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Missouri, Public Policy, and Assignment of Personal Injury Claims

Blogs, Erisa

An insurer that covers an individual’s medical expenses arising from an accident that caused personal injuries may request that the individual pay back those medical expenses when the individual reaches a settlement with the alleged tortfeasor.

If that request is governed by Missouri law, however, public policy will bar such a request.

That was the opinion of a 2010 Missouri Court of Appeals opinion, Scroggins v. Red Lobster, No. SD 30214 (Mo. Ct. App. Aug. 6, 2010). In that opinion, the court said that the individual paid for health care coverage, the insurer was obligated to cover the medical expenses, and that “Missouri courts have never allowed a provider to be reimbursed for medical expenses that the insured recovers in a settlement from a liable third party under a lient theory, and we declined to do so now.”

The court recounted that, since at least 1913, Missouri public policy has prohibited assignments of personal injury claims, so as to pervent the commoditization of the pain and suffering of individuals. Among the court’s comments in this regard are the following:

  • “Missouri public policy prohibits the transfer of a personal injury claims, in whole or part.”
  • “This has been Missouri’s public policy since at least 1913, and, in all likelihood much longer, as the prohibition against the assignment of personal tort claims dates back to English common law and the Middle Ages.”
  • “In 1913, this Court explained that ‘[t]here is every reason for holding that a cause of action for personal injuries, where the gist of the damages recovered in physical pain and mental anguish, should not be the subject of barter or trade, or a matter of profit to the creditors of the injured party.'”
  • “Missouri’s courts have long felt it is outside the province of our courts to coin into money an injured party’s pain and suffering for the profit of others.”
  • “In short, allowing the assignment of claims would lead to a secondary market where speculators would profit off of the pain and suffering of others.”

The Scroggins court noted that the insurer’s claim was based on a veiled assignment of a personal injury claim. 

The court also pointed out that there have been advocates for the creation of secondary markets in persaonl injury claims, citing, for example, Susan Lorde Martin, Syndicated Lawsuits: Champerty or New Business Opportunity? 30 AM. BUS. L. J. 485 (1992).

As described in the Passion For Subro blog, the insurer’s plan “was not subject to ERISA, because of its religious non-profit affiliation made it a church plan.”

The full opinion is available (via the blog Passion For Subro) .

(This has been cross-posted at Gfeller Laurie’s Secondary Insurance Market blog.)