TEXAS SUPREME COURT DENIES REVIEW OF CASE AFFIRMING U.S. ARMY SUBROGATION RIGHTS

An opinion issued last year by the El Paso Court of Appeals that affirmed a trial court’s ruling that the U.S. Army had subrogation rights against underinsured motorist coverage will stand, with the Texas Supreme Court formally declining to review the case last Friday.  As we reported last April, in Warmbrod v. USAA County Mutual Insurance Company, 367 S.W.3d 778 (Tex. App.—El Paso 2012), the insured was severely injured in a car accident and was treated free of charge in a U.S. Army Hospital by virtue of her husband’s military status.  The Army then sought to recover its costs from the insured’s UIM benefits, in accordance with 10 U.S.C. § 1095 and the Federal Medical Care Recovery Act (FMCRA).  The insurer paid its policy limits but protected the Army’s subrogation rights by issuing a check co-payable to the plaintiff, her attorney and the Army for the amount of the Army’s lien.

 On appeal, the El Paso Court agreed with the insured that the FMCRA only provides the Army with a right of recovery against responsible third-parties, but not against first party insurance proceeds.  Considering 10

U.S.C. § 1095, however, the court recognized that the United States government has a right to collect reasonable expenses for care it provided from third-party payers, which is defined to include “an automobile liability insurance or no fault insurance carrier.”    Accordingly, the court concluded that because the United States Army has a right to recover against the UIM coverage, summary judgment in favor of the insurer was proper.