Diminishment Statutes For Injury Cases

Indiana has two statutes which may diminish or reduce subrogation liens. The first is I.C. 34-53-1-2. This statutes deals with the reduction of a subrogation lien by the pro-rata share of attorney fees and costs of litigation. The second is I.C. 34-51-2-19. This statute mandates the reduction of a subrogation lien due to the comparative fault of the insured or by reason of uncollectability. These two statutes are used often by Indiana attorneys to help maximize the recovery for their clients in personal injury cases. If the case was resolved by settlement rather than by a jury trial and the fault allocation or damage amount is in dispute, the injured party may file a declaratory judgment action against the lien holder in order to have the court make a judicial determination of the fault or amount of damages.

The Indiana Supreme Court held in Department of Pub. Welfare v. Couch, 605 N.E.2d 165, (Ind. 1992) that I.C. 34-53-1-2 applied to cases in which the Welfare Department was asserting a lien. This concept was reaffirmed by the Indiana Court of Appeals in Pedraza by Pedraza v. Grande 712 N.E.2d 1007 (Ind.Ct. App. 1999).