Powell v. Blue Cross & Blue Shield

This appeal presents this primary issue: May the insurer/indemnitor, by contract providing for subrogation, claim reimbursement of its payment to the insured/indemnitee, out of the insured/in-demnitee’s recovery from the third-party tort-feasor, when the third-party recovery does not exceed the insured/indemnitee’s total loss? The trial court held that the insurer/indemnitor could so contract and ordered the insured/indemnitee to reimburse the insurer/indemnitor. Because we hold that the right of subrogation, whether equitable or contractual, does not arise until the plaintiff/insured has been fully compensated for her loss, we reverse and remand.

The facts in this case were stipulated by the parties. Cynthia Powell was permanently injured in an automobile accident. Blue Cross and Blue Shield of Alabama (“Blue Cross”) paid Cynthia’s medical expenses of $27,080.26 under the provisions of a group health insurance policy that covered Cynthia. Cynthia sued the driver of the other automobile involved in the accident, Joy Jolly, and its owner, Dale Jolly, alleging negligence and wantonness. In an amended complaint, she alleged over $7,000,000 as damages for her injuries. Cynthia Powell, however, settled her claim against the Jollys for the $100,000 limit of the Jollys’ liability insurance policy.

Blue Cross filed a motion to intervene in the lawsuit, seeking subrogation for $27,-080.26 that it had paid for Cynthia’s medical expenses. The trial court allowed Blue Cross to intervene, dismissed the Jollys, and ruled that Blue Cross was entitled to the full amount it had paid for Cynthia’s medical expenses out of the settlement recovery. In its judgment the trial court stated that “it is conceded by all concerned that the $100,000 recovery does not make the plaintiff whole.” The trial court went on, however, to hold that under the insurance contract Blue Cross was “entitled to the reimbursement of any amounts paid by it for the benefit of its insured. This reimbursement is due even though the insured is not paid in full, or made whole by any recovery from a third party.”

The Powells appeal the trial court’s judgment that Blue Cross is entitled to recover the full $27,080.26. For a complete understanding of the issues involved in this case and our resolution of them, the reader should take note of two other cases released this day: McKleroy v. Wilson, 581 So.2d 796 (Ala.1990); and Sharpley v. So noco Products Co., 581 So.2d 792 (Ala.1990).

Contained in the Blue Cross policy was specific language that gave Blue Cross first priority over any money that the insured collected from a third party.

“Separate from and in addition to the Administrator’s right of subrogation, if a subscriber or a member of his family recovers money from the other person or organization for any injury or condition for which benefits are provided by the administrator, the Member agrees to reimburse the Administrator from the recovered money that amount of benefits the Administrator has paid or provided. That means that the Member will pay the Administrator the amount of money recovered by him through judgment or settlement from the third person or organization up to the amount of the benefits paid or provided by the administrator. The right to reimbursement of the Administrator comes first even if a Member is not paid for all of his claim for damages against the other person or organization or if the payment he receives is for, or is described as for, his damages (such as for personal injuries) for other health care expenses or if the member recovering the money is a minor.” (Emphasis added.)

Blue Cross filed with this Court a motion to dismiss the appeal, arguing that the plaintiffs have no standing to bring an appeal because the trial court dismissed the Jollys as defendants. A party or his personal representative has standing to bring an appeal from an adverse ruling contained in a final judgment. Home Indem. Co. v. Anders, 459 So.2d 836, 842 (1984), appeal after remand, 477 So.2d 312 (Ala.1985). The Powells suffered an adverse ruling with respect to the issue of subrogation. This judgment with respect to Blue Cross is final in all respects and is therefore a final judgment from which the Powells may appeal. Rule 4(f), A.R.Civ.P.

The entire law of subrogation, conventional or legal, is based upon equitable principles. International Underwriters/Brokers, Inc. v. Liao, 548 So.2d 163, 165 (Ala. 1989). The equitable considerations that are the underpinnings of subrogation are (1) that the insured should not recover twice for a single injury, and (2) that the insurer should be reimbursed for payments it made that, in fairness, should be borne by the wrongdoer. Id. In International Underwriters, we stated;

“[N]o right of subrogation against the insured exists upon the part of the insurer where the insured’s actual loss exceeds the amount recovered from both the insurer and the wrongdoer, after deducting costs and expenses. In other words, the insurer has no right as against the insured where the compensation received by the insured is less than the loss.”

