Table Of Contents

Jurisdictions That Have Held That the “Made Whole” Doctrine Cannot Be Modified by Contract


Franklin v. Healthsource of Ark., 942 S.W.2d 837 (Ark. 1997)

Court applies “made whole” rule despite insured’s express assignment of tort recovery to insurer; attempt to enforce the “literal language” of the assignment “ignores the fact that this type of contract is realistically a unilateral contract of insurance and overlooks the insured’s total lack of bargaining power in negotiating the terms of these types of agreements.” Id. at 840.


Kral v. Am. Hardware Mut. Ins. Co., 784 P.2d 759 (Colo. 1989)

Court rules that express and specific subrogation agreement does not require the insured to reimburse the insurer out of a tort recovery unless she has been made whole, holding generally that such agreements “should be deemed enforceable only to the extent such reduction in benefits would not impair the ability of the insured to achieve full compensation . . . .” Id. at 763.


Wasko v. Manella, 849 A.2d 777 (Conn. 2004)

Court rejects insurer’s argument that subrogation clause authorized by a Connecticut statute provides an insurer with “an inviolate right” to bring a subrogation action, id. at 783, noting that contractual terms “may be ‘trumped’ by principles of equity,” id. at 785, and adding that “under traditional principles of subrogation, if an insured brings an action against a negligent party, an insurer generally is entitled to recover the amount it paid to the insured only if the amount of damages awarded exceeds the difference between the amount the insurer paid and the insured’s actual damages.” Id. at 784.


Davis v. Kaiser Found. Health Plan of Georgia, Inc., 521 S.E.2d 815 (Ga. 1999)

Court holds that the “made whole” rule reflects state policy that “overrides the parties’ freedom of contract” and therefore that a provision in an insurance contract that required an insured to reimburse the insurer with proceeds from a tort recovery without regard to whether the insured had received complete compensation is unenforceable as “violative of public policy.” Id. at 818. See also Ga. Code § 33-24-56.1, codifying the holding in Davis.


Ludwig v. Farm Bureau Mut. Ins. Co., 393 N.W.2d 143 (Iowa 1986)

Court adopts the rule that “when the total of the insured’s recovery from a third party and the insurance company’s payments under the policy still are less than the loss sustained, the insured has not been made whole, and the insurer may not recover against him.” Id. at 146-67. Court also held that insurer may obtain reimbursement if insured is “made whole” with respect the elements of damages covered by insurance; courts need not take into account other elements of damages (such as pain and suffering) in determining whether insured was “made whole” by tort recovery. Id.


S. Farm Bureau Cas. Ins. Co. v. Sonnier, 406 So. 2d 178 (La. 1981)

Court holds that despite subrogation clause, if insured is less than fully compensated by tort recovery, insurer is only partially subrogated, and insured has complete priority in receiving payment. See also Brister v. Blue Cross and Blue Shield of Florida, Inc., 562 So.2d 1040,1044 (La. Ct. App. 1990) (“What the Supreme Court held in Sonnier was that since the survivors had not been fully compensated, the subrogated insurer could not collect from the survivors the amount the insurer had paid them.”).


Union Ins. Soc. of Canton v. Consol. Ice Co., 245 N.W. 563 (Mich. 1932)

Court holds that insurer is not entitled to subrogation against the insured for the judgment recovered against the wrongdoer if the total amount received by insured, after deducting attorney’s fees and costs, does not fully compensate insured. Id. at 564. See also Mich. Mut. Ins. Co. v. Shaheen, 300 N.W.2d 599 (Mich. Ct. App. 1980) (holding that agreement providing that insured would hold, for the benefit of insurer, all rights and claims which he had against any other parties involved in the action should be interpreted to compel insured to reimburse insurer only for that amount of insured’s recovery which exceeds damages defendant has suffered, including costs and attorney fees).


