Illinois Insurer Reimbursement: Section 50 and the Made-Whole Rule

By the FigureMyTax Editorial Team · How we calculate

Illinois does not apply a blanket made-whole rule, but a subrogation or reimbursement claim is reduced in the same proportion as your recovery is diminished by comparative fault or limited insurance, and then bears a pro rata share of your attorney fees and expenses.

The statute

770 ILCS 23/50 says that if a subrogation or reimbursement claim arising from payment of medical expenses or other benefits exists, and your recovery is diminished by comparative fault or because limited liability insurance makes the full value of your claim uncollectible, the claim is diminished in the same proportion. Unless the parties agree, the court determines the comparative fault and the full value of the claim. The claimant then bears a pro rata share of your attorney fees and litigation expenses.

A worked example

Say your claim is worth $300,000, you are 20% at fault, and the at-fault driver has only $100,000 of insurance, so you recover $100,000. Your recovery is diminished by about two-thirds, and a health plan that paid $9,000 can claim about $3,000. It then bears about 36.3% of that for your fees and costs, leaving about $1,900. The Illinois medical lien calculator lets you enter the percent of diminution.

What section 50 does not cover

It does not apply to workers' compensation or occupational disease liens, to holders of liens under the Health Care Services Lien Act such as hospitals and physicians, or to uninsured and underinsured motorist payments. A claim may be adjudicated even when no lien has been filed.

The made-whole rule

A law-firm compilation of Illinois subrogation law reports that Illinois does not apply the made-whole doctrine as a blanket rule and that a contract can override it; a State Bar section newsletter describes section 50 as codifying a common-fund approach. We did not read the cases, so treat these as leads. A self-funded employer plan may be governed by federal law, so ask for the plan document.

What to do

Ask for an itemized claim and the plan, and ask the claimant to reduce it under section 50. See how provider liens differ from an insurer's claim and how Medicaid and Medicare recover.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Illinois's rules apply to your specific case with a licensed Illinois attorney.