What happens when a person is seriously injured, but their medical expenses far exceed what can be recovered from the defendant’s insurance coverage?  Can the injured person’s health insurance carrier get all the money back they paid for their medical care, even if that leaves the person not fully compensated (not “made whole”)?  The language of the insurance contract itself affects what recovery rights the health insurer has in this situation, but the Make Whole Rule is generally used when an injured party seeks a waiver of the contractual obligation to reimburse medical insurance and automobile medical payment benefits to the insurer.  This obligation usually arises in cases after judgment or settlement, when the insurer shows up demanding reimbursement for benefits it has already paid.  The reasoning behind the Make Whole Rule is that the insurer should not be reimbursed for benefits it paid unless and until the plaintiff insured is first “made whole,” that is, fully compensated for their injuries. 

California adopted the Make Whole Rule in Sapiano v. Williamsburg National Insurance Company (1994) 28 CA 4th 533, holding that a commercial vehicle insurer in a subrogation claim cannot “assert its contractual right to repayment where the total third party insurance is insufficient to compensate the full loss suffered by the insured.”  The plaintiff has not been made whole if the amount recovered from third-party tortfeasors (defendants) does not fully compensate them for their injuries.  In such cases, insurance companies should not be allowed to receive reimbursement through their right to subrogation. This is the primary concept of the Make Whole Rule. There should be no right to subrogation when the injured party has not been made whole.  Janssen Malloy LLP is currently representing a client who was seriously injured in a motorcycle/vehicle collision, with over $385,000 in paid medical expenses, with a defendant who has only a $50,000 policy limit (and no assets beyond that policy to satisfy a judgment).  We are demanding a waiver of the health insurer’s subrogation reimbursement claim on the basis that our client has clearly not been made whole.

Insurers try to avoid the Make while Rule by altering the contract language to include a clause giving the insurer’s reimbursement rights priority, even if the policyholder has not yet been made whole.  Careful review of the contract language is required, since such clauses are strictly construed against the party that drafted them (the insurance company).  Since the insurer has already been paid a premium to cover the risk that the insured may need medical expenses paid under the policy, it is hardly fair that they also attempt to also take the limited recovery of their insured policyholder.  Injured persons need experienced and knowledgeable trial counsel to be fully and fairly compensated, and the attorneys at Janssen Malloy LLP stand ready to assist when need arises.