in §8.01-66.2 shall be subrogated to such lien.” The lien in question is one automatically created by Virginia law. The lien arises when one receives medical care arising from a negligent act. The provider of the services has a lien on the injured person’s claim against the negligent person or entity.
VA Code § 8.01-66.2 includes the following:
- hospital, public or private
- nursing home
- registered nurse
- registered physical therapist in this Commonwealth
- receives medicine from a pharmacy
- ambulance service
Limitations on Recovery
Covered entities are limited to the ” just and reasonable charge for the service rendered, but not exceeding $2,500 in the case of a hospital or nursing home, $750 for each physician, nurse, physical therapist, or pharmacy, and $200 for each ambulance service.”
A Virginia subrogation attorney handles a range of issues, some more than others. Cases involving neighbors’ trees causing damage to vehicles or homes occur more frequently than one would think. It makes sense considering the geography of our state. Virginia is home to a variety of large deciduous and coniferous trees which are a marvel to view, but can cause real problems with both their branches and their root systems.
The seminal case in Virginia, Fancher v. Fagella, 650 S.E.2d 519 (Va., 2007), clearly settles the question of whether the owner of the encroaching tree is responsible for the damage caused to his neighbor’s property. The parties in the suit were neighbors, and still could be, in adjoining town homes in the County of Fairfax. Joseph Fagella had a large sweet gum tree growing on his property that Richard Fancher alleged was damaging his property and that the tree constituted a noxious nuisance. Specifically, Fancher alleged that the tree was damaging his retaining wall, the rear foundation of his house and rendering the steps to his house ineffectual due to root encroachment. Fancher attempted self-help by attempting repair and cutting back branches and roots, but they always grew back. He prayed for an injunction requiring the removal of the tree and an award of damages in compensation for repairs made to the wall and the foundation. At the hearing expert testimony was presented and it was established that the trunk of the tree was located on Fagella’s property. The arborist testifying stated that the sweet gum is native to the area, that it grows to “incredible heights of 120 to 140 feet” at maturity and would eventually reach a trunk diameter of 4 to 6 feet. The arborist testified that the tree was deciduous, dropped “spiky gumballs,” had a “heavy pollen load,” an “extremely invasive root system” and a “high demand for water.” His opinion was that the tree was presently “only at mid-maturity,” that it would continue to grow, and that “[n]o amount of concrete would hold the root system back.” The root system was, in his opinion, the cause of the damage to the retaining wall and the pavers and “in the same line as those cracks to the wall and the foundation.” The arborist stated that the tree was “noxious” because of its location and that the only way to stop the continuing damage being done by the root system was to remove the tree entirely, because the roots, if cut, would grow back. After the presentation of evidence was concluded Fagella made a motion to strike the prayer for injuctive relief, based upon the Virginia Supreme Court case Smith v. Holt, and the motion was sustained. Fancher filed an interlocutory appeal to the Virginia Supreme Court, certiorari was granted.
The Virginia Supreme Court had to settle which of the two developing legal doctrines Virginia would adhere to when presiding over cases dealing with trees and neighboring properties: (1) the Massachusetts Rule or the (2) Virginia Rule. The Massachusetts Rule limits the victim to self-help and provides no remedy at law when plants are encroaching upon a neighbor’s property. The Virginia Rule provides that encroaching roots and plants can be classified as a “noxious nuisance” when they cause actual harm or pose actual danger to persons or property. In other words, the offending plants cannot merely drop flowers, cast shade or cause other minor annoyances. Ultimately, the Virginia Supreme Court adopted the “Virginia Rule” and sustained the injunction against Fagella.
The Texas Supreme Court overturned the Austin Court of Appeals in Texas Health Ins. Risk Pool v. Sigmundik, 315 S.W.3d 12, 14 (Tex.2010) that ruled the “made whole” doctrine was inapplicable in a subrogation action where a contract clearly lays out a right to subrogation. This reversal is in line with a previous case, Fortis Benefits v. Cantu, 234 S.W.3d 642 (Tex.2007), standing for the same proposition.
Despite this clear line of case law, the Austin Court of Appeals erred on the side of the “little guy” in the situation where a trial court attempted to allocate the entirety of an $800,000.00 settlement in a negligence suit to the family of an individual who was injured in an oilfield explosion and spent 52 days in the hospital before eventually succumbing to his extensive injuries. When the insurance company intervened in the action and asserted a $330,000 lien on any recovery obtained by the family the trial court ruled that where subrogation claims work an injustice they should not be allowed. The court cited the financial hardship of the family and the solid financial position of the insurance company. The Austin Court of Appeals concurred with the trial court’s reasoning and affirmed. Ultimately, the Supreme Court overturned the ruling and cited its own cases to the contrary.
These cases are instructive for the Virginia subrogation counsel facing sympathetic trial judges who may be tempted to ignore the plain subrogation language in an insurance contract to “balance the equities.” As the Texas Supreme Court affirms, contracts are still held to be almost sacrosanct, no matter the outcome. This applies for subrogation, just like any other form of contractual agreement.
Press Release from NASP Amicus Committee:
CGI v. Rose
Last year, NASP authored an amicus brief before the Ninth Circuit Court of Appeals supporting the plan in CGI Technologies and Solutions, Inc. v. Rose. Today, the Ninth Circuit release a decision in that case which is adverse to the subrogation industry. Specifically, the Ninth Circuit held that district courts could refuse to enforce clear plan language of an ERISA plan if it determined that enforcement of the language was not appropriate under the circumstances. In the Rose case, the Ninth Circuit remanded the case back to the district court to determine whether it was “appropriate” to enforce language that clearly disavowed the make-whole doctrine.
