Fiscal Note - SB 0025 - Insurers Are Subrogated to the Insured's Right to Recover Damages From a Liable Party
L.R. NO. 0478-01
BILL NO. SB 25
SUBJECT: Insurance, Insurance-Medical, Insurance-General, Health, Civil
Procedures
TYPE: Original
DATE: January 10, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Insurance
Dedicated $8,750 $0 $0
Total Estimated
Net Effect on All
State Funds $8,750 $0 $0
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Corrections (DOC), the Department of Public
Safety (DPS) - Missouri State Highway Patrol (MHP), the Department of Health
(DOH), the Office of Administration (COA), and the Missouri Consolidated
Health Care Plan (HCP) assume this proposal would not fiscally impact their
agencies.
The Department of Insurance (INS) states that approximately 175 insurers
(companies, health servicing corporations, and health maintenance
organizations) write major medical and comprehensive group policies. Each
insurer may submit policy amendments changing their current policies to
include subrogation rights for the insurer. Policy amendments are to be
accompanied with a $50 filing fee. Based on the estimated policy amendments,
$8,750 in new revenue would be generated for the Insurance Dedicated Fund in
the first fiscal year only. INS further states that they currently
disapprove such subrogation provisions in policies.
Officials from the Department of Transportation (DHT) state the proposal
would have no fiscal impact on the department. However, the Highway and
Patrol Medical Plan (Plan) may be affected. The Plan currently has a
subrogation provision but this proposal could reduce the amount that would be
recoverable by the Plan in some instances. DHT plan administrator, Blue
Cross and Blue Shield, states that subrogation can be worth as low as
one-tenth of one percent to one and one-half percent of the benefit payments
of the plan. DHT states that using 1995 claims of $25,622,584 and assuming a
one percent recovery less 50% benefits paid to or on behalf of the insured
the Plan would lose $128,113 in claims paid.
Officials from the Department of Conservation (MDC) stated this proposal
would appear to be favorable to employers. However, the actual reduction in
cost is unknown because information on the occurrence of this activity is not
readily available. MDC assumes there would be no fiscal impact on their
agency.
The Department of Social Services (DOS) did not respond to our fiscal impact
request. However, in responding to a similar proposal last year DOS assumed
they would incur no fiscal impact.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
INSURANCE DEDICATED FUND
Income - Department of Insurance
Policy amendment fees $8,750 $0 $0
ESTIMATED NET EFFECT ON
INSURANCE DEDICATED FUND $8,750 $0 $0
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that
bodily injury judgements or settlements would be reduced as result of this
proposal.
DESCRIPTION
This act allows insurers the right of subrogation of an insured's legal claim
for bodily injuries. If the insured sues and gets a legal judgment the
settlement shall be distributed to the insurer for medical cost incurred less
attorney's fees on a prorated basis less case expenses on a prorated basis.
This distribution from medical cost shall be reduced if a finding of
comparative fault is determined. If the insured does not sue, the insurer can
bring suit against the liable party at the insurer's expense. Any recovery
by the insurer shall be considered when revising rates for group policy
holders.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Corrections
Department of Public Safety
Missouri State Highway Patrol
Department of Health
Office of Administration
Missouri Consolidated Health Care Plan
Department of Conservation
Department of Transportation
Department of Insurance
NOT RESPONDING: Department of Social Services
This Fiscal Note is not an official copy and should not be quoted or cited.