Indiana Insurer Reimbursement: Lien Reduction, Fee Sharing and the Made-Whole Rule

By the FigureMyTax Editorial Team · How we calculate

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

The reduction statute

IC 34-51-2-19 says that if a subrogation claim or other lien or claim from payment of medical expenses or other benefits exists, and your recovery is diminished by comparative fault or by the uncollectibility of the full value of your claim because of limited liability insurance or any other cause, the lien or claim is diminished in the same proportion. The holder bears a pro rata share of your attorney's fees and litigation expenses.

The insurer fee-sharing statute

Chapter 34-53-1 applies to an insurer claiming subrogation or reimbursement from the proceeds of a settlement or judgment from a proceeding you commenced. It must pay, out of the amount received, its pro rata share of the reasonable and necessary costs, including depositions, witness fees and attorney's fees, the fee share being the lesser of the amount you contracted for your portion of the claim and 33⅓% of the settlement (34-53-1-2).

A worked example

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

The made-whole rule

A law-firm compilation of Indiana subrogation law reports that the made-whole doctrine does not apply to health insurance subrogation in Indiana, that it can be overridden by plan language, and that the lien reduction and common fund statutes apply instead. We did not read the cases, so treat this as a lead. 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 both statutes. See how hospital 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 Indiana's rules apply to your specific case with a licensed Indiana attorney.