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Colorado Subrogation Law

April 29, 2021

If you get into an accident in Colorado, the amount you can recover in financial compensation for your medical bills and other losses depends almost entirely on how much insurance coverage is available. You may be able to seek financial benefits from your insurance company or someone else’s insurance provider. An important part of a personal injury claim to understand is Colorado’s subrogation laws.

Colorado Subrogation Law

What Does Subrogation Mean?

When applied to an insurance claim, subrogation is the right of an insurance company to pursue reimbursement from the party that caused the insured person’s losses for the benefits the insurer paid a policyholder. The purpose of subrogation is to prevent an insurance company from paying for medical costs and other losses when it is not obligated to do so based on the terms of an insurance policy.

If, for example, a policyholder in Colorado did not cause a car accident, but his or her health insurance company paid for the victim’s initial medical care, the insurance company would have the right to file a subrogation claim or medical lien against the victim’s car accident lawsuit for reimbursement for these expenses. Although this is how the subrogation law used to work, Colorado changed its laws in 2010 by passing Colorado Revised Statute 10-1-135.

What Is the Colorado Made Whole Doctrine?

The Colorado Made Whole Doctrine states that an injured accident victim has the right to keep all of his or her gross settlement or judgment award, minus fees, costs and liens. It stipulates that a health insurance company only has the right to seek reimbursement after the injured victim has been fully compensated for his or her losses – in other words, after the victim has been made whole.

Under the old law, a health insurance company could force an injured accident victim to pay back any benefits awarded for accident-related medical care from the victim’s settlement or judgment award, even if this amount exceeds the victim’s entire financial recovery from a defendant. The Made Whole Doctrine helps accident victims by restricting or even eliminating a health insurance company’s right to file a subrogation claim based on the amount of the award.

Furthermore, the Made Whole Doctrine presumes that if an injured party receives an award in the amount of the other party’s insurance policy limit, he or she was not made whole since the victim had to settle for the maximum amount available under the policy. In this case, the health insurance company forfeits all right to a claim of subrogation against the victim’s financial recovery.

What Is the Colorado Common Fund Doctrine?

Another law that was solidified with Colorado Revised Statute 10-1-135 is the Common Fund Doctrine. This doctrine states that a health insurance company must match its subrogation claim to the same percentage the injured victim had to pay his or her personal injury lawyer. For example, if the plaintiff had to pay 33 percent in lawyer’s fees, the insurance company would have to reduce its subrogation claim by 33 percent. This prevents an insurance company from taking too much of a victim’s settlement.

How Might the Colorado Subrogation Law Affect Your Case?

Colorado’s subrogation law protects accident victims’ financial interests. Unlike the state’s previous subrogation law, the Made Whole and Common Fund doctrines restrict, reduce and can even completely eliminate an insurance company’s right to file a subrogation claim or lien against your financial recovery as an injured accident victim in a personal injury lawsuit.

Rather than being forced to repay your insurance company with most or all of your financial compensation from a defendant, Colorado law protects your monetary award from excessive insurance liens. For assistance with a subrogation claim during a personal injury lawsuit, consult with an attorney in Denver. An attorney can help you further protect your financial recovery.