Opinion ID: 865097
Heading Depth: 2
Heading Rank: 2

Heading: The “Made Whole” Doctrine

Text: ¶11. In refusing to order the reimbursement, the circuit court relied on this Court’s decision in Hare, 733 So. 2d at 279, wherein Hare was insured by both a health insurance policy and an uninsured motorist policy. Hare suffered injuries in an automobile accident and collected approximately $6,000 in medical benefits from his health insurance policy, which included the following subrogation language: “[t]he plan shall be subrogated and shall succeed to the right of the Employee . . . to recovery against any person, organization or other carrier.” Id. Thereafter, Hare settled with his uninsured motorist carrier for $10,000, and the health insurance carrier sought reimbursement pursuant to its subrogation agreement. Id. ¶12. In Hare, this Court engaged in a detailed analysis of the “made whole” rule, defining it as “the general principle that an insurer is not entitled to equitable subrogation until the insured has been fully compensated.” Id. at 281. This decision was based on equitable common law principles which supported the conclusion that until the insured had been fully compensated – or made whole – no double recovery would occur. Id. at 284. This Court further stated, “the general intent of subrogation (and the stated intent of [Hare’s health insurance policy]) is to prevent a double recovery by the insured.” Id. at 285. Finally, this Court noted that the “made whole” rule “is not to be overridden by contract language, because the intent of subrogation is to prevent a double recovery by the insured . . . .” Id. at 284. Thus, because this Court found 5 that Hare had not been fully compensated for his injuries, the health insurance carrier was not allowed to enforce its otherwise valid and enforceable contractual right of subrogation. Id. ¶13. Federated’s subrogation rights do not spring from a contractual agreement as in Hare, but rather are conferred by Section 71-3-71. As the Court of Appeals stated in Mississippi Food & Fuel Workers’ Compensation Trust v. Tackett, 778 So. 2d 136, 143 (Miss. Ct. App. 2000), a workers’ compensation insurer’s right of reimbursement “exists by virtue of statute and must rise or fall strictly as a matter of statutory interpretation.” In reversing and rendering a chancery court’s order denying a workers’ compensation insurer its right of reimbursement, the Court of Appeals noted, “[a] chancellor, despite his broad equitable powers, is not free to disregard the clear guidance of a pertinent statute simply because he concludes that it would be unfair on the particular facts of the case to apply the statute according to its terms.” Id.3 ¶14. Thus, we find the circuit court erred when it applied the equitable “made whole” doctrine to the statutory right of subrogation provided in Section 71-3-71. The Mississippi Workers’ Compensation Act unambiguously provides the method for distributing proceeds when, as here, an injured employee recovers from a third party. ¶15. The circuit court’s reliance on an unpublished opinion from the Hinds County Circuit Court4 was error. First, our trial courts are not free to decide issues according to authority 3 We also recently declined to apply the “made whole” rule to an Uninsured Motorist/Under Insured Motorist case. See United Servs. Auto. Ass’n v. Stewart, 919 So. 2d 24, 30 (Miss. 2005). 4 The circuit court cited the unpublished Hinds County Circuit Court opinion of Mississippi Insurance Guaranty Ass’n v. Brewer. On July 26, 2005, the Mississippi Court of Appeals issued its decision in Mississippi Insurance Guaranty Ass’n v. Brewer, 922 So. 2d 807 (Miss. Ct. App. 2005). One assignment of error in Brewer was the trial court’s ruling that the “made whole” doctrine applied to workers’ compensation subrogation liens. Id. at 812. In reversing the trial court, the Court of Appeals 6 found in unpublished circuit court opinions. Additionally, the Arkansas case cited by the Hinds County Circuit Court is inapposite. In Jaynes, the Arkansas Supreme Court applied the “made whole” doctrine to an Arkansas workers’ compensation subrogation lien statute which had previously been found vague and ambiguous. 33 S.W.3d at 165. The Arkansas statute entitled the compensation carrier to a first lien on only two-thirds of the net proceeds recovered in a third-party action. Id. The statute required one-third of the remainder of the proceeds go to the injured employee. Id. Considering the depth and breadth of Mississippi precedent on this question, reliance on a foreign jurisdiction’s interpretation of its own markedly different subrogation statute is unnecessary. ¶16. Thus, in the case before us today, Federated is entitled to satisfaction of its workers’ compensation subrogation lien in the amount of $66,412.10.