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LEGAL AND PRACTICAL SUBROGATION ISSUES IN THE U.S.A.

LEGAL AND PRACTICAL SUBROGATION ISSUES IN THE U.S.A.

against a defendant with

against a defendant with a large degree of fault may go unsatisfied because that defendantis impecunious. Whether this result is fair is not the point. When confronted with severalliability, subrogating insurers must realize that they will need to adopt a litigation strategydifferent from the strategy used when the joint and several rule applies.Another tort reform which has affected a subrogating insurer’s rights concernsstatutes of repose or limitations. These reforms shorten the time for filing suit and mayresult in a complete bar to claims. For example, Florida and Ohio have established 10year statutes of repose for products liability actions. Texas has created a 15 year statuteof repose for such actions. Utah has passed a statute that establishes a 10 year statute ofrepose for actions against architects, engineers and builders for design error or faultyconstruction. Thus, in these jurisdictions, the actions cannot proceed if the accidentoccurs more than a specified period of time after a product was manufactured or a projectwas completed. The statutes of repose provide a defendant with an absolute defense to aclaim based on a defective product or faulty design or construction. Such limitationshave impacted the subrogation rights of an insurer by eliminating the potential forrecovery against a number of defendants.Another area in which tort reform has impacted the rights of a subrogating insurerconcerns the admissibility of certain types of evidence. The State of Maine, for example,has adopted a statutory provision which provides that subsequent remedial measurestaken after an accident are not admissible as evidence of negligence. The State of Floridahas a provision which provides a rebutable presumption that a product is not defective ifMP3 20204330.1- 20 -

the product met federal or state standards. Georgia has strengthened expert witness rulesand adopted the Daubert standard in civil cases which has placed restrictions on theability of an expert witness to render opinions at trial.Tort reform legislation withrespect to evidentiary issues is intended to limit the ability of a plaintiff to establish aclaim. None of the legislation has expanded or liberalized the rules of evidence, and thussubrogating insurers can expect that this type of tort reform will negatively impact theirsubrogation rights.The purpose of tort reform in the United States is primarily devoted to theregulation, control and restriction of personal injury actions. However, statutes of repose,imposition of several liability, and evidentiary limitations do not distinguish a personalinjury plaintiff from a subrogating insurer. The measure of damages sought by thesubrogating insurer may not be the subject of damage caps or limitations, but the abilityto pursue those damages is affected directly by tort reform. As noted at the outset, it isnot the intent of this paper to criticize or extol tort reform in the United States, but thereis no question that tort reform has limited and in some instances eliminated the rights of asubrogating insurer.MP3 20204330.1-21 -

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