Indiana Supreme Court Refuses to Allow Insurance Carriers to Circumvent Subrogation Statutes

By Ted Smith & Terri Todd

On May 30, 1997, the Indiana Supreme Court handed down its opinion in Erie Insurance Co. v. George(1), holding that:

An insurer may not sue independently to enforce a personal injury claim arising out of subrogation prior to resolution of its insured’s claims absent an agreement with its insured granting explicit and unequivocal authority to initiate a lawsuit or settlement that governs the forum for resolution of both the insured’s and insurer’s claims.(2)

Facts of the Case

The undisputed facts in Erie were that on February 8, 1993, Donald Kellenberger and James George were involved in a crash in which Kellenberger rear-ended George. Kellenberger carried automobile liability insurance with GEICO. Erie was George’s automobile insurance carrier. On May 3, 1993, George retained attorney Gerald Sufleta to represent him in his personal injury claim against Kellenberger. On May 11, 1993, Sufleta notified Erie of his representation and asserted an “attorney’s lien for fees and costs”.(3)

At Sufleta’s request, in June 1993, Erie sent him a check in the amount of $4080.00, which represented medical payments coverage for George’s medical expenses. The cover letter that Erie sent with that draft stated that by paying George’s medical expenses, it acquired a right of subrogation against Kellenberger in the amount of $4080.00 and stated that Erie intended to pursue its own subrogation claim.

On September 24, 1993, Erie sent a letter to GEICO, advising it of its subrogation lien and asking GEICO to issue a separate check to Erie “‘[w]hen settlement has been reached with our insured and his attorney'”. Ten days later, even though George had not yet settled his claim against Kellenberger, Erie wrote another letter to GEICO, demanding payment of its subrogation lien within ten days. When Erie did not receive payment from GEICO, Erie (without notice to George or Sufleta) initiated its own lawsuit against Kellenberger.

On February 15, 1994, George and Sufleta moved to intervene in the lawsuit that Erie had filed against Kellenberger, asserting that Erie had no right to bring an action in its own name at that stage. In addition, they alleged that, in any event, Erie was liable for a pro rata share of George’s attorney fees and costs, pursuant to I.C. 34-4-41-4.(4)

Trial Court’s Ruling

The trial court held a hearing on April 21, 1994, at which three things happened: (1) the trial court granted George and Sufleta’s motion to intervene; (2) Kellenberger (through GEICO) filed a “complaint seeking interpleader” of Erie and Sufleta and deposited a check for $4260.00 with the court(5); and, (3) Erie, George and Sufleta stipulated to the dismissal of Kellenberger from the lawsuit.

George and Sufleta then moved for summary judgment, contending that Erie could not bring its subrogation claim against Kellenberger directly, but rather, had to pursue its subrogation claim against any settlement that George obtained from Kellenberger. George and Sufleta also asked for attorney’s fees and costs out of the funds that GEICO had paid into court.

Erie also moved for summary judgment, arguing that as a subrogee, it had a common law right and a right under Indiana Trial Rule 19(E)(3) to bring an action against Kellenberger in its own name once it had made payment to George. Erie also asserted that its lien should not be reduced for payment of any fee to Sufleta because: (1) Sufleta had expended no effort to recover the money from Kellenberger; (2) I.C. 34-4-41-4 did not apply to the facts of this case; and, (3) Sufleta was collaterally estopped from litigating the issue by decisions in prior lawsuits involving his right to attorney’s fees.

The trial court ruled that Erie could not sue in its own name to enforce its subrogation rights until George had settled with Kellenberger or obtained a judgment against him. According to the trial court, in the absence of a common law right to sue independently before George had settled with Kellenberger or obtained a judgment against him, Erie could sue in its own name only if its policy with George so-provided. However, the trial court interpreted Erie’s policy as providing that Erie could enforce its subrogation rights only after its insured settled with or obtained a judgment against the tortfeasor. Therefore, the trial court held that until George’s claim against Kellenberger was settled or finally adjudicated, George was to hold in trust any money that he recovered to which Erie claimed it was entitled. In addition, the trial court ordered Sufleta to submit an affidavit substantiating the costs incurred in pursuing George’s claim against Kellenberger and reporting whether the claim had been settled or was still pending. Disbursement of the interpled funds was postponed until the fee issue was resolved.

