Car Insurance

In a case where the plaintiff was seriously injured following a motorcycle accident, the U.S. District Court for the Western District of New York upheld the health insurance company’s refusal to allow the plaintiff to privately enter into a settlement agreement with the owner and driver of the car who hit him.

In Richard P. Borden v. Blue Cross and Blue Shield of Western New York, a/k/a HealthNow, NY, Inc., et al., Judge William Skretny concluded the insurance company had the right to refuse to waive its subrogation claim and seek recovery for the benefits it paid from the parties responsible for the plaintiff’s injuries.

Parties, Case Background

The instant dispute stems from an accident that the plaintiff, Richard P. Borden, was involved in when a car hit the motorcycle he was riding on in September 2004.

Borden suffered serious injuries resulting in hospitalization for several months. His health insurance provider, Blue Cross and Blue Shield of Western New York, a/k/a HealthNow, NY, Inc., paid more than $55,000 in medical expenses for him.

In February 2005, State Farm Mutual Automobile Insurance Co. - on behalf of the owner and driver of the car who hit Borden - offered to pay him $100,000 to settle his claims.

Borden subsequently asked HealthNow to consent to the proposed settlement, and to waive its subrogation rights. According to the terms in the insurance plan, HealthNow could proceed independently against any parties responsible for his accident in order to recover the benefits it paid.

plan contained the following rider: In the event that you suffer an injury or illness for which another party may be responsible, such as someone injuring you in an accident, and we have paid benefits as a result of that injury or illness, we will be subrogated and succeed to the right of recovery against the party responsible for your illness or injury to the extent of the benefits we have paid. This means we have the right independently of you to proceed against the party responsible for your injury or illness to recover the benefits we have paid, (emphasis added).

Based on these terms, the court found that HealthNow had a right of subrogation.

Specifically, the court noted that HealthNow had already paid more than $55,000 in medical expenses, and as a result had the right to try to recover those costs. Therefore, the court found that HealthNow’s refusal to waive its right of subrogation did not constitute a breach of its contractual or fiduciary duties as defined under the benefit plan.

Under the circumstances, it cannot be said that this subrogation language is ambiguous, wrote Judge Skretny. Therefore, this court construes the plan to confer upon HealthNow an unqualified right of subrogation against any persons responsible for causing injuries to its insured for which it has paid benefits.