Case Name: Peggy L. WHEELAHAN v. Mary Ann ELLER and Allstate Insurance Company
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1984-02-09
Citations: 446 So. 2d 442
Docket Number: No. CA-1115
Parties: Peggy L. WHEELAHAN v. Mary Ann ELLER and Allstate Insurance Company.
Judges: Before REDMANN, BARRY and WILLIAMS, JJ.
Reporter: Southern Reporter, Second Series
Volume: 446
Pages: 442–448

Head Matter:
Peggy L. WHEELAHAN v. Mary Ann ELLER and Allstate Insurance Company.
No. CA-1115.
Court of Appeal of Louisiana, Fourth Circuit.
Feb. 9, 1984.
Concurring Opinion Feb. 16, 1984.
Writ Denied March 23, 1984.
Harold M. Wheelahan, III, New Orleans, for plaintiff-appellee.
Thomas D. Benoit, Staff Atty., State Employees Group Benefits Program, Baton Rouge, for intervenor-appellant.
Before REDMANN, BARRY and WILLIAMS, JJ.

Opinion:
BARRY, Judge.
In this tort suit an insurer appeals the denial of its intervention for reimbursement' of medical expenses paid to its insured. The sole issue is whether a medical benefits insurer, in the absence of conventional subrogation, is legally subrogated to its insured against a tortfeasor.
Plaintiff Peggy Wheelahan claims injuries from an automobile accident and sued the driver of the other vehicle and her insurer Allstate Insurance Company, and Government Employees Insurance Company (GEICO), plaintiffs uninsured motorist carrier. Plaintiff was an employee of the L.S.U. Medical Center and a member of the State Employees Group Benefits Program which provided accident-benefits. The Program paid plaintiff $12,098.14 for medical expenses and filed an intervention for reimbursement from the driver and her insurer. The trial judge, without assigned reasons, denied the intervention and the Program now appeals.
A person may pay another's debt, but there is no subrogation under C.C. Art. 2134, which provides:
An obligation may be discharged by any person concerned in it, such as a eo-obli-gor or a surety.
The obligation may even be discharged by a third person no way concerned in it, provided that person act in the name and for the discharge of the debtor, or that, if he act in his own name, he be not subrogated to the rights of the creditor.
An exception (not applicable here) is C.C. Art. 2160 which provides for express conventional subrogation.
Intervenor contends it is legally subrogated under C.C. Art. 2161(3):
Subrogation takes place of right:
3. For the benefit of him who, being bound with others, or for others, for the payment of the debt, had an interest in discharging it.
Thus, legal subrogation occurs if the party who paid the debt is "bound with others, or for others." Intervenor cites Pringle-Associated Mortgage Corp. v. Eanes, 254 La. 705, 226 So.2d 502 (1969) which interprets Art. 2161 to require that an obligation be in solido for subrogation to take place.
The intervenor concludes: "This principle [Pringle] certainly fits the present situation. Due to the injury to the plaintiff, the Program was obligated (by 'contract') to pay certain medical expenses up to a designated amount. If a third person (the defendant-driver) is at fault in causing the injury, then she is obligated to pay those same expenses (by 'tort'). Thus the Program is 'bound with' the defendant for these expenses and is entitled to legal sub-rogation from the plaintiff to collect them from the defendant."
Intervenor also cites Volume Shoe Corp. v. Armato, 341 So.2d 611 (La.App. 2d Cir.1977) (hazard insurer), Hartford Accident & Indemnity Company v. Byles, 280 So.2d 624 (La.App. 3d Cir.1973) (uninsured motorist insurer) and Sentry Indemnity Co. v. Hester, 430 So.2d 1159 (La.App. 1st Cir.1983) (casualty/fire insurer), all of which held that Art. 2161(3) grants subrogation against the negligent tortfeasor.
Plaintiff counters that the Program is a bargained-for exchange in which the plaintiff/employee received benefits in lieu of additional salary. Plaintiff points out the Program is financed by equal contributions from the State and its Employees and their contract provides:
In consideration of the payment of contributions by the contract holder in the amounts and at the times hereinafter provided, the Program hereby agrees with the contract holder, subject to the terms appearing on this and the following pages of this contract including, if any, the riders, endorsements, and amendments to this contract which are signed by the board to pay benefits in accordance with the terms of this contract. The obligations and the rights of all persons under this contract shall be determined in accordance with the terms of this contract without regard to the terms of any prior agreement or of any instrument amending or supplementing or replacing any such agreement,
and later, further provides:
This written contract and the individual application of the Covered Employee constitutes the entire contract between the parties.
