If you've been injured and you have insurance or Medicare or Medicaid, then chances are your insurance company has covered at least some of the costs of your medical treatment. When someone else negligently caused your injury, then that person is the party responsible for those medical bills, even though your insurance has already paid for some of them. Under New Mexico's "collateral source" rule, the defendant's liability for damages may not be reduced by benefits received by or for the plaintiff from a source other than damages awarded against the defendant.
Your insurance company can seek reimbursement from the responsible party for payments made on your behalf. This is called "subrogation." When your insurance company pays your claim, they have a "subrogation right." A claim made by your insurance company for reimbursement is called a "subrogation claim."
The idea behind subrogation is that the party at fault should compensate any losses or damages caused by the incident, which can include the financial loss of your insurer.
The defendant should not escape full liability because you had the foresight to purchase insurance or because you made contributions to Medicare. When an injured plaintiff pursues a lawsuit against a defendant, New Mexico law says that the plaintiff has a responsibility to protect the insurer's subrogated interest. When the plaintiff recovers either through settlement or judgment, the plaintiff holds the subrogated interest in trust.
Because you and your attorney have put the time, effort, and expense into pursuing the lawsuit and taken on the risk of litigation in obtaining a settlement or judgment, which benefits the insurer without incurring the same expenses or risk, New Mexico law says that the insurer should contribute a proportionate share of attorneys' fees, costs, and taxes due from the amount obtained. A proportionate share of fees is deducted from the insurer's subrogated interest.