Hare v. State, 733 So. 2d 277 (Miss. 1999)

Court adopts the “made whole” rule, rejecting insurer’s argument that it was entitled to reimbursement of “all sums recovered . . . by settlement” for hospital, medical or related services under the terms of the insurance plan. The Court explains that allowing the literal language of an insurance contract to destroy an insured’s equitable rights “ignores the fact that this type of contract is realistically a unilateral contract of insurance and overlooks the insured’s total lack of bargaining power in negotiating the terms of these types of agreements.” Id. at 284 (citations omitted).


Swanson v. Hartford Ins. Co. of Midwest, 46 P.3d 584 (Mont. 2002)

Court rejects argument that contract language can override equitable made whole doctrine, and reaffirms holding that the public policy in Montana requires that an insured must be totally reimbursed for all losses as well as costs, including attorney fees, involved in recovering those losses before the insurer can exercise any right of subrogation, regardless of any contract language providing to the contrary. Id. at 589; see also Youngblood v. Am. States Ins. Co., 866 P.2d 203 (Mont. 1993) (observing that “subrogation of medical payment benefits in Montana is void as against public policy.”)


Blue Cross and Blue Shield of Neb., Inc. v. Dailey, 687 N.W.2d 689 (Neb. 2004)

Court holds that contractual language that attempts to allow insurer to recover regardless of whether insured is fully compensated is unenforceable. Id. at 699. Court explains that insurance terms which purport to place burden of loss on the insured despite the fact that the insured has paid the insurer to bear the risk are “in direct opposition to the equitable principles upon which subrogation is allowed.” Id.

New York

USF & G v. Maggiore, 299 A.D.2d 341 (N.Y. App. Div. 2002)

Court applies “make whole” rule despite subrogation clause, noting that allowing subrogation where insured is not fully compensated would be “contrary to the principal purpose of an insurance contract: to protect an insured from loss, thereby placing the risk of loss on the insurer [though] the insurer has accepted payments from the insured to assume this risk of loss.” Id. at 558-59 (quoting 16 Couch, Insurance 3d, § 223:136, at 152-153).

North Carolina

St. Paul Fire & Marine Ins. Co. v. W. P. Rose Supply Co., 198 S.E.2d 482 (N.C. Ct. App. 1973)

Court holds that, when the sum recovered by the insured is less than the total loss, the loss should be borne by the insurer. Id. at 484; see also 11 N.C.A.C. 12.0319 (prohibiting subrogation clause in life or accident and health insurance policies).


Nationwide Mut. Ins. Co. v. DiTomo, 478 A.2d 138 (Pa. Super. 1984)

Court holds that insurer’s claim against insured which sought subrogation of money that the insured had received from insurer of tortfeasor involved in auto collision failed to state a claim where the insured had not been made whole. Id. The right to subrogation does not even arise until the insured has been made whole. Id.


Wimberly v. American Cas. Co. of Reading, Pa. (CNA), 584 S.W.2d 200 (Tenn. 1979)

Court finds no right of subrogation where insured has not first been made whole. Id. at 203; see also Abbott v. Blount County, ‑‑‑ S.W.3d ‑‑‑‑, 2006 WL 3199277 (Tenn., Nov. 7, 2006), in which the Court holds that insurers may not bind insured’s right to settlement by using artful contract terms because “[c]ontract terms that require the consent of the insurer would allow the insurer to withhold consent from any settlement that does not make the insured whole and thereby compel the insured to seek a larger award at trial.” Id. at *2.


Thiringer v. Am. Motors Ins. Co., 588 P.2d 191 (Wash. 1978)

Court finds that, in the context of a general settlement of personal injury claims, the insurer is entitled to subrogation only after payment of the insured’s general damages; unless “otherwise directed by statutory requirements,” courts must be “guided by the principle that a party suffering compensable injury is entitled to be made whole but should not be allowed to duplicate his recovery.” Id. at 194.