Plaintiff notes her contract fails to grant conventional subrogation, and argues in the absence of a solidary obligation there is no legal subrogation under Art. 2161(3). Harris v. Huval Baking Co., 265 So.2d 783 (La.App. 3d Cir.1972) writ denied 263 La. 103, 267 So.2d 210 (1972); Courtney v. Harris, 355 So.2d 1039 (La.App. 4th Cir.1978). Both cases denied subrogation where the insurer paid medical expenses caused by a third party tortfeasor. In Courtney v. Harris we pointed out Hartford Accident & Indemnity Co. v. Byles, supra, (relied on by intervenor) was distinguishable. Byles involved uninsured motorist coverage (not medical payments) and held in favor of legal subrogation; however, the Court carefully distinguished Harris v. Huval Baking Company, supra, and American Indemnity Co. v. New York Fire & Marine Underwriters, Inc., 196 So.2d 592 (La.App. 1st Cir.1967) (no legal subrogation for medical insurer, nor right of direct action by medical insurer against tortfeasor) and said:
[T]he insurer was not legally subrogated to the rights of the insured insofar as the medical payments were concerned. In [American Indemnity] as in Harris v. Huval Baking Co., supra, the medical payments were owned by the insured regardless of liability on the part of anyone else, and the insurer thus was not bound with or for any other person for those payments. Article 2161 of the Civil Code did not apply, and the insurer thus was not entitled to a legal subrogation to the rights of its insured under that article.
Byles, supra, at 627.
The two other cases cited by intervenor, Volume Shoe and Sentry Indemnity, are also distinguishable. In Volume Shoe the defendant's automobile damaged Payless Shoe Store, a wholly owned subsidiary of Volume Shoe. The hazard insurer, Fireman's Fund, paid Volume Shoe and a sub-rogation agreement was executed. Without addressing the effect of the subrogation, the Court relied exclusively on Byles, supra, and held Fireman's Fund was legally subrogated under Art. 2161.
Sentry Indemnity, supra, involved a subrogation claim pursuant to a fire policy. Sentry's policy stated the insurer "may require from the insured an assignment of all rights of recovery against any party for the loss.... " The insured informed the insurer "he did not wish to subrogate" and no subrogation agreement was effected. Without discussing this further, the Court, relying on Bytes, Volume Shoe and Prof. Johnson's article (footnote 1 supra), granted subrogation under Art. 2161(3). Bytes, Volume Shoe and Sentry are inapplicable.
The public policy considerations urged by intervenor are without merit. To deny sub-rogation will not result in the wrongdoer escaping responsibility as suggested by in-tervenor (and by Sentry, supra, at 1162 and Johnson, supra, at 679, 684). The "collateral source rule" prevents such a "windfall" to the defendant. On the other hand, plaintiff's insurance recovery is what she paid for; the proceeds are "net" after considering premium payments.
Nor do we agree that permitting legal subrogation will necessarily result in lower premiums for insureds. That academic supposition presupposes numerous variable factors. During argument intervenor's counsel stated that the Program's coverage now includes subrogation, but that premiums were recently increased.
The basis of the debts are different (contract-tort) and the amounts may vary. The insurer's liability exists regardless of fault, so it is not "bound with" the tortfeasor.
The judgment of the district court is affirmed at intervenor's/appellant's- costs.
AFFIRMED.
REDMANN, C.J., concurs with reasons to follow.
. See Legal Subrogation of Insurer to Insured's Rights Upon Payment of Claim, Johnson, Prof. H. Alston, 39 La.L.Rev. 675 (1979) which criticizes Courtney v. Harris.
. In a case involving comparative negligence, subrogation could provide for less than the insurance recovery, or the tortfeasor might be forced to pay the total loss even though the comparative fault was disproportionate. Query: adopting intervenor's position, is a life insurer legally subrogated for death benefits against a tortfeasor?