Court of Appeals Decision

Erie appealed and the Court of Appeals reversed the trial court’s ruling, holding that: (1) Erie was entitled to initiate its own action against Kellenberger to recover the amount of med pay coverage that it had extended to George; and, that: (2) a factual determination of Sufleta’s contribution to securing the interpled funds was required before attorney fees and costs could be awarded to Sufleta.(6) George and Sufleta then sought transfer to the Supreme Court, which was granted on October 7, 1996.

Issues Presented to the Supreme Court

In Erie, the Supreme Court, for the first time, was called upon to interpret I.C. 34-4-41-1 through I.C. 34-4-41-5 (the statute which the Indiana legislature enacted in 1993, dealing with subrogation and attorney’s fees in personal injury cases).

The Supreme Court characterized the issues to be resolved in the case as being:

(1) Does Erie, as subrogee, have a right to bring an independent action to recover reimbursement of the funds that it had paid to George? and, (2) Who is entitled to the interpled funds?

Supreme Court’s Holding

The Supreme Court held that “… the insurer cannot sue independently to enforce subrogation rights for personal injuries while its insured’s claims are still outstanding unless the insurer has obtained an explicit contractual right transferring control of the dispute to the insurer”.(7) Therefore, in this case, “Erie cannot file a lawsuit for medical expenses in its own name independent of George’s claim“.(8)

The Court’s reasoning for reaching its decision in Erie v. George includes the following:

The plain terms of the subrogation statute are consistent with this result I. C. 34-4-41-3 states that the insurer subrogation statute applies to “an insurer claiming subrogation or reimbursement rights to the proceeds of a settlement or judgment resulting from a legal proceeding(9) commenced by an insured against a third party legally responsible for personal injury for which payment is made by the insurer.”(10) It obligates an insurer claiming subrogation or reimbursement rights to “pay, out of the amount received from the insured, the insurer’s pro rata share of the reasonable and necessary costs and expenses of asserting the third party claim”.(11)

According to the Court, “[a]t best, by referring to ‘pro rata’ payments’ out of the amount received from the insured’ the statute suggests an assumption that the insured has already collected from the tortfeasor and remitted subrogation payments to the insurer before the sharing of attorney’s fees and costs occurs. This in turn suggests that no independent prior action by the insurer is contemplated …”.(12)

However, the statute is silent as to the procedures that are available to a subrogee insurer to collect its subrogated claim. That is, the statute does not directly address whether a subrogated insurer can file an independent suit for subrogated personal injury claims before its insured’s claims are resolved.(13) Nor does the statute address the procedures by which the insured is to obtain his/her pro rata share of attorney fees and costs which the statute obligates the insurer to pay.

Preventing claim splitting and deterring repetitive litigation Indiana has long-discouraged claim splitting. “‘A party seeking to enforce a claim, legal or equitable, must present to the court … all the grounds upon which he expects a judgment in his favor. He is not at liberty to split up his demand and prosecute it piecemeal[.]’ [citation omitted]”. “It is axiomatic that Erie, upon paying George’s medical bills, acquired no greater rights than those George held himself. Because George’s claim against Kellenberger was still outstanding when Erie filed suit, Erie, by suing only for the medical expenses, effectively split George’s claim. In so doing, Erie has attempted something George himself could not have done. And because Erie’s legal rights are coterminous with George’s, Erie’s lawsuit is barred as an impermissible attempt to split the personal injury claim.”(14)

“One obvious objective behind the rule [against claim splitting] is deterring repetitive litigation. Public resources are wasted if more than one judge and more than one jury are employed to try claims for different damage elements arising out of the same event and asserted under the same theory of recovery. The defendant also has an interest in not being subject to multiple litigation. The rule against claim splitting applies with no less force to claims arising under equitable doctrines, in this case subrogation. …”(15)

Explicit agreements under which the insured assigns his/her claim against the responsible third party can protect insurers in appropriate cases Erie pointed out that insurers cannot always depend upon an insured to enforce their equitable interest in a recovery. That is, there may be circumstances in which the insured collects under the insurance policy but does not pursue an action against the tortfeasor. Erie argued that because the subrogee steps into the legal position of the subrogor, insurers may therefore be faced with forfeiture of recovery due to statutes of limitations. However, the Supreme Court rejected that argument, stating that “[t]he solution to the problem is not suing independently without notice to the insured, as Erie did here, but rather securing an assignment of rights from the insured by contract to initiate a unitary lawsuit”.(16)

