Subrogation-Make Whole Rule

Health insurance policy says: "Payments of any Benefits will allow Claims Administrator to be subrogated to and succeed the rights of the Member for recovery against any person, organization or carrier in accordance with applicable laws. Any subrogation claim shall be a first priority lien on the full or partial proceeds of any settlement, judgment or other payment recovered by or on behalf of the member to the extent allowed by law. Also, to the extent permitted by law, this lien applies whether or not the covered person has been fully compensated for all of his or her losses." Will this defeat make whole rule?

Answer: I think so, assuming it is an ERISA plan. Here's the writeup I did on the subject: Oklahoma has adopted the "make whole" rule in Equity Fire and Cas. Co. v. Youngblood, 1996 OK 123, 927 P.2d 572. This common law doctrine forbids subrogation where the result would be to cause the insured to be less than fully compensated or "made whole." Note that, if this is an employer provided health plan, the federal ERISA statute probably applies, which might give you a different result. The usual rule with regard to ERISA subrogation is that the make whole rule applies unless the plan specifically negatives its application. However, language such as that the plan is entitled to "first rights of recovery" or some such may indicate an intent to negative the make whole rule. See in this regard, Great West Life & Annuity Co. v. Clingenpeel, 996 F.Supp. 1353.