548 So.2d at 164-65.

Although today subrogation is most often utilized by insurance companies, historically it was available to anyone who was obligated to pay the debts of another. Deneberg, Subrogation Recovery: Who is Made Whole?, 29 Fed’n Ins.Couns.Q. 185, 186 (1979). Anyone who was obligated to pay the debts of another could utilize sub-rogation. Id. The English courts originally applied subrogation to insurance policies on the rationale that the contract of insurance was a contract of indemnity, which meant that the insured should be fully indemnified, but not more than fully indemnified. Id. citing Castallain v. Preston, 11 Q.B.D. 380, 386 (1883).

The principle of indemnity was the primary reason for the adoption of subrogation in insurance cases. See International Underwriters, supra; North River Ins. Co. v. McKenzie, 261 Ala. 353, 359, 74 So.2d 599, 604 (1954). The insurer’s obligation was to make the insured whole, but not more than whole. Accordingly, subro-gation originally served to prevent the insured from receiving a double recovery by first collecting the insurance proceeds and then suing the tort-feasor or other third parties, so as to recover again for his injury. A second reason for the adoption of subrogation in insurance cases is what has been called “the moralistic basis of tort law as it has developed in our system.” Kim-ball & Davis, The Extension of Insurance Subrogation, 60 Mich.L.Rev. 841, 841 (1962). In other words, the wrongdoer should bear the burden of reimbursing the insurer for payments it made to the insured because of the wrongdoer’s actions. See International Underwriters, supra; City of Birmingham v. Walker, 267 Ala. 150, 158, 101 So.2d 250, 256 (1958).

Subrogation accomplished these goals by allowing the insurer to “stand in the shoes” of the insured in order to recover its payments from the tort-feasor who caused the damage. Therefore, these early subrogation cases were based on the premise that the insured would be fully indemnified for his loss before the insurer would have a right to subrogation. Deneberg, supra, at 187.

This basic principle of fully indemnifying the insured was also followed in Alabama:

“It is true that subrogation ‘does not depend upon contract, but has its foundation in natural justice’ when the debt or superior lien has been fully paid. That is, elements of subrogation are that it is a valuable right that touches the one who owns it and invokes the application or seeks the substitution in that ownership, and that the claim against the debtor or superior lien holder has not been waived when the debt or superior lien has been fully paid by him who would substitute.”

Montgomery v. Wadsworth, 226 Ala. 667, 669, 148 So. 419, 421 (1933) (citations omitted).

In the present case, the contract of insurance would abrogate these underlying principles of subrogation by reimbursing the insurer even though the insured has not fully recovered for her loss. Blue Cross argues that it should be allowed to recover the money it has paid in medical expenses, even though Cynthia’s loss exceeds her recovery, because its policy expressly entitles it to recover that money out of the settlement proceeds. Blue Cross bases its argument upon language contained in the International Underwriters opinion.

Although the policy itself was not in evidence in International Underwriters, we stated in dictum that “equitable principles apply to all instances of subrogation except when the contract provides otherwise.” International Underwriters, 548 So.2d at 165. However, to construe this language as Blue Cross would have us to do would undermine the equitable principles upon which subrogation is based and would thwart the purpose for which the insured purchased insurance. Equity requires that the insured should at least recover his or her loss before the insurer is subrogated.

In International Underwriters, we cited several cases from other jurisdictions in support of the proposition that “equitable principles apply to all instances of subrogation except when the contract provides otherwise.” 548 So.2d at 165. Those cases, however, represent a split of authority as to whether the insurer's right to subrogation arises before the insured is fully reimbursed for his loss. For example, in Westendorf v. Stasson, 330 N.W.2d 699 (Minn.1983), the Supreme Court of Minnesota expressly stated that “when the right to sub-rogation arises by virtue of an agreement, the terms of the subrogation will nonetheless be governed by equitable principles, unless the agreement clearly and explicitly provides to the contrary.... The right [to subrogation] may be modified or extinguished by contract.” Id. at 703. (Emphasis added.) The Minnesota court recognized that the right to subrogation itself exists before the insured has fully recovered for his loss and that the insurer may, through the contract, completely negate the equitable principles upon which that right is based.

However, in International Underwriters, we also cited Garrity v. Rural Mut. Ins. Co., 77 Wis.2d 537, 253 N.W.2d 512 (1977). In Garrity the Wisconsin Supreme Court held that a standard subrogation clause in a fire insurance policy did not change the common law rule that required that the insured fully recover his loss before the insurer had a right of subrogation. The Garrity court stated, “We hold that because the contract here contains no language to the contrary, the normal rule of subrogation applies and the subrogee has no right to share in the fund recovered from the tort-feasor until the subrogor is made whole.” Garrity, 77 Wis.2d at 546-47, 253 N.W.2d at 516.