Only an explicit contractual relinquishment of the right to select the forum and control the litigation is sufficient to deprive the insured of those rights while the insured has any remaining claims The Supreme Court noted that an equitable assignment of the right to sue may arise by operation of law, rather than by contract, upon full payment of a loss. However, the Court stated that “… where the insured has remaining claims, only an explicit contractual relinquishment of the right to select the forum and control the litigation is sufficient to deprive the insured of those rights”.(17)

The subrogation clause in Erie’s insurance policy did not give it the right to pursue subrogation by filing suit against the tortfeasor before its insured had settled his claim against the tortfeasor Erie argued that it acquired a right to sue independently upon payment to George by virtue of the following clause in its insurance policy with him: “‘After we make a payment under this policy, we will have the right to recover from anyone else held responsible. Anyone we protect is required to transfer this right to us, and do nothing to harm this right. Anyone receiving payment from us and from someone else for the same accident or loss will reimburse us up to our payment'”.(18)

The Supreme Court rejected Erie’s argument, noting that “[w]here a right to subrogation is asserted under a contract before the debt is satisfied, as here, ‘the contract must be clear, unequivocal and so certain as to admit no doubt on the question.’ [citation omitted]”.(19) In this case, the Court stated that “[r]ead most favorably to Erie, the clause at best is ambiguous on whether Erie has any right upon payment to sue independently before George’s claim is resolved. The clause certainly does not alert the lay reader that the consequence of independent action … is to deprive the insured of choice of forum” and that Erie was acquiring control over George’s claim.(20) “It is well-settled that ‘[w]here there is ambiguity, insurance policies are to be construed strictly against the insurer’. [citation omitted] To accord a right to sue to enforce all claims, a subrogation clause must be far more explicit than Erie’s was here.”(21)

Indiana Rules of Trial Procedure Trial Rule 19(E)(3) of the Indiana Rules of Trial Procedure provides that a “subrogee may enforce the claim to the extent that he establishes his title or interest by appropriate pleading and proof without joining the subrogor”. The Supreme Court points out that the trial rule does not address the issue of when a subrogee acquires a claim that may be asserted independent of the subrogor’s. Rather, “it deals with the pre-existing rule of joinder, and assumes the subrogee has an assertable claim as a matter of substantive law”.(22)

Allowing independent lawsuits by subrogees under Trial Rule 19(E)(3) before the insured’s claims have been resolved would “divest the insured of the ability to control the presentation of the insured’s claims”.(23) In rejecting that possibility, the Supreme Court pointed out that:

If the insurer were permitted to assert its subrogated claim pursuant to Rule 19(E) independently of the insured’s, then clearly the provisions of Section (E)(3)(c) apply and the insured is ‘subject to permissive joinder as provided in Rule 20.’ Rule 20(A)(2), in turn, provides that the insured as an ‘unwillingly plaintiff,’ may be dragged into that suit by the defendant. Here Kellenberger quite reasonably chose to write a check for the $4260 in medical payments and walk away from this free for all among Erie, its insured and it insured’s attorney. If Rule 19(E) were available to Erie, however, Kellenberger could equally rationally have determined that Erie had selected a favorable forum to litigate the dispute between George and Kellenberger. In that event, Rule 20 would enable involuntary joinder of George’s claims. The net effect of this would be to permit Erie, by paying medical benefits, to obtain control of the prosecution of George’s claim. As noted above, that risk is nowhere spelled out in the insurance policy on which Erie relies for its subrogation rights.(24)

Duplicate lawsuits have the potential for producing undesirable collateral consequences Erie cited Chemco Transp., Inc. v. Conn(25) for the proposition that an insurer’s separate action as subrogee will not bar an insured’s claims. In that case, a Chemco truck injured Conn and destroyed his vehicle. Conn first filed a claim for the loss of his vehicle with his own insurance carrier (Protective Insurance Company). Then, Conn sued Chemco in Cass County to recover for both his personal injuries and the property damage to his vehicle. Conn next collected from his own insurance company for the damage to his vehicle.

