Insurers can pursue subrogation of WTC losses: Judge

http://www.businessinsurance.com/article/20090820/NEWS/908209983

Posted On: Aug. 20, 2009 3:42 PM CENTRAL

Mark A. Hofmann

NEW YORK—A federal judge has upheld the right of commercial property insurers who insured the World Trade Center to pursue subrogation [see definition below -gReT] claims associated with losses stemming from the Sept. 11, 2001, terrorist attack that destroyed the twin towers.

In an Aug. 13 opinion, U.S. District Court Judge Alvin Hellerstein denied three motions to bar subrogation by the property insurers. The motions were brought by plaintiffs affiliated with Larry Silverstein, who leased the World Trade Center; a group of airlines, airport security companies and others; and certain defendants including the Silverstein companies in an action involving the destruction of Tower Seven of the WTC complex.

The parties seeking the subrogation ban argued that New York’s collateral source law barred all such subrogation claims.

Judge Hellerstein held that the “rule of law, now established by three decisions of New York’s highest court, is that §4545 (collateral source law) does not affect the subrogation rights of plaintiffs’ insurers. The principle of subrogation is so embedded in the common law, and would be so radically affected, that a very clear legislative intent to disrupt it is required.”

The judge found no such legislative intent.

subrogation

A taking on of the legal rights of someone whose debts or expenses have been paid. For example, subrogation occurs when an insurance company that has paid off its injured claimant takes the legal rights the claimant has against a third party that caused the injury, and sues that third party.