Ridge Tool Co. v. Silva

While it is true that the trend in the law has been to deny the application of equitable subrogation, that position has been severely criticized. Kimball Davis, The Extension of Insurance Subrogation (1962), 60 Mich. L. Rev. 841; Fleming, The Collateral Source Rule and Loss Allocation in Tort Law (1966), 54 Cal. L. Rev. 1478. The commentators argue that medical insurance is designed to compensate the insured only for his actual medical losses and that such insurance is more analogous to a contract of indemnity than one of investment. Kimball Davis, supra, at 849-860; Fleming, supra, at 1501-1502. Thus, the distinction between indemnity and investment contracts for the purposes of determining whether equitable subrogation is available is tenuous at best.

The doctrine of equitable subrogation is designed to prevent duplicative recovery constituting unjust enrichment. IV Palmer, Law of Restitution (1978) 448, Section 23.17. Equitable subrogation also helps keep insurance premiums in check by recycling recaptured funds among policy holders. Fleming, supra, at 1481-1484. Finally, equitable subrogation places the ultimate loss on the wrongdoer, the party who is primarily responsible for the loss. 3 Appleman, Insurance Law and Practice (1967) 495, Section 1675. Such a beneficial and salutary doctrine should not be denied recognition for the reasons given by the majority.

The interplay of the doctrine of equitable subrogation with the collateral source rule must figure into any argument concerning the former's application. In Ohio, as in many other states, the collateral source rule precludes a tortfeasor from introducing evidence of medical insurance benefits received by the plaintiff for his injuries. The rule prevents the tortfeasor from reducing plaintiff's damages by the amount of medical insurance benefits the plaintiff has already received. The rule's operation increases the likelihood that a plaintiff will reap a double recovery for some portion of his injuries. Not only will he receive a damage award designed to compensate him for his medical expenses, but also insurance proceeds paying those expenses.

The application of the doctrine of equitable subrogation to personal injury cases provides a method of eliminating double recovery which is likely to result from the application of the collateral source rule. So long as the collateral source rule is available to plaintiffs in personal injury cases, so, too, should the doctrine of equitable subrogation be available.

Many personal injury claims are liquidated and ascertainable. The amount of the insured's loss, the insurer's payment, and the tort recovery are known with relative certainty in most instances. Certainly a formula could be devised which would guarantee that the insured is fully compensated for his losses while ensuring that any double recovery is recaptured and redistributed among the policy-holders in the form of lower premiums. Fleming, supra. This would be the fairest result.

I believe that the instant case presents a genuine issue of fact as to whether appellees obtained a double recovery. Therefore, I would reverse and remand for a determination as to the extent of the appellees' loss. If the trial court determines that appellees were not adequately compensated, or not at all overcompensated for their loss, it should deny the equitable subrogation claim. If, however, the court determines that there was an excess recovery, it should allow satisfaction of the appellants' claim.

Therefore, I would remand the cause for the trial court's further consideration.