Ten months later, while Conn’s lawsuit against Chemco was still pending, Protective, as subrogee, filed suit against Chemco in Marion County, seeking recovery for the property damage to Conn’s vehicle and naming Conn as a plaintiff without his knowledge. That lawsuit was subsequently settled and dismissed with prejudice.

Chemco then filed a motion for summary judgment in Conn’s Cass County suit, asserting that the Marion County action was res judicata as to the property damage claims. The trial court denied that motion. The Cass County case was tried and the jury awarded Conn damages for both his vehicle and his personal injuries.

The Indiana Court of Appeals held that res judicata did apply. However, the Supreme Court granted transfer and affirmed the trial court, holding that since Conn was not a party to the Marion County action, he was not bound by it.

In its decision in Erie, the Supreme Court notes that apparently, in Chemco, no mention was made of Trial Rule 19(E); and, states that under that rule, if the Marion County action had been properly instituted, Conn was not a necessary party to it. Nor did any party in Chemco challenge the subrogee, Protective Insurance Company’s, right to bring a separate claim in Marion County. However, in Conn, the Supreme Court did state that although Protective had the right to pursue its subrogation claim in Conn’s name, Conn reserved the right to pursue his claim since Protective only partially compensated him for the loss. In Conn, the Supreme Court found merit to Conn’s argument that to find against him on the res judicata issue would be to give insurance companies the power to settle all of a plaintiff’s claims in spite of the fact that the plaintiff did not give all of his/her rights to his/her insurance carrier when he/she settled with his/her own insurer.

In Chemco, the result was that Chemco paid twice for the damage to Conn’s vehicle – once to Conn’s insurance company; and, then again, to Conn – which the Supreme Court in Erie characterizes as an unsatisfactory result. In addition, the Court states that the result that Chemco sought to avoid by finding no res judicata effect – control of the insured’s case by his/her insurer – is equally unsatisfactory. However, in contrast to the issues raised in Erie, in Chemco, there was no direct challenge to the first lawsuit. Rather, the issue was simply how to deal with the res judicata effects of the first lawsuit in the second.

In Erie, the Supreme Court stated that “[r]equiring the subrogee to join in the insured’s suit by reliance on the ancient prohibition against claim splitting solves both problems and also eliminates duplicative litigation. Indeed, George contends that this case presents a situation where he was in the process of settling his personal injury claims in a manner that would produce reimbursement to Erie without any litigation at all. Whether that is true in this case or not, certainly such a scenario is likely to occur from time to time if insurers can initiate independent claims as Erie did here. Even if Chemco was correct in its observation as to property damage — a question we do not decide — we decline to permit bifurcated personal injury claims”.(26)

I.C. 34-4-41-5 specifically provides that the Indiana subrogation statute does not prohibit an insurer with a subrogated property damage claim from settling that subrogation claim separately by arbitration, agreement, or suit in its own name. In Erie, George argued that this provision constitutes an implied prohibition against Erie (a subrogee) from proceeding separately to recover medical benefits that it had paid to him (its insured).

The Supreme Court declined to hold that the statute prohibits a subrogee from proceeding independently to recover medical benefits under all circumstances. In that regard, the Court noted that the statute does not provide any time limitation on the insured’s decision as to whether he/she will proceed with an action seeking recovery from the tortfeasor. Therefore, to hold that the statute prohibits a subrogee from proceeding unilaterally even with the insured’s consent would deprive the subrogee of any recovery at all if the insured decides not to proceed for any reason. According to the Court, there are several situations in which this is a realistic possibility. For example, in cases where the medical expenses are greater than the tortfeasor’s financial responsibility. In that situation, the insured has no incentive to recover from the tortfeasor because any recovery would have to be remitted to the subrogee. The Court concluded that:

Forfeiture of the subrogee’s right to recover medical expenses is too drastic a result to assume its implication from a statutory provision that merely states that the statute does not prohibit the subrogee from asserting a property damage claim. Nor is there any fix for this result — such as an automatic shift of authority two months before the expiration of applicable limitations periods — that would not require this Court to engage in legislation.

