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Unlimited Subrogation: Improving Medical Malpractice Liability by Allowing Insurers to Take Charge

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  • Kenneth S. Reinker
  • David Rosenberg

Abstract

This article proposes unlimited insurance subrogation (UIS) to improve the insurance and deterrence results of medical malpractice liability. Unlimited insurance subrogation enables patients to assign their entire potential medical malpractice claims to their first-party insurers without limitation as to the amount the insurers pay out in benefits or recover in tort damages. Unlimited insurance subrogation should improve insurance outcomes by converting suboptimal tort insurance into more optimal first-party insurance. Establishing first-party insurers as plaintiffs to confront liability insurers on the defense side should improve deterrence through more effective prosecution of meritorious claims and by harnessing the insurers' incentives for cooperation to reduce meritless and unnecessary litigation. In addition, UIS should encourage further reforms by contract between the first-party and liability insurers who would take charge of the system. This article shows that loss of patient cooperation, insurer gaming, and other possible problems with UIS are unlikely to arise or are readily solvable. (c) 2007 by The University of Chicago. All rights reserved.

Suggested Citation

  • Kenneth S. Reinker & David Rosenberg, 2007. "Unlimited Subrogation: Improving Medical Malpractice Liability by Allowing Insurers to Take Charge," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages 261-289, June.
    • Handle: RePEc:ucp:jlstud:v:36:y:2007:i:s2:p:s261-s289
    DOI: 10.1086/519468
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    References listed on IDEAS

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    1. Calfee, John E & Rubin, Paul H, 1992. "Some Implications of Damage Payments for Nonpecuniary Losses," The Journal of Legal Studies, University of Chicago Press, vol. 21(2), pages 371-411, June.
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    3. A. Mitchell Polinsky & Daniel L. Rubinfeld, 2003. "Aligning the Interests of Lawyers and Clients," American Law and Economics Review, American Law and Economics Association, vol. 5(1), pages 165-188.
    4. Sykes, Alan O, 2001. "Subrogation and Insolvency," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 383-399, Part I Ju.
    5. David Rosenberg, 1986. "The Uncertainties of Assigned Shares Tort Compensation: What We Don't Know Can Hurt Us," Risk Analysis, John Wiley & Sons, vol. 6(3), pages 363-369, September.
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    Cited by:

    1. A. Mitchell Polinsky & Steven Shavell, 2017. "Subrogation and the Theory of Insurance When Suits Can Be Brought for Losses Suffered," NBER Working Papers 23303, National Bureau of Economic Research, Inc.
    2. Gomez, Fernando & Penalva, Jose, 2015. "Tort reform and the theory of coordinating tort and insurance," International Review of Law and Economics, Elsevier, vol. 43(C), pages 83-97.
    3. Spurr, Stephen J., 2021. "Subrogation and its consequences for tort litigation," International Review of Law and Economics, Elsevier, vol. 67(C).
    4. Daniel L. Chen, 2015. "Can markets stimulate rights? On the alienability of legal claims," RAND Journal of Economics, RAND Corporation, vol. 46(1), pages 23-65, March.

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