SPECIAL INTEREST CONSERVATISM….Today’s lecture on Republican pandering to special business interests concerns the soon-to-be-extinct legal doctrine known as “equitable subrogation.” You’re excited already, aren’t you?

Here’s the nickel explanation. Suppose you’re in a car accident and you suffer a bunch of damages: medical bills, lost wages, lawyers’ fees, and so forth. Your insurance company pays your medical bills, and then you sue the other guy and recover damages. What happens to the money you recover?

Your insurance company naturally thinks the first priority should be to repay them for the medical bills they covered. However, anyone who’s not a paid spokesman for the insurance industry probably disagrees. After all, the insurance company has been collecting premiums for years and has enormous financial resources, while the victim is the one who’s actually suffering from both physical injury and financial distress. Common sense suggests that the injured party should get first crack at the dough, and only after he’s “made whole” should the insurance company get repaid. This is the doctrine of equitable subrogation.

That’s fair, and it’s also the law in most states. But of course, insurance companies hate it, and we all know that the insurance industry’s best friend is the Republican Party. Isn’t it about time for all those campaign contributions to start paying off?

You betcha! And the magic answer to the insurance industry’s woes is “ERISA,” a federal law that has grown since 1974 to oversee 130 million workers covered by employer pension and health plans ? and oh-by-the-way, a law that sweeps away any pesky state regulation in its path. Wouldn’t it be nice if ERISA were amended to get rid of equitable subrogation and give insurance companies first crack at any money recovered in legal settlements?

You hardly have to ask what happened next, do you? This is from Sue Steinman, policy director of the Association of Trial Lawyers of America:

Here?s what happened on the Hill. The House bill [on pension reform], as originally introduced, did not contain the subrogation language nor did the bill reported out of committee contain the subrogation language. It was added surreptitiously, just prior to the House floor debate as part of a Manager?s Amendment. The House Rules allow this, if a Manager?s Amendment is blessed by the Rules Committee, which is controlled by the Majority. That?s what happened in this case.

Yes, that’s surreptitiously, the Republican majority’s favorite way of screwing their own constituents. From here the bill will go to a conference committee, where the subrogation language will either live or die. If you think this sucks, call your congressman and complain.

NOTE: This issue was brought to my attention by Brian King, a Utah lawyer who specializes in ERISA cases. You can find a more detailed explanation of this issue on his blog.

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