The Wisconsin court later explained its Garrity holding in Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis.2d 263, 316 N.W.2d 348 (1982). In Rimes the insurer was seeking subrogation for medical payments that it had made to its insured, out of settlement proceeds recovered from the tort-feasor. The trial court had determined that the Rimeses sustained damages of $300,433.54 and that the settlement with the tort-feasors was $125,000. 106 Wis.2d at 264-66, 316 N.W.2d at 350. The Wisconsin Supreme Court stated that “[t]he subro-gation agreement in the instant case between Rimes and State Farm is not significantly dissimilar [from the one in Garrity ] and if literally interpreted would permit recovery by State Farm in the amount of medical payments made on behalf of Rimes.” 106 Wis.2d at 270, 316 N.W.2d at 352-53 (emphasis added).

The court in Rimes, however, did not allow the literal interpretation of the subro-gation agreement to abrogate the equitable basis for subrogation. The Wisconsin court noted that “one who claims subrogation rights, whether under the aegis of either legal or conventional subrogation, is barred from any recovery unless the insured is made whole.” 106 Wis.2d at 272, 316 N.W.2d at 353. Moreover, the court indicated that this rule would apply even though contract provisions specified a different result. Rimes followed this rationale:

“[E]ven though an insured has recovered from a tort-feasor a sum more than sufficient to equal the subrogated amount claimed by the insurer, the insurer is not entitled to subrogation unless the insured has been made whole for his loss. The purpose of subrogation is to prevent a double recovery by the insured. Under circumstances where an insured has received full damages from the tort-feasor and has also been paid for a portion of those damages by the insurer, he receives double payment — he has been made more than whole. Only under those circumstances is the insurer, under principles of equity, entitled to subrogation. Subrogation is to be allowed only when the insured is compensated in full by recovery from the tort-feasor.”

106 Wis.2d at 271-72, 316 N.W.2d at 353.

Consequently, the court in Rimes ruled that an insurer has no right to subrogation until the insured is first fully compensated for his loss. In International Underwriters, we did not decide the issue before us now, because the insurance contract was not part of the record in that case. As a result, the language and analysis in International Underwriters did not consider such a policy provision. International Underwriters, supra, at 166. The present case, however, presents us with a policy written specifically to abrogate the equitable principles of subrogation. We recognize that some jurisdictions hold that although subrogation is based on equitable principles the insurance contract may specifically defeat those considerations by allowing the insurer to be subrogated even though the insured has not been fully compensated for his loss. See, e.g., Culver v. Insurance Co. of North America, 115 N.J. 451, 559 A.2d 400 (1989); Peterson v. Ohio Farmers Ins. Co., 175 Ohio St. 34, 191 N.E.2d 157 (1963).

We are of the opinion, however, that the better reasoned rule is that the insurer is not entitled to subrogation unless and until the insured has been made whole for his loss. We so hold. See, e.g., St. Paul Fire & Marine Ins. Co. v. W.P. Rose Supply Co., 19 N.C.App. 302, 198 S.E.2d 482 (1973); Lombardi v. Merchants Mut. Ins. Co., 429 A.2d 1290 (R.I.1981); Wimberly v. American Casualty Co. of Reading, Penn., 584 S.W.2d 200 (Tenn.1979); Ortiz v. Great So. Fire & Cas. Ins. Co., 597 S.W.2d 342 (Tex.1980); Thiringer v. American Motors Ins. Co., 91 Wash.2d 215, 588 P.2d 191 (1978); Rimes v. State Farm Mut. Auto. Ins. Co., supra; see, also, Allstate Ins. Co. v. Clarke, 364 Pa.Super. 196, 527 A.2d 1021 (1987); Deneberg, supra, at 190.

This rule better reflects the underlying equitable principles that give rise to the remedy of subrogation itself, without which there would be no right of subrogation at all, and better reflects the purpose for which one purchases insurance. The very heart of the bargain when the insured purchases insurance is that if there is a loss he or she will be made whole. The cases that originally applied subrogation to insurance contracts did so on behalf of the insurer only after the insured had been fully compensated. These cases never envisioned the use of subrogation as a device to fully reimburse the insurer at the expense of leaving the insured less than fully compensated for his loss. “Where either the insurer or insured must to some extent go unpaid, the loss should be borne by the insurer for that is a risk the insured has paid it to assume.” Rimes, 106 Wis.2d at 276, 316 N.W.2d at 355 (quoting Garrity v. State Farm Mut. Auto. Ins. Co., 77 Wis.2d 537, 542, 253 N.W.2d 512, 514 (1977)).

