Understanding Texas Insurance Subrogation Law

Subrogation of insurance claims refers to the process by which an insurance company, after paying out a claim following a Texas car accident or other loss, assumes your legal rights to seek damages from a third party. This may mean the insurance company “stands in your shoes” to file a lawsuit against the person or company responsible for causing your loss or damages. 

Texas has its unique set of regulations governing the subrogation of claims. In this blog post, the experienced personal injury lawyers at the Hartley Law Firm will help you understand some of the basic principles of Texas insurance subrogation law and how it can affect your personal injury claim. Speak to a Texas car accident lawyer to discuss a claim.

What Does it Mean to Subrogate Your Claim?

When an insured suffers a loss covered by their insurance policy and receives a claim settlement from their insurer, the insurer has a right to cover their loss. The insurer then acquires the right to pursue any available legal remedies against third parties responsible for the loss or damage.

Why Subrogate a Texas Insurance Claim?

There are two main reasons to subrogate a claim. The first is to be paid for your recovery faster than litigating the claim yourself. In theory, you should receive payment for your vehicle repairs, medical bills, and other expenses quickly if your claim is subrogated. Typically, you will file a claim with your insurer and, in most cases, receive benefits within 30 days.

However, you can also make the choice to litigate the claim yourself and not subrogate the claim to your insurer. A Texas personal injury lawyer, like those on our team at the Hartley Law Firm, can help you make an informed decision about whether to file a claim with your insurance or pursue damages on your own. Contact us today!

Your Role in a Subrogated Texas Insurance Claim

Claim subrogation is typically a passive activity for the insured. If the other party was clearly at fault for your accident, it may be easy for your insurance company to receive reimbursement from the defendant. If your claim is simple, it may take a few weeks to a couple of months from start to finish. However, more complex claims can take over a year.

What Is the Point of Claim Subrogation?

The purpose of claim subrogation is to recover the insurer’s losses by reimbursing the carrier first for payments and costs, preventing the insured from recovering more than the actual value of their damages. For example, after a car accident, if the insured recovers damages exceeding the insurer’s subrogation interest, the insurer reimburses itself and covers costs before any remaining amount is paid to the injured party.

Specific Features and Statutory Framework of Texas Insurance Subrogation Law

While the Texas Insurance Code does not explicitly mention subrogation, Texas law recognizes both contractual subrogation – established by insurance agreements – and equitable subrogation, which courts have implied to prevent insured parties from suing after receiving compensation for a covered claim. Additionally, the Texas Civil Code authorizes subrogation rights for medical benefits.

One of the essential aspects of Texas subrogation law is that it follows the “made-whole doctrine.” Under this doctrine, an insured must be fully compensated for their losses before the insurer can exercise its subrogation rights. This means that if you have $5,000 in damages and your insurance company pays you only $2,500, your insurer can seek only $2,500 in damages from any third party, and you can pursue the third party for the remaining $2,500.

Contractual Subrogation (Conventional Subrogation)

This right is established through a written agreement or contract, typically found within insurance policies, and applies even without explicit statutory language. However, policies governed by federal ERISA law may include clauses waiving the made-whole doctrine, or a waiver of subrogation that prevents the insurer from pursuing certain third-party recoveries.

Equitable Subrogation

Equitable subrogation arises by operation of law to prevent unjust enrichment, allowing an insurer to stand in the insured’s shoes even if no contractual subrogation clause exists.

Chapter 140: Health Benefit Plan Payors

Enacted in 2014, Chapter 140 of the Texas Civil Practice and Remedies Code limits the contractual subrogation rights of health benefit plan payors for medical or surgical expenses resulting from personal injuries caused by third parties. Under this chapter:

• Payors may contract for subrogation and reimbursement rights from an individual’s recovery.
• For agreements entered into after January 1, 2014, the made-whole doctrine does not apply to the payor’s recovery.
• If the injured individual is not represented by counsel, the payor may recover the lesser of half of the gross recovery or the total cost of benefits paid.
• If represented by counsel, the payor may recover the lesser of half of the gross recovery minus attorney’s fees and costs (per Section 140.007) or the total cost of benefits paid minus those fees and costs.
• Chapter 140 generally prohibits payors from pursuing first-party coverages such as PIP unless premiums for that coverage were paid by parties other than the insured.

Workers’ Compensation Subrogation (Labor Code Chapter 417)

When an injured employee claims workers’ compensation benefits, the carrier is subrogated to the employee’s rights against third parties responsible for the injury. The carrier may enforce the third party’s liability in the employee’s name, limited to total benefits paid less the employer’s share of responsibility.

Any recovery beyond the carrier’s subrogation interest is first applied to carrier reimbursement and costs, with remaining funds paid to the injured employee; excess amounts are treated as advances against future benefits.

Subrogation Statute of Limitations

Insurance companies generally have two years from an insured’s accident date to assert subrogation rights for both property damage and personal injury claims.

Anti-Subrogation Rule

Texas common law bars insurers from bringing subrogation actions against their own insureds or co-insureds under the same policy to avoid conflicts of interest. A waiver of subrogation clause can further strengthen this protection by contractually preventing the insurer from suing certain parties. Exceptions arise when the risk is not covered or when the insured has impaired the insurer’s subrogation rights.

Specific Applications

• Auto Insurance Subrogation: After paying for vehicle damage or other losses, an auto insurer can seek reimbursement from the at-fault party, ensuring prompt insured compensation while pursuing recovery.
• Medical Payments (MedPay) and Personal Injury Protection (PIP): MedPay coverage is subject to subrogation if the policy includes such rights, governed by Chapter 140 and the made-whole doctrine. PIP is generally exempt from subrogation by statute, though a policy may grant subrogation against uninsured motorists.
• Hospital Liens: Hospitals have liens on claims of patients treated for third-party injuries, typically covering the first 100 days of hospitalization, enforceable by filing notice with the county clerk.

How the Hartley Law Firm Can Help

If you have been injured in an accident and are facing the decision to subrogate your insurance claim, the Hartley Law Firm can help. Austin F. Hartley is a compassionate and skilled Dallas, TX personal injury attorney with deep experience helping clients make strategic decisions and negotiate with insurance companies. 

To learn more about how Hartley Law Firm can help, call us. You can also use the online form to schedule your free initial consultation.