Ruckel v. Gassner, 646 N.W.2d 11 (Wis. 2002)

Court specifically reaffirms that an insured must be made whole before the insurer may exercise subrogation rights against its insured, even when unambiguous language in an insurance contract states otherwise.

Jurisdictions That Require That Contractual Modification of the “Make Whole” Doctrine Be Made by Clear, Unequivocal, and/or Specific Language


Ex parte State Farm Fire and Cas. Co., 764 So. 2d 543, 546 (Ala. 2000)

Court recognizes that equitable “made whole” doctrine may be modified by contract only where terms of the insurance policy are “clear and unambiguous” in requiring the insured to reimburse the insurer to the extent of its payment to the insured. Id. at 545-46. See also Wolfe v. Alfa Mutual Ins. Co., 880 So. 2d 1163,1167 (Ala. Civ. App. 2003). (general subrogation language is “not sufficient to modify applicability of the made-whole doctrine”).


Sapiano v. Williamsburg Nat’l Ins. Co., 28 Cal. App.4th 533 (Cal. Ct. App. 1994)

Court holds that, in absence of specific language to contrary, general provision that insurer was subrogated to rights of insured does not permit insurer to recover from third-party tortfeasor until insured has been made whole. Id. at 538. The court also observed that where the insured does not assist in prosecution of the claim, insured may not be permitted to recover until insured has been made whole. Id.


Florida Farm Bureau Ins. Co. v. Martin, 377 So. 2d 827 (Fla. Dist. Ct. App. 1979)

Court rules that equitable principles such as the “made whole” doctrine apply even when the subrogation is based on contract, except as modified by specific provisions in the contract. Id. at 830. “In the absence of specific terms to the contrary, the insured is entitled to be made whole before the insurer may recover any portion of the recovery” from the tortfeasor. Id.


Willard v. Auto. Underwriters, Inc., 407 N.E.2d 1192 (Ind. Ct. App. 1980)

Court holds that “made whole” doctrine applies to contractual as well as equitable subrogation. Id. at 1193. A contract may not avoid application of the doctrine unless it is “clear, unequivocal and so certain as to admit no doubt on the question to avoid application of the before the debt is satisfied.” Id.


Wine v. Globe Am. Cas. Co., 917 S.W.2d 558 (Ky. 1996)

Court rules that subrogation rights may be modified by contract only if violence is not done to established equitable principles. Id. at 562. Court held that principles of equity did not require insured to be “made whole” before carrier was entitled to subrogation where (1) insurance language clearly and explicitly provided insurer with the right of subrogation and subordinated insured’s interests in any recovery in favor of insurer until insurer was reimbursed, and (2) at time of claim, each party was represented by counsel and enjoyed a parity in bargaining position, and (3) insured’s losses had already been sustained and were fully known and appreciated. Id. at 565.


Westendorf v. Stasson, 330 N.W.2d 699 (Minn.1983)

Court applies “make whole” rule despite contract provision giving HMO provider right to reimbursement to extent of damages recovered, noting that equitable principles apply to all instances of subrogation unless modified by specific provisions in the contract. Id. at 230-31.

New Jersey

Culver v. Ins. Co. of N. Am., 559 A. 2d 400 (N.J. 1989)

Court observes that “made whole” doctrine applies to contractual as well as equitable subrogation. Id. at 404. An insurer may not avoid application of make whole doctrine unless contract is sufficiently specific and honors reasonable expectations of the parties. Id. at 403.


N. Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 814 N.E.2d 1210 (Ohio 2004)

Court holds clear and unambiguous language allows subrogation where insured is not fully compensated. Id. at 1215.