Our review of the origins and development of the law of subrogation persuades us that a prerequisite to the right of subro-gation is the full compensation of the insured. In effect, an attempt to contract away this prerequisite to the right of sub-rogation would defeat the right itself. This is not compatible with the principle of fairness that underlies all equitable doctrines. Therefore, we hold that the insurer has no right to subrogation unless and until the insured is made whole for his loss.

For purposes of subrogation, the test for when the insured has been made whole is whether the injured plaintiff has been completely compensated for all of his loss. Likewise, all sources of reimbursement must be considered in determining the extent to which the plaintiff has been compensated. It is when the plaintiff’s recovery from all sources exceeds the sum total of the plaintiffs damages that the right to subrogation arises.

Typically, in cases involving subro-gation, a plaintiff injured by a third party recovers a portion of his total loss from an indemnitor or indemnitors and a portion from the tort-feasor. In such cases the indemnitor(s) may reimburse the injured plaintiff for such damages as medical expenses, loss wages, or disability. The plaintiff, or the indemnitor(s), as provided in the indemnification contract, will then bring an action for damages against the tort-feasor. If the proceeds collected from the tort-feasor, either through settlement or a judgment, when added to the amount paid to the plaintiff via indemnity contracts), equals the amount of the plaintiff’s total loss, then the plaintiff is made whole.

This holding requires calculation and comparison of two amounts, (1) the amount of the plaintiffs total loss and (2) the total amount that the plaintiff receives in compensation for that loss. The determination of what the plaintiffs loss is, and whether he has been made whole for that loss, is a question of fact. Calculation of the plaintiffs loss requires the finder of fact to consider all elements of that loss, including, but not limited to, damage to property, medical expenses, pain and suffering, loss of wages, and disability. Because punitive damages are not an element of compensation, they can not be included in the calculation of the plaintiff’s loss. Determining whether the indemnitee is made whole should be based on the principle that the indemnitee should be made whole, but not more than whole. Likewise, calculation of the amount received in compensation requires consideration of every payment made to, or on behalf of, the plaintiff that arises out of the damages sustained in the event that gave rise to the cause of action.

Once these two amounts are obtained, subrogation, either equitable or as specified in the indemnitor’s contract, will apply if the amount received in compensation by the plaintiff exceeds the plaintiff’s amount of loss. As noted above, where the total compensation received is less than the loss, no right of subrogation arises. However, where the amount of compensation exceeds the amount of loss, then the indem-nitor will be entitled to subrogation against the amount by which the compensation exceeds the loss.

This rule may be best explained by example. It should be noted that the numbers in Tables 1 through 3 that follow reflect amounts that have been selected to illustrate the factors that should be considered in the calculation of a plaintiff’s loss and recovery. Although similar specificity in amounts might occur in joint settlement negotiations where the plain tiff/indemni-tee, indemnitor(s), and tort-feasor agreed to set such amounts, these figures are not meant to reflect how a finder of fact would determine the plaintiff’s loss. For instance, consider a case where a plaintiff’s loss and recovery are as reflected in Table 1.

Table 1.

PLAINTIFF'S LOSS PLAINTIFF'S RECOVERY

Amount Paid Plaintiff By First-Party Indemnification

Property $ 10,000 Collision Insurer $ 10,000

Medical 50,000 Medical Insurer 50,000

Lost Wages 5,000 Wage Contributor 5,000

Disability 10,000 Disability Insurer 10,000

Total indemnified ($75,000)

Amount Paid By Tort-feasor

General Damages $50,000

Pain and Suffering 55,000 Punitive Damages -0-

Tort-feasor Total ($50,000)¿

TOTAL LOSS $130,000 TOTAL RECOVERY (All Money Paid) $125,000

In Table 1, the indemnitors have no right to subrogation, because the plaintiff recovered less than the total amount necessary to make him whole. The indemnitors paid the plaintiff a total of $75,000 and the plaintiff collected $50,000 from the tort-fea-sor. The plaintiffs total recovery is $125,-000, which is $5,000 less than his total loss. Because the plaintiff recovers less than $130,000, there is nothing to which the indemnitor could be subrogated. It is irrelevant as to how the indemnitee may allocate the amounts recovered from the tort-feasor (e.g., it is irrelevant that the complaint may seek damages only for pain and suffering or that the settlement or judgment states that the amount recovered is only for pain and suffering). The court will look to the total dollar amount recovered by the indemnitee, from whatever source, as compensation for his loss.

