On May 25, House Bill 1869, a bill that would restrict the subrogation rights of insurance companies, was signed into law by Governor Rick Perry. A press release by the bill’s author, Representative Four Price, gave this reason for the subrogation bill in a press release:
Currently, most health insurance companies are entitled to reimbursement for all such medical expenses paid, thereby often leaving an injured person with little or nothing from their recovery. There is little incentive for many cases to settle quickly or at all. House Bill 1869 provides an equitable legal framework for settling cases, which helps an injured person timely meet other expenses while providing certainty to health insurers.
A FAQ on subrogation was provided by Attorney Judy Kostura via email and explains what subrogation is:
Subrogation is when the insurance company that collected premiums and agreed to bear a loss also wants to be reimbursed by their insured for that loss. The subrogated company then takes on the legal rights of their insured to collect from the person who caused the loss or, more commonly, to collect from their own insured after their insured has settled with the person who caused the loss. Subrogation most commonly occurs when a health insurance carrier has paid medical bills for an injured claimant and then takes the legal rights the claimant has against the responsible party who caused the injury and takes their insured’s recovery for itself. The problem arises when the responsible party who caused the harm does not have adequate assets or insurance to make the injured party whole (pay all of the injured party’s losses).
When the bill was first introduced in the House, it was referred to the House Judiciary Committee where it faced heavy opposition. However, after facing 2 days of hearings, the bill was amended and then passed unanimously in both the House and Senate. The bill also faced a companion bill in the Senate, SB 1339, which would have resulted in a lengthy conference committee. However, Price worked out a deal with the bill’s author, Senator Robert Duncan, which effectively left SB 1339 pending in committee.
“I am very appreciative of the numerous and diverse stakeholders who worked diligently with Senator Duncan and me over the course of the entire session in crafting a bill that is sound public policy for Texans,” Price said.
The bill was then signed into law by Governor Rick Perry.
“I applaud Governor Perry for signing this hallmark legislation that will significantly help severely injured Texans and their families in times of great personal distress. Governor Perry showed great interest in this bill, and I extend to him my sincere gratitude for taking the time to personally meet at length with Senator Robert Duncan and me regarding the impact of this legislation,” Price remarked in a press release.
The law takes effect on January 1, 2014.