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Quality Chiropractic6/14/2002
epresent him. He then goes to Doctor II to get additional treatment not covered by insurance. This time, both he and his attorney sign a document assigning proceeds to the doctor.
The victim then collects a judgment from the tortfeasor. Attorney collects a contingency fee, which is taken directly from the judgment. Insurer, who asserted its subrogation rights and was joined as a party to the litigation, is paid directly by the tortfeasor. See Amica Mut. Ins. Co. v. Maloney, 120 N.M. 523, 527, 903 P.2d 834, 838 (1995). Attorney is obligated to pay Doctor II out of the judgment proceeds. See In re Moore, 2000-NMSC-019, 4, 129 N.M. 217, 4 P.3d 664; Romero, 111 N.M. at 791, 810 P.2d at 810. The only party without recourse, unless he can collect a judgment directly from the patient, is Doctor I, who accepted an assignment from the patient without a guarantee from the patient's attorney.
Plaintiff's hypothetical raises two questions. First, why can Attorney, Insurer, and Doctor II take proceeds directly from the judgment, while Doctor I cannot? In other words, why is an insurance company that paid for medical services entitled to more protection than a physician who provided services directly? Second, if our courts will enforce a patient's promise to pay a creditor directly or through an attorney, why do we refuse to enforce a patient's assignment?
Assignment versus Subrogation and Contingency Fees
As to the first question, we think there are substantive differences between subrogation agreements and contingency fee contracts, on the one hand, and assignments, on the other. Subrogation developed as an equitable doctrine intended to avoid unjust enrichment. " ubrogation gives the payor a right to collect what it has paid from the party who caused the damage." White v. Sutherland, 92 N.M. 187, 190, 585 P.2d 331, 334 (Ct. App. 1978). The right of subrogation allows an insurer who has fully compensated the insured to step into the shoes of the insured and collect what it has paid from the wrongdoer. Amica Mut. Ins. Co., 120 N.M. at 527, 903 P.2d at 838. The subrogee, therefore, is never a volunteer choosing to become involved in litigation; only those with a duty to pay can assert subrogation rights. See Imel v. Travelers Indem. Co., 281 N.E.2d 919, 921 (Ind. Ct. App. 1972) (distinguishing subrogation and assignment). Thus, the doctrine of subrogation does not invite strangers to become unnecessarily involved in litigation. The subrogated insurer has a pre-existing duty under the insurance policy to pay out benefits to its insured. A party accepting an assignment, on the other hand, does so after the accident has already occurred, and inserts itself into the litigation. Plaintiff had no obligation to treat the patient, and no obligation to accept an assignment.
Because the subrogated insurer has a pre-existing duty to pay, it bears the risk that the insured will be unable to obtain compensation from the tortfeasor. This is one of the primary benefits of insurance. The same was true in Seaboard Fire & Marine Insurance Co., where the employer had a statutory obligation to pay out worker 's compensation benefits. If there was no recovery from the third-party tortfeasor in that case, the employer would have no additional recourse to seek reimbursement for the benefits it paid to the worker. Plaintiff in this case bore no such risk. It elicited a promise from the patient that he pay the bills if he was unable to recover for his accident. Plaintiff is essentially a creditor who sought a better guarantee of payment by demanding that the patient grant an assignment in any proceeds from his claim against the other driver.
In addition, the doctrin
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