If, on the other hand, the plaintiff recovers more than $130,000 in compensation for his loss, then the indemnitors would have a right to subrogation in the amount of the overage. For instance, consider Table 2.

Table 2.

In Table 2, the plaintiff has recovered $75,000 from the indemnitors and $200,000 from the tort-feasor, for a total recovery of $275,000. Therefore, the plaintiffs total recovery is $145,000 greater than his total loss; there is an overage of $145,000.

The indemnitors, in the above example, have a right of subrogation in the amount that each has paid to, or on behalf of, the plaintiff. The total amount required to fully subrogate all indemnitors is $75,000. In this example there is enough money to fully compensate each indemnitor, and the plaintiff would be entitled to the remaining $70,000.

In some eases, however, the amount of the plaintiffs recovery subject to subro-gation may not be enough to satisfy the amount that the first-party indemnitor or indemnitors paid in benefits. In those cases where there is a single indemnitor entitled to subrogation, that indemnitor would recover the full amount of the overage. However, in cases where there is more than one indemnitor with a right to subrogation, and the rights to subrogation have not been altered by contract, each indemnitor would be entitled to its pro rata share of the available proceeds. Standard Marine Ins. Co. v. Westchester Fire Ins. Co., 93 F.2d 286 (2d Cir.1937), cert. denied, 303 U.S. 661, 58 S.Ct. 830, 82 L.Ed. 1120 (1938); 16 Couch On Insurance 2d, Subro-gation § 61:48 (1983).

For example, consider a third situation, where the plaintiffs losses are the same as in the first two tables, but the plaintiff recovers compensation for those losses as shown in Table 3.

Table 3.

In Table 3 the plaintiffs total loss was $130,000. The plaintiffs total recovery was $200,000 — $75,000 paid by the first-party indemnitors plus $125,000 recovered from the tort-feasor. In this example, the first-party indemnitors’ right to subrogation arises because the plaintiff has recovered a total amount in excess of his total loss. In this example, however, there would be only $70,000 available for subro-gation, to be divided among the four first-party indemnitors. Because the amount of the overage is insufficient to fully compensate all of the first-party indemnitors, each indemnitor would be entitled to a pro rata share of the overage, based on the ratio that the amount of its indemnification to the plaintiff bears to the total indemnification paid to the plaintiff.

In the example set out in Table 3 the collision insurer would recover $9,333.33— $10,000 (amount paid) divided by $75,000 (total loss paid by indemnitors) multiplied by $70,000 (amount available for subrogation). Similarly, the medical insurer would recover $46,666.67 — ($50,000 h- $75,000) x $70,000. The wage contributor would recover $4,666.67 — ($5,000 h- $75,000) x $70,-000. The disability insurer would recover $9,333.33 — ($10,000 -=- $75,000) X $70,000. The total amount subrogated and divided among the insurers would thus be $70,000.

It should be noted that these calculations, as exemplified in the three tables, do not include attorney fees and litigation expenses in computing the plaintiffs “total loss”; therefore, any reimbursement to the indemnitor should be further reduced by an amount equal to the indemnitor’s pro rata share of the attorney fees and costs, computed, of course, only against the third-party recovery.

Although the information in Tables 1 through 3 is presented in detail that might occur only in a settlement conference where all interested parties reached agreement as to specific elements of damages, the rule governing when subrogation arises has ready application in litigation. Where a finder of fact determines plaintiff’s total loss, that determination would take the place of the breakdown of figures represented in the column labeled “Plaintiff’s Loss” in the tables. The calculation would then proceed as discussed previously, by comparing the plaintiff’s total loss with his total recovery. In most cases a jury would determine the plaintiff’s total loss as the amount rendered in its verdict. The plaintiff’s total recovery would include the amount of the judgment that the plaintiff actually collects from the tort-feasor, plus any other reimbursement that he receives from any other source for his injuries. For example, consider Table 4.

Table 4.

