SUBROGATION LIMITATION REPEALED

In 2009, the Maine Legislature amended a provision of the Maine Insurance Code (24-A M.R.S. § 1 et seq.) regarding an insurer’s subrogation rights concerning medical payments made by the insurer pursuant to the medical payments coverage provisions of a liability policy. The 2009 legislation amended section 2910-A of the Code to prohibit any recovery by the insurer for medical payments when the insured’s settlement or award was $20,000.00 or less. The most recent legislative change to section 2910-A of the Code removed the $20,000.00 threshold entirely, thereby restoring the insurer’s right to subrogation regardless of the size of the insured’s recovery. The effective date of the most recent change in the statute was August 30, 2012.

Both the 2009 and 2012 changes to section 2910-A of the Code are silent as to the retroactive effect of the changes on policies and claims. When the statute was changed in 2009, the Maine Bureau of Insurance issued a bulletin clarifying that the amended statute applied to policies issued or renewed on or after September 12, 2009, which was the effective date of the change. Hence, the Bureau’s opinion was that changes to the statute are not retroactive. However, the Bureau almost immediately withdrew the bulletin without comment, leaving all to wonder whether the change in the statute was truly retroactive. No bulletin has been issued yet regarding whether the newest amendment to the statute is retroactive and none is expected. I believe the Bureau of Insurance is leaving it up to the courts to decide whether the statutory changes are retroactive. So far, Maine’s courts have been silent on the issue.

Whether the statutory change is retroactive or not, the change must also be reflected in the policies containing the subrogation rights. If a policy has the $20,000.00 threshold language that complies with the prior law, then the recent statutory change will not expand the insurer’s subrogation rights. Also, under the statute, all policy changes regarding subrogation rights must be approved by the Bureau of Insurance.

Lastly, the statute has always reserved to the insurer the right to directly pursue the third party responsible for the insured’s damages. If the insurer choses this option, then the statutory threshold and the other requirements of the statute do not apply.

If you are an insurer in need of assistance regarding subrogation claims for insureds located in the State of Maine, the attorneys at Gosselin & Dubord, P.A. located in Lewiston, Maine have extensive experience with insurer representation and stand ready to assist you. Please contact Attorney David R. Dubord at (207) 783-5261 or drd@gosselindubord.com.