It is simple enough to state that the subrogee may not sue independently for medical benefits if that is what the Legislature intended. Similarly, if the Legislature intended to authorize a separate suit for property damage that can be simply done as well. What we find, however, is only a statement that the statute “does not prohibit” a suit for property damage. Whatever this means as to property damage, we cannot conclude that the Legislature intended by such an oblique approach to forfeit the rights of the subrogee under some circumstances.(27)

Supreme Court’s Conclusion

The Supreme Court summarizes its holding in Erie as follows:

In sum, we conclude that an insurer as subrogee of some but not all of its insured’s personal injury claims may not sue independently to enforce the subrogated claim prior to resolution of its insured’s remaining claims in the absence of an agreement with its insured granting explicit and unequivocal authority to initiate a lawsuit that selects a forum for resolution of both the insured’s and insurer’s claims. At bottom this amounts to no more than an affirmation that unless the parties agree otherwise, the insured is entitled to control adjudication of its rights and the insurer, although entitled as a matter of equity to reimbursement, is a secondary player whose rights derive from its insured and are not independent of them. [citations omitted] Any other rule would encourage, or at least permit, unnecessary lawsuits by insurers to enforce subrogation rights.(28)

Applying that rule to the facts of this case, the Court held that “[b]ecause Erie here sued Kellenberger without George’s consent and prior to some final resolution by George, the lawsuit is impermissible. Accordingly, the $4260 held by the trial court in interpleader is to be held in trust by George until final settlement or final resolution of the claim against Kellenberger, if this has not already occurred. T.R. 19(E)(3)”.(29)

Reduction of Subrogation Liens for Attorney Fees

The Supreme Court notes that the insurer subrogation statute(30) creates an obligation for an insurer to contribute to amounts “‘resulting from’ the insured’s efforts at collection”. Therefore, the Court held that whether an insured or its counsel’s efforts led to a recovery or settlement for purposes of awarding attorney’s fees under the subrogation statute is a question of fact to be determined based on the particular facts of each case.(31) However, the Court rejected amicus curiae Insurance Institute of Indiana’s argument that the statute is wholly inapplicable where an insurer subrogee “actively pursues its independent claim.(32) Rather, according to the Court, “that presents a factual issue of whose efforts resulted in what”.(33) The Court also noted that in one of the first decisions in which it interpreted the subrogation statute, the Indiana Court of Appeals “concluded that its main purpose was to prevent free riding by insurers who assert subrogation or reimbursement rights against a recovery obtained through the efforts of the insured“.(34)

The Supreme Court notes in its opinion that amicus curiae Insurance Institute of Indiana appears to contend that lawyers for insured tort creditors might reap a windfall or double recovery if insurers wait to enforce subrogation rights against the proceeds of a settlement or judgment. The Institute reasons that attorney’s fees would have to be paid to the insured’s counsel on (1) the insurer’s original medical payments under the policy; and, (2) the subrogated proceeds recovered in the settlement or judgment, amounting to a double recovery of attorney’s fees for no additional benefit to the insured. The Institute suggests that this adds to the overall cost of resolving disputes to the detriment of insureds in the form of higher premiums. The record in Erie does not disclose Sufleta’s fee agreement with George. Therefore, the Court states that it was not able to determine whether there was any basis for the Institute’s contention in this case. However, the Court notes that the Indiana Trial Lawyers Association, also as amicus curiae, pointed out that in the normal working of the subrogation statute, there is no duplicate fee collected by the insured’s attorney when the insured recovers from the tortfeasor and remits to the subrogee. The effect of the statute is to shift a portion of the insured’s attorney fee from the insured to the subrogee, but not increase the fee. The insured gets the benefit of the reduction of the subrogation lien – not the insured’s attorney.

New Indiana Statute Governing Chiropractic Testimony

On July 1, 1997, I.C. 25-10-1-15 relative to chiropractic testimony became effective. The statute provides that:

In any legal proceeding, a chiropractor’s testimony relating to records or reports of a licensed physician may be admissible as evidence in the legal proceeding if the:

(1) chiropractor is qualified as an expert by the chiropractor’s knowledge, skill, experience, training, or education; and

(2) [the] court is satisfied that the information is of the type reasonably relied upon by other chiropractors.