In Table 4 the plaintiff recovered $75,000 from first-party indemnitors. After a trial, the jury returned a general verdict against the tort-feasor in the amount of $100,000. Therefore, the plaintiffs total loss, as determined by the finder of fact, is $100,000. Assuming that the plaintiff is able to collect the entire judgment, plaintiffs total recovery is $175,000 — $100,000 from the tort-feasor plus $75,000 paid by first-party indemnitors. In the example set forth in Table 4, the plaintiff has collected $75,000 more than his total loss. Consequently, the indemnitors would have a right to sub-rogation to the $75,000 overage.

In the present ease, the record shows that Cynthia Powell’s damages far exceed the amount of her recovery; thus, Blue Cross has no right to be reimbursed for its payment of medical expenses on behalf of Cynthia. Had Blue Cross’s right to subro-gation arisen, then the language in the policy would have controlled. It follows that Blue Cross, as of the time of the writing of this opinion, had no right to subrogation because Cynthia Powell had not yet been made whole. Accordingly, the judgment is reversed, and the cause is remanded.

REVERSED AND REMANDED.

HORNSBY, C.J., and SHORES and ADAMS, JJ., concur.

JONES, J., concurs specially.

KENNEDY, J., concurs in the result.

MADDOX, HOUSTON and STEAGALL, JJ., dissent.

. Because of our holding with respect to the primary issue, and because the third-party recovery is less than the injured insured’s total loss, the secondary issue, whether the insurer/indemnitor may extend or enlarge its equitable right of subrogation by contract, is moot.

. For purposes of this opinion, we have quoted the policy language that Blue Cross included in its "Motion to Deny Plaintiffs Petition For Pro-ration." We note that in their brief the appellants allege that on the date of Cynthia Powell’s accident she was covered under a Blue Cross policy that contained a different subrogation clause. However, the above-quoted language is the only subrogation clause contained in the record and, thus, the only policy before this Court. Our holding in this case does not preclude the trial court from considering the issue of which policy is controlling in this case if that issue is properly presented to it.

. Although this policy language characterizes itself as "separate from and in addition to the administrator’s right of subrogation,” it would nonetheless reimburse the insurer for the money that it paid to its insured out of money recovered from the tort-feasor. Even though this portion of the policy does not give Blue Cross the right to "stand in the shoes” of its members, in all other respects this clause serves as a subrogation clause, and we, therefore, will apply the same principles that govern conventional subrogation. See International Underwriters/Brokers, Inc. v. Liao, 548 So.2d 163, 164 (Ala.1989), for a discussion of those principles.

.Likewise, the decision in this case is not limited to insurance companies but applies to any indemnitor who claims a right to subrogation.

. Operation of the "collateral source rule” would prevent the tort-feasor from introducing any evidence that the injured party has already recovered for his injuries by way of insurance. Pearson v. Birmingham Transit Co., 264 Ala. 350, 87 So.2d 857 (1956). But, we note that for civil cases filed after June 11, 1987, Ala.Code 1975, § 12-21-45, would allow evidence that an outside source has paid or will pay or reimburse the plaintiff for certain medical or hospital expenses. This statute also allows the plaintiff to introduce evidence of the cost of obtaining such reimbursement (i.e., premiums). "Upon proof by the plaintiff to the court that the plaintiff is obligated to repay the medical or hospital expenses which have been or will be paid or reimbursed, evidence relating to such reimbursement or payment shall be admissible." Ala.Code 1975, § 12-21-45(c) (Supp.1990).

. A more recent case indicates, however, that in spite of this clear language in Westendorf the Minnesota courts may be reluctant to enforce a subrogation agreement that would allow the insurer to be subrogated even though the insured is not first fully compensated, as against public policy. See Allum v. MedCenter Health Care, Inc., 371 N.W.2d 557, 560 (Minn.Ct.App.1985).

. We note that the right of subrogation may be affected by statute, as in the Alabama law of wrongful death, Ala.Code 1975 §§ 6-5-380 and 6-5-410. See Motors Insurance Corp. v. Loftin, 277 Ala. 331, 170 So.2d 281 (1965).

. We note that any reimbursement for compensation paid to an injured plaintiff under the Alabama Workmen's Compensation Act, Ala. Code 1975, § 25-5-1 et seq. (hereinafter the “Act"), by an employer or its insurer is specifically governed by § 25-5-11(a). Our holding in this case in no way interferes with the legislatively mandated scheme provided for under the Act.

We also note that, pursuant to the Act, only compensation, as opposed to medical payments, is reimbursable. For an analysis of this reimbursement scheme, see Maryland Cas. Co. v. Tiffin, 537 So.2d 469 (Ala.1988). All of the examples set forth in the present opinion are based on the premise that no compensation under the Act is involved.