1 : an equitable doctrine holding that when a third party pays a creditor or obligee the third party succeeds to the creditor's rights against the debtor or obligor; also : a doctrine holding that when an insurance company pays an insured's claim of loss due to another's tort the insurer succeeds to the insured's rights (as the right to sue for damages) against the tortfeasor called also equitable subrogation
2 : an act or instance of subrogating
NOTE: Subrogation can take place either by operation of law or by contractual agreement.
Merriam-Webster's Dictionary of Law at dictionary.com.
I'll give it to you in laymen's terms.
Say you're driving along the highway. A large semi is in front of you. All of a sudden, the doors at the back of the semi swing open, spilling boxes onto the highway. Your car is hit, you swerve and your car rolls. You end up in the hospital with multiple injuries. You're out of work for months and will have to endure many months more of physical therapy. Your insurance pays most of the medical expenses.
At least the company that owned the semi is paying you compensation for pain and suffering. It's a good thing. You didn't know how you were going to get by. You get paid a reasonable settlement.
This is where subrogation steps in. If your insurance falls under federal regulations your insurance company can lay claims to your settlement. They can require that you repay them out of your settlement money.
That's the problem that's wracking the brains and legal knowledge of Minnesota state representatives and attorneys for the 35W bridge victims. They want to compensate them, but they don't want it to go to the insurance companies, waiting like sharks in the bloody waters below.
So... not only do health insurance companies charge you through the nose, refuse to pay for preventative and necessary treatments, and drop you for sneezing the wrong way - now they can take your settlements as repayment, too.
Sick. Absolutely sick.
Read the Star Tribune article, "Will insurers go after 35W bridge victims' awards?" by Pam Louwagie that got me ranting at 700am.