Kittle specifically involved a subrogation issue and the underlying principles of equity upon which subrogation is based.See footnote 8 Given its usual and ordinary meaning, the doctrine of subrogation provides an equitable remedy to "'one secondarily liable who has paid the debt of another and to whom in equity and good conscience should be assigned the rights and remedies of the original creditor.'" Id. at 130, 405 S.E.2d at 460 (quoting State Farm Mut. Auto Ins. Co. v. Foundation R. Ins. Co., 78 N.M. 359, 363, 431 P.2d 737, 741 (1967)). Put another way, in syllabus point four of Ray v. Donohew, 177 W. Va. 441, 352 S.E.2d 729 (1986), we said:
        "The doctrine of subrogation is that one who has the right to pay, and does pay, a debt which ought to have been paid by another is entitled to exercise all the remedies which the creditor possessed against that other." Syl. Pt. 1, Bassett v. Streight, 78 W. Va. 262, 88 S.E. 848 (1916).

See also Travelers Indem. Co. v. Rader, 152 W. Va. 699, 703, 166 S.E.2d 157, 160 (1969) ("'subrogation is an equitable right which arises out of the facts and which entitles the subrogee to collect that which he has advanced"' (quoting Busch v. Home Ins. Co., 97 N.J. Super. 54, 56, 234 A.2d 250, 251 (1967)).

    Recognizing the equitable nature of subrogation, we held in Kittle that it may be limited by what is referred to as the made-whole rule. 185 W. Va. at 133-34, 405 S.E.2d at 463-64. In insurance cases, the made-whole rule has been interpreted as meaning "[u]nder general principles of equity, in the absence of statutory law or valid contractual obligations to the contrary, an insured must be fully compensated for injuries or losses sustained (made whole) before the subrogation rights of an insurance carrier arise." Wine v. Globe American Casualty Co., 917 S.W.2d 558, 562 (Ky. 1996); see also Hill v. State Farm Mut. Auto. Ins. Co., 765 P.2d 864, 868 (Utah 1988) ("Where the insured settles with the tort-feasor, the settlement amount goes to the insured unless the insurer can prove that the insured has already received full compensation."); 16 George J. Couch, Couch on Insurance 2d § 61:64 at 145-46 (Ronald A. Anderson & Mark S. Rhodes eds., rev. ed. 1983) (stating that "in absence of waiver to the contrary,  . . . no 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"). The equitable principle underlying the made-whole rule in insurance subrogation cases is that the burden of loss should rest on the party paid to assume the risk (the insurer) and not on the party least able to shoulder the loss (the inadequately compensated insured). Wine, 917 S.W.2d at 562.

    In Kittle, we stated that the equitable principles of the made-whole rule also could be applied to a subrogation action sought by the Department of Human Services (DHS)See footnote 9 to recover medical expenses it paid on behalf of a child who received serious injuries when he was struck by an automobile. 185 W. Va. at 128, 134, 405 S.E.2d at 458, 464. The driver of the automobile was found to be judgment proof, and the driver's automobile insurer offered to settle for the full liability coverage of $100,000. Id. at 128, 405 S.E.2d at 458. However, the guardian ad litem for the child testified that the actual value of the claim was between $200,000 and $250,000. Thereafter, a proceeding was brought in the circuit court, and the circuit court entered orders, inter alia, approving the settlement, finding the child was not made whole by the settlement, and prohibiting collection efforts by DHS for the medical expenses it paid. DHS appealed, claiming it was entitled to full reimbursement from the settlement proceeds. Id.

    The subrogation issue arose in Kittle by virtue of West Virginia Code § 9-5-11 (1990), which granted DHS the authority to recover reimbursement for medical expenses.See footnote 10 Id. at 129-30, 405 S.E.2d at 459-60. Although the statute specifically contained the term "subrogated," we found the statute did not disavow normal subrogation principles and gave no priority of reimbursement between a medical recipient and DHS when the medical recipient was not fully compensated for his or her injuries. Id. at 132, 405 S.E.2d at 462. Thus, we stated in syllabus point three, in part, that "when the term 'subrogation' is given its usual and ordinary meaning, equitable principles must be considered." Id. at 127, 405 S.E.2d 457. Under these principles, we held the circuit court did not error by denying DHS's subrogation claim because the circuit court found the legislature had not contemplated the situation at hand, the child was not made whole by the settlement, and reimbursement to DHS would reduce the money available to meet the child's future medical expenses. Id. at 133-34, 405 S.E.2d at 463-64.
        
    In the present case, the Plaintiff argues the same equitable principles should be applied because he was not made whole by the settlement and, therefore, should be relieved from paying his medical providers. However, the underlying problem with the Plaintiff's argument is that the relationship between the Plaintiff and the Foundation is purely that of debtor and creditor. The Foundation was never secondarily liable to "pay" for the Plaintiff's medical expenses, and it has no interest that warrants invoking the equitable principles of the subrogation doctrine and the made-whole rule.

    Ordinarily, a hospital, physician, and other medical provider are entitled to be compensated for their services by either express or implied contract. 41 C.J.S. Hospitals § 14 (1991); 70 C.J.S. Physicians and Surgeons § 132 (1987); 10 Samuel Williston, Williston on Contracts § 1286A (Walter H. E. Jaeger ed., 3d ed. 1967). If no express contract exists, there is generally an implied agreement that such compensation will be paid by the patient for the reasonable value of the services rendered. 41 C.J.S. Hospitals § 14; 70 C.J.S. Physicians and Surgeons § 132; see generally Ye Olde Apothecary v. McClellan, 163 W. Va. 19, 253 S.E.2d 545 (1979) (holding that physician is entitled to reasonable fee for services and medications supplied). In addition, although we have no cases directly on point in West Virginia, other jurisdictions, in analogous situations, have held this type of relationship does not give rise to subrogation interests in favor of a medical provider.