The impetus for this statute being enacted appears to have been the Indiana Court of Appeals’ decision in Faulkner v. Markkay of Indiana, Inc.(35) The plaintiff in Faulkner was a customer who was injured in a fall in a Cub Food store. The plaintiff was treated for her injuries by several doctors, including Philip Sprinkle, a chiropractor. Dr. Sprinkle testified at trial as an expert witness. Plaintiff’s counsel attempted to introduce an exhibit which was a compilation of the plaintiff’s medical records generated by other healthcare providers (three orthopaedic surgeons and a neurosurgeon) through Dr. Sprinkle. The trial court refused to admit the other healthcare providers’ records even though Dr. Sprinkle testified that he relied upon them in making his diagnosis of the plaintiff’s injuries. In addition, the trial court refused to permit Dr. Sprinkle to re-state the other doctors’ opinions which were contained in their records. The trial court’s basis for its ruling was that as a chiropractor, Dr. Sprinkle would not be capable of being cross-examined with respect to the information contained in the “physicians” records.

The jury returned a verdict in favor of the plaintiff and awarded her $10,000.00 in damages. She appealed, arguing that the trial court erred in refusing to allow her to elicit testimony from Dr. Sprinkle relative to the other doctors’ reports. That is, she asserted that it would not be error to permit Dr. Sprinkle (a chiropractor) to testify concerning out-of-court statements made by “physicians” in medical reports.

The plaintiff acknowledged that the excluded medical records were hearsay. In considering whether the records were admissible under an exception to the hearsay rule, the Court of Appeals noted that Rule 702(a) of the Indiana Rules of Evidence provides that “[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise”. In addition, the Court noted that Rule 703 of the Indiana Rules of Evidence states that “[e]xperts may testify to opinions based on inadmissible evidence, provided that it is of the type reasonably relied upon by experts in the field”.

As the Court of Appeals pointed out, Rule 702 permits the admission of expert opinion testimony – not opinions contained in documents prepared out of court by other experts; and, Rule 703 permits a testifying expert to rely on materials, including inadmissible hearsay, as a basis for forming his/her own opinions.

In Faulkner, the trial court permitted Dr. Sprinkle to testify as to his own opinions and to testify that he had relied on inadmissible evidence. However, the plaintiff argued that the trial court erred in refusing to permit Dr. Sprinkle to testify regarding the substance of the information (that is, to re-state the opinions) contained in the medical records generated by the plaintiff’s physicians.

The Court of Appeals acknowledged that it had previously held that an expert may properly testify as to his/her own opinion which is based in part on reports not in evidence and upon inadmissible hearsay, provided that:

(1) the expert has sufficient expertise to evaluate the accuracy and reliability of the information;

(2) the report is of the type normally found reliable; and,

(3) the information is the type customarily relied upon by the expert in the practice of his/her profession.(36)

However, the Court of Appeals in Faulkner agreed with the trial court’s reasoning for excluding Dr. Sprinkle’s testimony – which was that since he is a chiropractor, he is not capable of being cross-examined relative to the information contained in the physician’s reports. In its decision, the Court of Appeals noted that the rules of evidence do not permit the admission of materials relied upon by an expert witness for the truth of the matters contained therein if the materials are otherwise inadmissible. Applying that concept to the facts in Faulkner, the Court of Appeals stated that the records of the physicians were “otherwise inadmissible” because Dr. Sprinkle, as a chiropractor, did not have the same education, training or expertise as the physicians who generated the reports in question.

The plaintiff argued that Dr. Sprinkle’s post-graduate training and certification in impairment ratings qualified him to interpret medical reports of physicians. The Court of Appeals rejected that argument, noting that “… while Dr. Sprinkle may be a highly-credentialed chiropractor, the fact remains that he does not have the same education, training or experience as the orthopaedic surgeons or neurosurgeon, whose reports he relied upon”. The Court of Appeals stated that it “cannot allow an expert’s reliance on hearsay to be employed as a conduit for placing the physicians’ statements before the jury. [citation omitted] The expert witness must rely on his own expertise in reaching his opinion and may not simply repeat opinions of others. See Miller v. State, 575 N.E.2d 272, 274-75 (Ind. 1991) (physician could rely upon but not repeat what another physician told him about diagnosis of defendant’s girlfriend).”(37)

