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Robert Suchy, et al., Plaintiffs, and Blue Cross and Blue Shield of Minnesota, intervenor, Appellant, vs.Illinois Farmers Insurance Company, Respondent. C1-97-11...
STATE OF MINNESOTA
IN COURT OF APPEALS
C1-97-1182

Robert Suchy, et al.,
Plaintiffs,

and

Blue Cross and Blue Shield
of Minnesota, intervenor,
Appellant,

vs.

Illinois Farmers Insurance Company,
Respondent.

Filed February 10, 1998
Affirmed
Klaphake, Judge

Hennepin County District Court
File No. PI-95-17959

Robert J. Lange, Lange & Anderson, P.A., 3800 West 80th Street, Suite 250, Bloomington, MN 55431 (for appellant)
R. Stephen Tillitt, Anne T. Johnson, Gislason, Dosland, Hunter & Malecki, P.L.L.P., 9900 Bren Road East, Suite 215-E, Minnetonka, MN 55343 (for respondent)
Considered and decided by Harten, Presiding Judge, Huspeni, Judge, and Klaphake, Judge.
S Y L L A B U S
A medical insurance carrier is not entitled to assert a subrogation interest in an award of underinsured motorist benefits, absent either a policy provision establishing subrogation rights or wrongful conduct by the underinsured motorist carrier.

O P I N I O N


KLAPHAKE, Judge
Following an automobile accident, Robert Suchy received medical insurance benefits from appellant Blue Cross and Blue Shield of Minnesota (Blue Cross) and no-fault insurance benefits from respondent Illinois Farmers Insurance Company (Illinois Farmers). Suchy settled with the tortfeasors and sued Illinois Farmers for underinsured motorist (UIM) benefits. The district court reduced the jury verdict by the amount of Blue Cross's medical insurance payments to Suchy, which the court considered a collateral source. On appeal, Blue Cross argues that its medical insurance payments should have been included in the verdict because it had asserted an equitable subrogation interest in the UIM award. We affirm.
FACTS
Robert Suchy was injured in a motor vehicle accident with an intoxicated person, Nancy Brown. Suchy's no-fault carrier, Illinois Farmers, paid $20,000 in medical expenses. Suchy's health insurance carrier, Blue Cross, paid medical bills in the amount of $156,564.30, for which it asserted a subrogation interest.
file:///C|/Users/Peter/Desktop/opinions/c1971182.htm[4/16/2013 8:11:23 PM]
Robert Suchy, et al., Plaintiffs, and Blue Cross and Blue Shield of Minnesota, intervenor, Appellant, vs.Illinois Farmers Insurance Company, Respondent. C1-97-11...
Suchy sued Brown and the dram shop that had served her intoxicating beverages on the evening of the accident. Brown's liability insurer settled for $80,000, and the dram shop's insurer settled for $21,000. From that settlement, Blue Cross agreed to accept $20,319.56. Suchy and Blue Cross signed a release of claims against Brown and the dram shop. The release stated that the parties' settlement did not affect Suchy's UIM claim against Illinois Farmers; however, the release did not indicate whether Blue Cross intended to retain a subrogation interest in the UIM claim.
Suchy sued Illinois Farmers for UIM benefits and a jury awarded him $387,075.12. Based on the award, the district court issued an order for judgment. The following day, Blue Cross's attorney asserted a subrogation interest in the amount of its prior payment of $156,564.30, reduced by the payment of $20,319.56 from the settlement with Brown and the dram shop.
After conducting a hearing on collateral sources, the district court found that Blue Cross had not assigned to Suchy any claimed subrogation interest in the UIM proceeds and that Blue Cross had not asserted any subrogation interest in the UIM proceeds until after the verdict was rendered. The court concluded that Blue Cross had no subrogation interest in the UIM award, either contractual or equitable. The court also concluded that even if Blue Cross had such an interest, it was not timely asserted.

ISSUE
Did the district court err by concluding that Blue Cross did not have an equitable subrogation interest in the UIM award?

ANALYSIS
A trial court must reduce a jury award by the amount of collateral sources that have been paid to a plaintiff. Minn. Stat.

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Minnesota Law