In issuing its opinion, the Ninth Circuit Court of Appeals adopted the rationale used by the Third Circuit in US Airways, Inc. v. McCutchen, 663 F.3d 671 (3rdCir. 2011). US Airways filed a petition for certiorari to the United States Supreme Court on the McCutchen case. NASP (along with SIIA and the Western Pennsylvania Teamsters) authored an amicus brief supporting the petition. Coincidentally, the Supreme Court is scheduled to conference that petition tomorrow. As such, we should know soon whether the Supreme Court will review the issue addressed in the McCutchen and Rose cases.
Kammy Poff, Amicus Committee Chair
Joseph Willis, Legislative Affairs, Chair
In celebration that is. Back from the celebratory cruise, the law firm of Chaplin & Gonet is refreshed and back hard at work again. Our collection professionals are hoping to exceed last year’s collection goals and continue the globe-trotting. If you have a business, hospital or are in need of collection services on accounts receivable contact Chaplin & Gonet today to learn what makes us the premier collection firm in Virginia.
In celebration of meeting their collection goals for the year, staff at the law firm of Chaplin & Gonet have been rewarded by setting sail to the Bahamas! The firm broke all historical collection records and demonstrates the determination of Chaplin & Gonet to collect on behalf of subrogation and collection clients.
As a result the office will be closed May 24 through May 29. All voice mails and emails will be answered promptly upon re-opening. If you would like to put Virginia’s premier subrogation and collection firm to work for your company contact us today.
Equitable Subrogation in Virginia
Subrogation is the legal process in which an insurer can step into the shoes of their policyholder to recover damages from the third party responsible for the loss. Equitable subrogation is based on equity, or fairness, as defined by the Virginia Supreme Court in Xl Specialty Ins. Co. v. Dept. of Transp., 611 S.E.2d 356, 269 Va. 362 (Va, 2005):
Equitable subrogation is subrogation that arises by operation of law. It is not based on contract or privity of parties, but is “purely equitable in nature, dependent on the facts and circumstances of each particular case.” Centreville Car Care, Inc. v. North Am. Mortgage, 263 Va. 339, 345, 559 S.E.2d 870, 872 (2002) (quoting Federal Land Bank of Baltimore v. Joynes,179 Va. 394, 402, 18 S.E.2d 917, 920 (1942)). When a principal defaults on a contract guaranteed by a performance or payment bond and the surety performs on the bond, principles of surety law and the doctrine of equitable subrogation impose certain rights and duties running between the surety, principal, and obligor, and allow the surety to enforce such rights and duties. See Dickenson v. Charles, 173 Va. 393, 400, 4 S.E.2d 351, 353 (1939) (quoting Kendrick v. Forney, 63 Va. (22 Gratt.) 748, 749-50 (1872)); Fulkerson v. Taylor, 100 Va. 426, 432,41 S.E. 863, 865 (1902); Restatement (Third) of Suretyship and Guaranty § 27 (1996).
Equitable subrogation arises from the common law and can work against the insurer conducting business in Virginia. For instance, where the Virginia policyholder has uninsured losses and recovers a judgment against the tortfeasor that does not equal the amount of total loss suffered by the insured, then the insurer cannot recover against the third party.
Contractual Subrogation in Virginia
The key difference in Virginia between equitable subrogation and contractual subrogation is that judges ultimately decide the outcome of an equitable subrogation action, while the language and intent of the parties control the outcome in a contractual subrogation case. It is imperative for the parties to a subrogation case to understand the language of the insurance contract and how it affects subrogation rights. For instance, insurance contracts can be written to give the insurer first right of subrogation, which cuts off most equitable subrogation worries. Virginia subrogation attorneys would be wise to discuss contract provisions with clients operating in Virginia.
Justin McLeod, Esq.
Chaplin & Gonet
Virginia subrogation attorneys need to familiarize themselves with the ways HIPAA compliance and General District Court discovery, namely the subpoena duces tecum, interact and ultimately impact healthcare subrogation practices in Virginia. By addressing whether a subpoena duces tecum request is both served properly and is HIPAA compliant, the Virginia healthcare subrogator can avoid any ethical or procedural pitfalls.
Is There Proper Service?
It is imperative that Virginia healthcare subrogation counsel ensure that service of the subpoena duces tecum conforms to the rules of their state, the federal rules, and that of the state it was served from. If a request is received from another jurisdiction then the Virginia healthcare subrogation attorney need only Google search the jurisdiction’s rules to pull them up. Upon determination that the subpoena duces tecum does not conform to the applicable rules, then the Virginia subrogation attorney cannot legally respond to them.
Is the Subpoena HIPAA Compliant?
The Virginia subrogation attorney would be wise to double and triple check that the subpoena duces tecum conforms to HIPAA regulations. Violation of HIPAA carries stiff penalties, namely civil penalties up to $1.5 million in annual fines and criminal penalties of up to ten years imprisonment for “covered entities.” This leads to the next issue:
Are You a Covered Entity Under HIPAA?
45 CFR 160.103 defines covered entities as a “health plan, health care clearing house, or a health care provider who transmits any health care information in electronic form.” If you are a Virginia healthcare subrogation attorney you are likely considered a covered entity or an agent for a covered entity under HIPAA regulations.
Is There a Valid Authorization For Disclosure?
Under HIPPA, a “valid authorization” is one that contains expressed written consent signed by the patient or their legal guardian for a specified purpose. This consent must include a detailed description of what records are referred to and what purpose they are to be used.
Conclusions for the Virginia Healthcare Subrogation Attorney
Upon receipt of any subpoena duces tecum for health records the Virginia healthcare subrogation attorney need only remember two things: process and HIPAA. If both are complied with then it is safe to respond, if however, one or both are not complied with then the Virginia subrogation attorney cannot respond to the subpoena duces tecum.
Justin McLeod, Esq.
Chaplin & Gonet