In addition, the Court of Appeals noted that it had previously stated that:

chiropractors are generally not qualified to serve as experts in cases involving physicians. Stackhouse v. Scanlon, 575 N.E.2d 635, 639 (Ind.Ct.App. 1991), trans. denied. They do not have the same education, training or experience, all of which are generally necessary to render an opinion of benefit to a jury. Id. For instance, a comparison of the licensing statutes shows that chiropractors are given only limited licenses, whereas physicians receive unlimited licenses as to the entire medical field. Id., see Ind.Code S25-10-1-1.1 (1993).(38)

Therefore, the Court of Appeals concluded that in Faulkner, the trial court properly held that Dr. Sprinkle could not testify as to the contents of the physicians’ reports, noting that the hearsay exception allows an expert to offer an opinion, but does not mandate that the contents of the reports be admitted. Therefore, the Court of Appeals concluded that the trial court did not abuse its discretion in excluding the reports.

The plaintiff in Faulkner also argued that the trial court erred in not admitting the orthopaedic surgeon’s report under the business records exception to the hearsay rule contained in Rule 803(6) of the Indiana Rules of Evidence. However, the Court of Appeals held that the plaintiff had waived that argument because at trial, plaintiff’s counsel never attempted to introduce the report under that exception. Rather, the Court characterized the report as having been merely one report buried in a compilation of records from numerous healthcare providers which plaintiff’s counsel offered into evidence as one large exhibit. Since plaintiff’s counsel had failed to properly bring the hearsay exception to the trial court’s attention so that it could rule on it at the appropriate time, that issue was waived.

There is some disagreement as to whether I.C. 25-10-1-15 changes the law with regard to chiropractic testimony (as set out in Faulkner) or whether it simply clarifies existing law. The language cited from the Stackhouse case(39) has (in our judgment) been taken out of context and given a broader interpretation and application than intended. Stackhouse was a medical malpractice case. The Court in Stackhouse held that a chiropractor was not qualified to give expert opinion testimony as to the standard of care for board certified physicians specializing in internal medicine and pulmonary disease.

In any case, I.C. 25-10-1-15 is helpful in making it clear that chiropractic testimony is subject to the same standard for admissibility as other expert medical testimony and removes any uncertainty about whether there is a general prohibition against chiropractors being permitted to testify in “cases involving physicians”. Pursuant to I.C. 25-10-1-15, trial courts are to exercise their discretion to determine in each case and with regard to each chiropractor, whether he or she has the necessary expertise to be permitted to rely upon and testify about, particular medical records and reports from other healthcare providers.


1. 49502-9610-CV-636, slip op. (Ind.S.Ct. May 30, 1997).

2. Id., at 2.

3. The Supreme Court notes that Sufleta’s letter did not specify what assets or payments he claimed were subject to the lien that he asserted. Therefore, the Court stated that it expressed no opinion as to whether, or on what, Sufleta held a lien.

4. I.C. 34-4-41-4 provides that: “An insurer claiming subrogation or reimbursement rights under this chapter shall pay, out of the amount received from the insured, the insurer’s pro rata share of the reasonable and necessary costs and expenses of asserting the third party claim. These reasonable and necessary costs and expenses include, but are not limited, to the following: (1) The cost of depositions. (2) Witness fees. (3) Attorney’s fees to the lesser of the amount contracted for by the insured for the insured’s portion of the claim or thirty-three and one-third percent (33 1/3%) of the amount of the settlement”.

5. In February 1994, George submitted an additional $180.00 in medical expenses, which Erie paid. The $4260.00 therefore appears to reflect the total amount that Erie had paid to George under the med pay provisions of his policy.

6. Erie Insurance Company v. George (1995), Ind.App., 658 N.E.2d 950.

7. 49502-9610-CV-636, slip op. at 10 (Ind.S.Ct. May 30, 1997).

8. Id. at 6. The Supreme Court also held that the Court of Appeals correctly ruled that summary judgment on the fee issue was inappropriate because a factual issue remained as to Sufleta’s role, if any, in obtaining recovery from Kellenberger and the application of Sufleta’s fee arrangement with George to those facts.

9. Which the Supreme Court notes has been held by the Indiana Court of Appeals to include not only settlements or judgments recovered through litigation, but also any settlement obtained through negotiations or alternative dispute resolution without suit being filed. D’Archangel v. Allstate Ins. Co. (1994), Ind.App., 656 N.E.2d 294; Allstate Ins. Co. v Smith (1995), Ind.App., 56 N.E.2d 1156.

