Under the Made Whole Doctrine, an insurer’s subrogation interest will not be given priority where doing so will result in less than a full recovery to the insured.

Ohio courts have consistently enforced the Made Whole Doctrine. Under the Made Whole Doctrine, an insurer’s subrogation interest will not be given priority where doing so will result in less than a full recovery to the insured. Clermont County Transp. Improvement Dist. v. Tekulve, 2014-Ohio-1581, 2014 Ohio App. LEXIS 1530, 2014 WL 1486773 (Ohio Ct. App., Clermont County Apr. 14, 2014) (“[W]here an insured has not interfered with an insurer’s subrogation rights, the insurer may neither be reimbursed for payments made to the insured nor seek setoff from the limits of its coverage until the insured has been fully compensated (i.e., “made whole”) for his injuries.”)

An insurance policy may avoid the application of the Made Whole Doctrine only by including language that is clear in establishing both a priority to the funds recovered and a right to any full or partial recovery.

An insurance policy may avoid the application of the Made Whole Doctrine only by including language that is clear in establishing both a priority to the funds recovered and a right to any full or partial recovery. N. Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 103 Ohio St. 3d 188, 2004-Ohio-4886, 814 N.E.2d 1210, 2004 Ohio LEXIS 2158, 34 Employee Benefits Cas. (BNA) 2071 (Ohio 2004). According to the Ohio Supreme Court, a reimbursement agreement between an insured and a health-benefits provider clearly and unambiguously avoids the made-whole doctrine if the agreement establishes both (1) that the insurer has a right to a full or partial recovery of amounts paid by it on the insured’s behalf and (2) that the insurer will be accorded priority over the insured as to any funds recovered. Id.

Revised Code Section 2323.44 will impact both health insurance carriers and insurers offering medical payments coverage under automobile and/or homeowner’s policies.

However, recent Ohio legislation, enacted at Revised Code Section 2323.44, has affected subrogation rights in Ohio. Under the new subrogation law, which we’ve have previously discussed, a health insurer’s right of subrogation will be diminished in the same proportion that the insured’s claim is diminished if the insured is unable to collect full value resulting from limited liability insurance or any other cause. R.C. 2323.44 does not bar a subrogated insurer from recovering only after the insured has been “made whole.” In effect, this new law provides that if a claimant receives less than the full value of his or her claim, a subrogated entity’s interest will be reduced by the same proportional amount, irrespective of contractual language. The statute will impact both health insurance carriers and insurers offering medical payments coverage under automobile and/or homeowner’s policies.