Client Advisory

The Connecticut Supreme Court has issued a significant decision that reshapes the timing and scope of insurer subrogation rights. In Orlando v. Liburd, the Court held that an insured may bring an unjust‑enrichment claim for premature subrogation immediately, without first obtaining a judgment against the tortfeasor or proving the tortfeasor’s inability to satisfy that judgment. The ruling clarifies the operation of the Make‑Whole Doctrine in Connecticut and creates new litigation exposure for insurers that receive policy‑limit tenders before fully compensating their insureds.

The decision reverses both the trial court and the Appellate Court, which had previously concluded that such claims were not ripe until the insured’s damages were adjudicated and the tortfeasor’s ability to pay was known. The Supreme Court reframed the injury as occurring the moment the insurer accepts subrogation funds that reduce the pool available to make the insured whole.

The case arose from a 2018 motor‑vehicle collision in which Plaintiff, Rocco Orlando, sought damages for diminished vehicle value and rental‑car expenses. The tortfeasor, Ernest Liburd, carried a $25,000 property damage limit with State Farm Mutual Insurance (State Farm). Orlando was insured by Nationwide Mutual Insurance Company (Nationwide).

During the claims process, State Farm tendered its full $25,000 limit to Nationwide, allegedly based on a representation that Orlando had been “made whole.” Orlando disputed that assertion and amended his complaint to allege that Nationwide’s acceptance of the funds violated his priority right under the Make‑Whole Doctrine by exhausting the coverage available to satisfy his remaining uncompensated losses.

Nationwide moved to dismiss, arguing that Orlando’s claim was speculative until he obtained a judgment against Liburd and demonstrated that Liburd could not satisfy it. Both lower courts agreed, concluding that the unjust‑enrichment claim was not ripe because Orlando’s injury depended on future events that might never occur.

However, The Connecticut Supreme Court rejected that reasoning and held that the claim was ripe as soon as Nationwide accepted the $25,000. The Court emphasized that the Make‑Whole Doctrine operates as a default rule in Connecticut, restricting an insurer’s ability to enforce subrogation rights until the insured has been fully compensated.

The Court explained that the harm in this case was not about calculating how much money the insured ultimately lost—it was the fact that his priority right under the Make‑Whole Doctrine was violated the moment Nationwide took the subrogation payment. By accepting the tortfeasor’s policy‑limit tender, Nationwide immediately reduced the pool of funds that should have been available to cover the insured’s remaining damages. The Court emphasized that even if the exact amount of the insured’s losses is still uncertain, the injury itself is already clear, so the claim is ripe. Requiring the insured to first win a judgment and then prove the tortfeasor cannot pay would create the kind of unfairness the Make‑Whole Doctrine is meant to prevent. In short, Nationwide’s early subrogation shifted the financial risk from the insurer to its own insured, and that is enough to make the claim actionable right away.

The Insurance Association of Connecticut and the American Property Casualty Insurance Association filed an amicus brief warning that expanding the make‑whole doctrine could: 1) increase litigation against insurers, 2) expose carriers to new categories of unjust‑enrichment claims, and 3) risk double recovery by plaintiffs.

The Supreme Court acknowledged these concerns but held that equitable principles required allowing insureds to challenge premature subrogation immediately. The Court emphasized that the doctrine exists to prevent insurers from recovering ahead of their insureds when available coverage is insufficient to make the insured whole.

Ultimately, this ruling introduces several operational and litigation risks for carriers: First, Insurers may now face unjust‑enrichment claims as soon as they accept subrogation funds without confirming the insured has been fully compensated. Second, since the Court repeatedly emphasized that Nationwide allegedly took the money without confirming whether the insured had been made whole, carriers must carefully document loss valuations, communications with other insurers, and the insured’s uncompensated damages. In other words, representations that an insured has been “made whole” may carry significant liability if inaccurate. Lastly, there needs to be clear protocols when exchanging information about loss valuation and subrogation rights, particularly in cases involving modest policy limits.

With the dismissal reversed, the case returns to the trial court for adjudication of the negligent‑subrogation claim against Nationwide and continued litigation of the underlying negligence action against Liburd. The plaintiff’s counsel has indicated the matter will likely proceed to a bench trial.