10. I.C. 34-4-41-3.

11. I.C. 34-4-41-4.

12. 49502-9610-CV-636, slip op. at 8 (Ind.S.Ct. May 30, 1997).

13. The Supreme Court notes that the statute does state that it “‘does not prohibit an insurer with a subrogated property damage claim from settling its subrogation claim separately by arbitration, agreement, or suit in its own name.’ IND. CODE S 34-4-41-5 (1993)”. 49502-9610-CV-636, slip op. at 9 (Ind.S.Ct. May 30, 1997). However, the Court specifically stated that “We express no opinion as to whether this provision amounts to an implicit authorization of a prior separate property damage suit by a subrogee that would override the consideration outlined in this opinion as to personal injury claims”. Id.

14. 49502-9610-CV-636, slip op. at 13 (Ind.S.Ct. May 30, 1997). As the Supreme Court points out in its opinion, “[t]his is not a novel doctrine. Our decisions have consistently barred claim splitting. See, e.g. Roby v. Eggers, 130 Ind. 415, 422, 29 N.E. 365, 368 (1891) (‘An entire claim arising from a single tort can not [sic] be divided and made the subject of several suits, however numerous the items of damages may be’). More recently, in summarizing our law on this issue, the Seventh Circuit noted Indiana’s well established policy against claim splitting: ‘Indiana, like most other states, does not allow a party to split a single claim for relief. Multiple legal theories supporting relief on account of one transaction must be litigated at one go.’ Wabash Valley Power Ass’n, Ind. v. Rural Electric Admin.,

903 F.2d 445, 455 (7th Cir. 1990)”. 49502-9610-CV-636, slip op. at 13-14 (Ind.S.Ct. May 30, 1997).

15. 49502-9610-CV-636, slip op. at 14 (Ind.S.Ct. May 30, 1997).

16. Id. at 15.

17. Id. at 17.

18. Id. at 18.

19. Id. at 17.

20. Id. at 18.

21. Id.

22. Id.

23. Id. at 19.

24. Id.

25. (1988), Ind., 527 N.E.2d 179.

26. 49502-9610-CV-636, slip op. at 21 (Ind.S.Ct. May 30, 1997).

27. Id. at 22-23.

28. Id. at 23-24 (Ind.S.Ct. May 30, 1997). Erie contended that it had acquired a right to sue independently to pursue its subrogation rights upon payment to George – based upon its insurance contract with George. The Supreme Court rejected that contention, noting that “[w]here a right to subrogation is asserted under a contract before the debt is satisfied, as here, ‘the contract must be clear, unequivocal and so certain as to admit no doubt on the question”. Id. at 17. The Supreme Court states that Erie could have “bargained for the right to initiate George’s claim”, but it did not do so. Id. Having raised the possibility of insurers re-writing insurance policies to permit them to pursue subrogation independently of their insureds, the Court went on to say that its conclusion is that ” … the Legislature left this matter to the courts and perhaps the Insurance Commissioner to resolve equitably. Assuming that insurers seek to include explicit provisions dealing with this problem in future policies, it may be up to the Commissioner in the first instance to determine whether those provisions are consistent with the insurance laws”. Id. at 22.

29. Id. at 24.

30. I.C. 34-4-41-1 through I.C. 34-4-41-5.

31. 49502-9610-CV-636, slip op. at 24 (Ind.S.Ct. May 30, 1997).

32. Id. at 25.

33. Id.

34. Id. at 25, citing Cook v. Humana Health Care Plan, Inc. (1994), Ind.App., 636 N.E.2d 166. In this regard, the Court states that “[i]f, as the Trial Rules plainly permit, Erie and George had sued jointly to recover for George’s personal injuries and Erie’s subrogated claim for medical, there would still remain the issue of whose efforts produced what recovery.” Id.

35. (1996), Ind.App., 663 N.E.2d 798.

36. Mundy v. Angelicchio (1993), Ind.App., 623 N.E.2d 456.

37. 663 N.E.2d 798, 801.

38. Id.

39. Stackhouse v. Scanlon (1991), Ind.App., 576 N.E.2d 635.

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