When is it time to cease recovery efforts?

Subrogation professionals are never pleased when a case they are handling reaches an impasse and needs to be shut down, especially after investing a significant amount of time and effort reviewing the claim facts, gathering missing evidence and developing a theory of negligence.  But sometimes ceasing recovery efforts is a prudent decision even when the liability clearly rests with an adverse party.  There are many reasons a subro file cannot successfully be pursued, or it is just not economically feasible to do so.

One of the most frequent reasons for case closure in property losses is lack of evidence.  The faulty product is thrown away or spoliated during the cleanup or renovation and there is no longer evidence available to support a subrogation claim.  Early subrogation intervention can greatly reduce the number of closures for this reason.

The cost of retaining expensive experts to support liability theories or the cost of litigation is often a deciding factor to close a subrogation claim.   Low dollar claims may simply not warrant the litigation expenses that would be incurred when the Adverse Carrier is not a member of Inter-Company Arbitration.  In other instances, asset checks on an uninsured adverse party may reveal several judgments already pending, which would make it extremely unlikely that any recovery would be realized unless that uninsured third party hit the lottery!

It is often exasperating when, after taking all the right steps and sending a Demand to the adverse carrier it is revealed that an insured presented their claim to an adverse party, executes a release and walks off with the subrogation dollars being arduously pursued.  While collecting twice is an area where recovery from the insured may be realized, if the insured has actually pursued an out of pocket claim not covered by their policy, and executed a release the subrogation carrier is out of luck as they are precluded from recovery by virtue of the signed release.  If however, the subrogation rep placed the adverse carrier on notice before the release was executed a claim still exists against the adverse carrier who in some instances is trying to get a case resolved for the lowest possible dollar.  Also somewhat vexing are when claims involving a municipality arrive in the Subro Department after the time frame to place the municipality on notice by filing a Notice of Claim has passed and recovery efforts are thwarted.  Involving the Subrogation Professional as soon as possible after a loss occurs can preclude this from happening.

I’m happy to close this subrogation claim”….said no Recovery Specialist worth their salt, EVER!  But, it remains true that from time to time ceasing the effort and redirecting the focus to a more viable recovery opportunity is justified.