Chapter 31: Subrogation

31.1 Overview

Subrogation is the process of recovering claims for medical and rehabilitation service costs.

The CRS program usually does not purchase goods or services for consumers when there are other sources to cover these expenses. However, CRS funds can be used before a settlement or judgment is reached in a workers' compensation or liability case when third party funds are not available at the time needed to ensure that the consumer's progress toward the rehabilitation goal is not delayed.

When CRS funds are expended on behalf of a consumer who has filed litigation or other legal claims, the CRS program helps recover those funds through the subrogation process

31.2 Types of Subrogation

The CRS program pursues recovery of expenditures in the following two types of cases:

  • Workers' compensation cases where the CRS program encumbrances have been made for medical or medically related expenditures, usually while the case is in litigation, and the insurance carrier refuses to pay for medical expenses.
  • Liability insurance cases, usually involving a lawsuit or claim between the drivers of two vehicles, the driver of a vehicle and a passenger in the vehicle, or the driver of a vehicle and a passenger in another vehicle. Medical and training services may be subrogated in liability cases.

31.3 Responsibilities

31.3.1 Counselor

There are three instances in which you must ask the consumer if he or she has retained an attorney or is pursuing a claim related to his or her disability:

  • at the time of application;
  • when completing the Individualized Written Rehabilitation Plan (IWRP); and
  • when amending or reviewing the IWRP.

If the consumer has retained an attorney or is pursuing a claim related to his or her disability:

  1. complete DARS3500, Subrogation Report;
  2. give the consumer a copy of page 3 of the Subrogation Report;
  3. review the page with the consumer to answer any questions; and
  4. send the Subrogation Report to Legal Services by:

Subrogation Coordinator
Legal Services, also known as the Office of the General Counsel (OGC)
Health and Human Services
4800 N. Lamar Blvd., Ste. 300 MC1419
Austin, TX 78756-3178

CRS field staff members are not required to track a subrogated case through settlement.

31.3.2 Legal Services

Legal Services provides all legal support and representation regarding subrogation, including legal intervention in lawsuits. In addition, the office acts as a liaison with the Office of the Attorney General.

Within Legal Services, the subrogation coordinator:

  • helps identify cases that are appropriate for subrogation;
  • begins efforts to recover costs when they are notified of a subrogation case; and
  • communicates with field counselors and private attorneys to facilitate reimbursement.

31.3.3 When to Use DARS3500

Use DARS3500, Subrogation Report, when the:

  • consumer is pursuing a claim against another party for personal injury and related damages caused by the other party's negligence or wrongdoing, and the CRS program has or will spend funds for rehabilitation services because of the negligence or wrongdoing;
  • Texas Department of Insurance, Division of Workers' Compensation has denied the consumer's claim; the consumer is appealing the denial either to the Texas Department of Insurance, Division of Workers' Compensation or in court; and the CRS program has provided or will provide diagnostic or restorative services related to the injury; or
  • consumer was injured on the job, but there was no workers' compensation coverage, and the consumer has filed a liability claim or lawsuit.

Upon receiving notification of a subrogation case, the subrogation coordinator begins efforts to recover costs.

31.4 When Recovery Begins for CRS funds

CRS recovery of funds begins when:

  • funds that are recoverable have been encumbered; and
  • CRS program staff members learn that a consumer has filed:
    • a lawsuit or claim, or will file a lawsuit, against a third party for injuries; or
    • a lawsuit appealing the decision of the Texas Department of Insurance, Division of Workers' Compensation in a workers' compensation case.

31.5 The Recovery Process

When Legal Services finalizes a settlement of a subrogation claim, the consumer's attorney often submits a request for a waiver of all or part of the CRS program subrogation lien.

When this happens, the subrogation coordinator:

  • communicates with the consumer’s attorney regarding the subrogation claim; and
  • sends a list of assessment questions to the counselor of record or the manager of that unit.

The counselor or manager of record:

  • completes the list of assessment questions; and
  • faxes the completed document to the subrogation coordinator at (512) 424-4059 within three workdays.

When all necessary documents, including the counselor's assessment responses, are received, Legal Services uses the information to negotiate an appropriate settlement amount for the subrogation claim, if warranted.

The final settlement amount may range from 0 percent to 100 percent of the total lien amount claimed by the CRS program.