## Facts

- Jeannette Ludwig held an automobile policy issued by Farm Bureau Mutual Insurance Company that included medical payments coverage and an express subrogation provision.
- In 1980, Ludwig, her husband, and her mother-in-law were injured in a Kansas collision involving a truck; Farm Bureau paid medical expenses under the policy.
- The occupants sued the trucking company and settled for $45,000, including $13,223.26 allocated to subrogation claims.
- Of the subrogation allocation, $9,380.97 represented Farm Bureau’s medical-payments claim (with the remainder allocated to another insurer).
- Farm Bureau did not negotiate the settlement but protected its subrogation interest; the tortfeasor’s insurer issued a separate check for $9,380.97 payable jointly to Farm Bureau and Ludwig.
- Ludwig asserted the settlement did not fully compensate her total damages and sought to prevent Farm Bureau from collecting until she was fully compensated.

## Issues

1. Whether an insurer may enforce an express medical-payments subrogation clause to obtain reimbursement from the insured’s tort settlement when the insured has not been fully compensated for all damages.
2. Whether the trial court erred in denying class certification for a proposed class of similarly situated policyholders.

## Decision

- The Supreme Court of Iowa reversed the denial of reimbursement and held Farm Bureau was entitled to recover under the policy’s subrogation provision despite Ludwig not being fully compensated.
- The court affirmed the denial of class certification.
- The case was affirmed in part, reversed in part, and remanded.

## Legal Principles

- Subrogation may arise in equity or by contract; when subrogation rights are clearly stated in an insurance policy, they are generally enforced according to the contract’s terms.
- A court will not impose a judicial “made-whole” condition to limit reimbursement where the policy language unambiguously grants the insurer a right to reimbursement from the insured’s recovery, absent a contrary statute or controlling public policy.
- Trial courts have discretion to deny class certification where individualized issues among proposed class members make class treatment inappropriate or unmanageable.

## Conclusion

The court enforced the policy’s explicit medical-payments subrogation clause, allowing the insurer to be reimbursed from settlement proceeds even though the insured was not made whole, and it upheld the trial court’s refusal to certify a class.


Ludwig v. Farm Bureau Mut. Ins. Co., 393 N.W.2d 143 (Iowa 1986)