Laura Moehrle

Dyan EbertMike LaFountaine

Earlier today, the Minnesota Court of Appeals issued its published decision in Auers v. Progressive Insurance Company (No. A15-1832) in favor of Progressive, holding (1) a subrogee that has negotiated a discount of medical expenses may not assert a subrogation right for that discount under Swanson v. Brewster, and (2) an injured Plaintiff who purchases the subrogation interest of a health insurance carrier is not entitled to recover the amount of the negotiated discount.

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.”

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.