MINNESOTA SUPREME COURT DENIES REVIEW OF AUERS V. PROGRESSIVE INSURANCE CO.

Plaintiffs Cannot Avoid Swanson v. Brewster Offset by "Buying the Lien"

Laura Moehrle

Dyan EbertMike LaFountaineBy: Laura A. Moehrle, Dyan Ebert, Mike Lafountaine - July 20, 2016

Yesterday afternoon, the Minnesota Supreme Court issued an order denying the plaintiff's petition for further review of the Court of Appeals' decision in Auers v. Progressive Insurance Co., 878 N.W.2d 350 (Minn. Ct. App. 2016). As a result, the published decision by the Court of Appeals in favor of Progressive remains in force and prevents a plaintiff who "buys the lien" from obtaining a double recovery.

This is a significant decision for the defense bar because it rejects an argument that has been advanced by plaintiffs since the 2010 Supreme Court decision in Swanson v. Brewster - namely that a plaintiff can buy and assert a health insurer's subrogation right, and prevent both the amount paid and amount of the discount received by the health insurer, from offsetting a damages award as a collateral source.

This case concerns the application of Minnesota's Collateral Source Statute - Minn. Stat. § 548.251.The parties stipulated Mrs. Karen Auers incurred $178,083.44 in past medical expenses related to an automobile accident. The parties also stipulated that the total damages ought to be reduced by the $20,000.00 payment by Mrs. Auers no-fault carrier.

The remaining $158,083.44 was wholly satisfied by the Mrs. Auers health insurer BCBS, who paid $72,216.85 and received a discount of $85,869.59. BCBS asserted a subrogation right for $72,216.85. Respondent Auers purchased, and received an assignment of, BCBS's subrogation right. Respondent Auers then argued that the recoverable damages could not be reduced by the amount of the negotiated discount because Auers had purchased and asserted BCBS's subrogation rights and therefore the collateral source statute exempted both the amount paid by BCBS and the amount of the negotiated discount from reduction under the collateral source statute.

Progressive disagreed, arguing Respondent Auers was allowed to collect the amount BCBS paid, but the negotiated discount remained a collateral source to be deducted from the award.

The Court of Appeals agreed with Progressive, holding that a subrogation right is limited to the amount actually paid by a collateral source entity. The Court stated "the negotiated discounts remain collateral sources to be deducted from the injured party's verdict under Minn. Stat. § 548.251."

Plaintiff sought further review of this decision in the Minnesota Supreme Court, but the Supreme Court has denied plaintiff's request.

This case was handled by Dyan Ebert, Mike LaFountaine and Laura Moehrle of the Quinlivan & Hughes firm. If you have any questions, please feel free to contact us.

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