    For instance, in Sisters of Charity of Providence of Montana v. Nichols, 483 P.2d 279 (Mont. 1971), the Supreme Court of Montana was presented with the question of whether a hospital, which receives payment for medical expenses from a settlement between an accident victim and a tortfeasor, is obligated to pay a pro rata share of the accident victim's attorneys' fees in obtaining that settlement. Id. at 282. The accident victim argued the hospital should be required to pay its share for the same reason a subrogated insurer is required to pay a portion of the cost of recovery. Id. at 283. However, the court disagreed and explained:
    The obligation of the subrogated insurer to share in the costs of recovery from a third party wrongdoer arises because the insurer occupies the position of the insured with coextensive rights and liabilities and no creditor-debtor relationship between them. But here, unlike that situation, the hospital's claim and lien is based upon a debt owed the hospital by its patient in whose shoes it does not stand for any purpose, the debt being owed to it by its patient irrespective of the patient's rights against a third party wrongdoer.
Id. (emphasis added). Thus, the court in Sisters of Charity determined that the rights of a subrogated insurer are distinguishable from that of a hospital owed a debt and "[b]ecause the substitution principle does not apply here, no obligation arises on the part of the hospital to share in the costs of recovery against a third party[.]" Id.

    Similarly, in Maynard v. Parker, 369 N.E.2d 352 (Ill. App. 3d 1977), aff'd, 387 N.E.2d 298 (Ill. 1979), a plaintiff was treated at a hospital after receiving injuries in an automobile accident. Id. at 353. A settlement fund was created by plaintiff's counsel, and the circuit court ruled that in equity the hospital must pay a portion of the plaintiff's attorney's fees and costs because the hospital directly benefitted from the fund. Id. The Illinois appellate court reversed and stated the benefit the hospital derived from the plaintiff's attorney's services "was merely incidental to the primary purpose of obtaining compensation for plaintiff's injuries." Id. at 355. In Maynard, the court further said the hospital's situation is analogous to a prior judgment creditor, not a subrogee, "in that the hospital's right to payment of its claim is not dependent upon plaintiff's recovery against a third party but rather involves an ordinary debt-creditor relationship." Id.; see also Bashara v. Baptist Mem. Hosp. Sys., 685 S.W.2d 307, 311 (Tex. 1985) (stating that insurer's right to recover in workers' compensation case is based on subrogation, but "hospital's rights are based on independent debtor-creditor relationship").

    We agree with Sisters of Charity, Maynard, and Bashara See footnote 11 to the extent they declare a hospital's claim for payment of services arises from a debtor-creditor relationship and not subrogation. Accordingly, we hold, absent a statuteSee footnote 12 or a contractSee footnote 13 to the contrary, a medical provider's right to be compensated by a patient is not dependent upon the patient's ability to obtain a recovery for such medical expenses from a tortfeasor. Instead, a medical provider's claim generally rests upon a debtor-creditor relationship, and such a claim cannot be extinguished or barred by the doctrine of subrogation.

    Applying these principles to the present case, we conclude that the Foundation has no subrogation rights in the underlying action and the relationship between the Foundation and the Plaintiff is one of debtor and creditor. Although the Plaintiff's letters of protection state the Foundation's bills for "related . . . expenses . . . . will be protected from any settlement," it does not give the Foundation a right to subrogation, and the letter in no way exonerates the Plaintiff from paying his debt to the Foundation in the event the Plaintiff is not fully compensated (made whole) by a settlement or an award or in the event the medical services provided are determined to be unrelated to the automobile accident. As previously indicated, one who receives medical services ordinarily has a contractual obligation to pay the reasonable value of those services irrespective of the made-whole rule.See footnote 14 Therefore, we hold the circuit court erred when it relieved the Plaintiff from paying the Foundation. Likewise, we find the circuit court erred when it extinguished and barred any claims the Foundation may have against the Plaintiff for medical expenses he incurred allegedly as a result of the automobile accident.

    Res judicata, or claim preclusion, "generally applies when there is a final judgment on the merits which precludes the parties or their privies from relitigating the issues that were decided or the issues that could have been decided in the earlier action." State v. Miller, 194 W. Va. 3, 9, 459 S.E.2d 114, 120 (1995) (citing Allen v. McCurry, 449 U.S. 90, 94, 101 S. Ct. 411, 414, 66 L.Ed.2d 308, 313 (1980); In re Estate of McIntosh, 144 W. Va. 583, 109 S.E.2d 153 (1959)). "A claim is barred by res judicata when the prior action involves identical claims and the same parties or their privies." Id. In other words, as summarized by the United States Supreme Court: "Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5, 99 S. Ct. 645, 649 n.5, 58 L.Ed.2d 552, 559 n.5 (1979).See footnote 15 In the present situation, the cause of action in the underlying case was a tort action between the Plaintiff and the Defendant. Therefore, if the Foundation brings a contract action against the Plaintiff, res judicata cannot be applied because the necessary requirements of the doctrine will not be met.

        2. Foundation's claim against the plaintiff is not derivative in nature or pursuant to a right of subrogation, and therefore the court does not have the authority or discretion to extinguish or bar this direct claim.

This section was rewritten in 1993 and subsequently amended in 1995. See W. Va. Code § 9-5-11 (Supp. 1996).