Equity Fire and Cas. Co. v. Youngblood, 927 P.2d 572 (Okla. 1996)

Addressing the enforceability of subrogation provisions in the context of an ERISA claim, Court holds that where the plan does not specifically provide that insurer is entitled to priority of payment and does not expressly give its managers the right to resolve ambiguities, and where the facts do not clearly show that the beneficiary’s settlement included reimbursement for medical expenses, the plan will not be allowed to recover unless insured is made whole. See also American Med. Sec. v. Josephson, 15 P.3d 976 (Okla. Civ. App. 2000) (holding that, in the absence of a priority-of-payment provision, subrogation clause is unenforceable unless insured has been fully compensated).

Rhode Island

Lombardi v. Merchants Mut. Ins. Co., 429 A.2d 1290, 1292-93 (R.I. 1981).

Court applies the “made whole” doctrine and rejects automobile insurers’ claims for a share in the proceeds of a safety responsibility bond obtained by the uninsured motorist tortfeasor unless the insureds’ loss (stated in their judgment against the tortfeasor), was fully paid. But see Ditomasso v. Ocean State Physicians Health Plan, Inc., No. 87-2487, 1988 WL 1016798 (R.I. Super. 1988) (distinguishing Lombardi, and holding that insured has enforceable right to subrogation where the language of the contract regarding subrogation is clear and unambiguous).


Birch v. Fire Ins. Exch., 122 P.3d 696, 698 (Utah 2005)

Court reiterates that while the doctrine of equitable subrogation may be modified by contract, “in the absence of express contractual terms to the contrary, ‘the insured must be made whole before the insurer is entitled to be reimbursed from a recovery from the third‑party tort‑feasor.’” Id., (quoting Hill v. State Farm Mut. Auto. Ins. Co., 765 P.2d 864, 866 (Utah 1988) (citations omitted)).

West Virginia

Kittle v. Icard, 405 S.E.2d 456, 464 (W. Va. 1991)

Court sets forth the West Virginia Supreme Court’s adoption of the “make whole” rule, stating that “[a]bsent a clearly expressed legislative intent requiring otherwise, ‘subrogated’ is to be given its usual, ordinary meaning.” Id. (citations omitted). While the legislature superseded the holding of Kittle by statute as set forth in Grayan v. Dept. of Health and Human Res., 498 S.E.2d 12 (W. Va. 1997), West Virginia courts continue to apply Kittle’s rationale, holding that “subrogation is an equitable principle and, as such, the general rules of equity, including the made‑whole rule, will apply regardless of whether the subrogation arises from common law or by contract, unless a contrary agreement is clearly and expressly stated.” Kanawha Valley Radiologists, Inc. v. One Valley Bank, N.A., 557 S.E.2d 277, 282 (W. Va. 2001).

Jurisdictions That Hold That General Subrogation Language Gives Insurers the Right to the First Monies Recovered from a Tort Claim


Capitol Indem. Corp. v. Strike Zone, S.S.B. & B. Corp.,646 N.E.2d 310 (1995)

Court holds that where an insurance contract gives the insurer the right to subrogate to the extent of its payment, the contract will be enforced as written even if the insured’s losses exceed the amount it recovers from the tortfeasor and the insurer. Id. at 312.


Stancil v. Erie Ins. Co., 740 A.2d 46 (Md. Ct. Spec. App. 1999)

Court holds that, in the context of homeowner’s insurance policy in which insured elected not to fully insure his property, principles of equity did not require insured to be made whole before insurer was entitled to subrogation. Id. at 48. The court distinguished Stancil from those cases involving health care claims, recognizing that the principles of equity might demand that the insured be made whole before insurer would be entitled to subrogation in the context of health care claims. Id.

South Dakota

Westfield Ins. Co., Inc. v. Rowe ex rel. Estate of Gallant, 631 N.W.2d 175 (S.D. 2001)

Court holds common law “made whole” doctrine will generally apply absent a subrogation clause in the insurance policy, but if there is any such clause, the made whole doctrine will not apply unless the clause specifically limits the insurer’s right of subrogation to instances where the insured has been made whole. Id. at 180. Court finds that automobile insurer is entitled to subrogation even though the insured was not made whole. Id.