1. What Is Subrogation in a Washington Personal Injury Case?
Imagine this: you’re in a Seattle car crash. Your health insurance pays $20,000 for hospital care. Later, you settle your claim for $100,000. Then your own insurance says, “We want our $20,000 back.”
That’s subrogation.
It allows insurers, whether health insurance, auto PIP, or Medicare, to demand reimbursement from your settlement. In plain English: if someone else caused your injury and your insurance paid for care, they want repayment.
It doesn’t feel right. You paid premiums for that coverage. But most policies include this language. And in Washington, while the Made Whole Doctrine from Thiringer v. Am. Motors Ins. Co., 91 Wn.2d 215 (1978) provides some protection, insurers still push aggressively. ERISA and federal plans (like Medicare or Medicaid) often sidestep state protections entirely.
Subrogation isn’t a fine print detail. It’s a financial landmine. Learn more about related issues in our guide to PIP coverage in Washington: https://www.scottlawseattle.com/blog/what-is-pip-insurance-washington/
2. Where Does Subrogation Show Up in Washington?
You expect to battle the other driver’s insurance. But suddenly, your own insurer or even a government program demands part of your settlement.
Common examples in Washington include:
- Health Insurance (Private & Employer Plans) – Pays bills, then seeks repayment. ERISA plans are especially aggressive.
- Personal Injury Protection (PIP) / MedPay – Washington auto policies include PIP unless waived. It covers bills but usually requires reimbursement (see blog: https://www.scottlawseattle.com/blog/washington-pip-injury-claims/).
- Government Programs – Medicare, Medicaid, VA, and Tricare assert lien rights with strict enforcement.
- Medical Providers – Seattle-area hospitals (UW, Swedish, Virginia Mason) and clinics may file liens if balances remain unpaid. For more: https://www.scottlawseattle.com/blog/medical-liens-injury-cases-washington/
3. Is Subrogation Legal in Washington?
Yes, but it’s not absolute.
Washington’s Made Whole Doctrine (Thiringer v. Am. Motors Ins. Co., 91 Wn.2d 215 (1978)) says insurers can’t recover unless you’ve been fully compensated for medical bills, lost wages, and pain and suffering. Despite this, many insurers still try, and enforcing the rule often falls on your lawyer.
The Common Fund Doctrine from Mahler v. Szucs, 135 Wn.2d 398 (1998) provides another layer of protection. It requires insurers seeking reimbursement to pay their proportionate share of the attorney fees and costs it took to secure the recovery in the first place. Put simply: if your lawyer did the heavy lifting to win your case, your insurance company can’t take its full reimbursement without also contributing to the costs of getting that money.
Winters v. State Farm, 144 Wn.2d 869 (2001) applied this principle directly to PIP claims, confirming that insurers cannot sidestep the common fund doctrine when they benefit from your attorney’s work.
Matyszuk v. State Farm, 134 Wn. App. 4 (2006) clarified the limits: the common fund doctrine applies when an insurer is reimbursed out of a third-party recovery, but not when the only recovery is from your own insurer.
However, these protections do not apply to ERISA plans or federal programs like Medicare, Medicaid, VA, or Tricare, which often demand repayment under federal law.
4. How Subrogation Impacts Your Settlement
Subrogation directly reduces your net recovery. Here’s a simplified breakdown:
- Settlement Amount: $100,000
- Attorney Fee (1/3): $33,333
- Medical Liens: $20,000
- Case Costs: $2,000
- Net to Client: $44,667
Clients often ask: Why is the attorney fee based on the gross settlement, not the leftover?
Because the work spans the entire case: proving liability, negotiating damages, and fighting insurers. Attorneys also negotiate subrogation and medical liens, saving you money you’d otherwise lose.
We once represented a Seattle crash victim facing a $50,000 ERISA lien. After months of negotiation, we cut it nearly in half, saving them $25,000.
For a related breakdown, see: https://www.scottlawseattle.com/blog/personal-injury-settlement-breakdown-washington/
5. Can Subrogation Be Negotiated?
Sometimes — but it depends on the type of plan, the facts of your case, and the governing law.
Often negotiable in Washington:
- Private health insurance (non-ERISA) — Subject to the Made Whole Doctrine from Thiringer v. Am. Motors Ins. Co., 91 Wn.2d 215 (1978).
- PIP claims — Guided by Thiringer and the Common Fund Doctrine from Mahler v. Szucs, 135 Wn.2d 398 (1998), and reinforced in Winters v. State Farm, 144 Wn.2d 869 (2001) (insurers must share a proportionate share of attorney fees and costs).
- Medical provider liens — Hospitals, clinics, and doctors sometimes overstate or inflate bills. These liens can often be reduced to a reasonable amount.
Sometimes negotiable or limited in scope:
- ERISA plans — Reductions are possible, but usually smaller and harder to secure because these plans are governed by federal law.
- Medicare — Has strong federal recovery rights, but beneficiaries can request a waiver (for hardship or fairness reasons) or a compromise of repayment through CMS: https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process
- Medicaid (Washington Apple Health) — By statute, HCA must pursue reimbursement. See: https://www.hca.wa.gov/about-hca/other-administrative-activities/personal-injury-casualty-recoveries-and-special-needs-trusts
- VA — The Department of Veterans Affairs allows waiver or compromise of its claims: https://www.va.gov/ogc/collections.asp
- TRICARE — TRICARE may compromise and waive its claims: https://tricare.mil/PatientResources/Claims/ThirdPartyLiability , https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd2527.pdf
Limits to keep in mind: In Matyszuk v. State Farm, 134 Wn. App. 4 (2006), the court made clear that if your only recovery is against your own insurer (not from a third party), you generally cannot force that insurer to share attorney fees under the common fund doctrine.
Bottom line: Federal and ERISA plans are not “never negotiable,” but the pathways are narrower and more rule-bound. An experienced lawyer can often reduce what’s owed, even if only modestly, by applying the right statutes and agency rules.
6. Why Ignoring Subrogation Is Dangerous
Pretending it doesn’t exist won’t work. If left unresolved, you could face:
- Lawsuits for reimbursement
- Settlement delays (especially with Medicare or Medicaid)
- Collections on unpaid medical bills
- Funds withheld in attorney trust accounts until liens are resolved
Subrogation doesn’t disappear when your case closes. It lingers until addressed.
7. Protecting Yourself From Subrogation Surprises
Subrogation is one of the least understood but most critical parts of a Washington injury case. If ignored, it can wipe out much of your recovery.
- Key takeaways for Washington clients:
- Know what kind of insurance plan you have.
- Don’t assume repayment demands are valid.
- Ask your lawyer early about liens and subrogation claims.
- Never sign repayment agreements without review.
How Scott & Scott Helps
At Scott & Scott, we fight for more than just settlements: we fight for money in your pocket. That means protecting you from unfair reimbursement claims, reducing liens, and making sure you keep as much of your settlement as possible.
If you’ve received a subrogation letter or medical lien notice, don’t go it alone. Small mistakes can cost thousands.
This is your sound counsel. We cut through the noise, fight for your recovery, and protect what’s rightfully yours.
Schedule a free consultation today and let us help protect what’s rightfully yours.