UNINSURED MOTORIST COVERAGE: DOES YOUR UNINSURED MOTORIST INSURANCE GET CREDIT FOR MEDICAL LIENS PAID BY OTHER SOURCES?
Understanding how much money you will walk from a settlement with is a crucial consideration in the decision as to how you will resolve your car accident case. Often times, the resolution of car accident cases is based upon uninsured motorist coverage payments. It is crucial that your personal injury attorney understand how payments from uninsured/underinsured motorist carriers will be allocated from the settlement.
One of the crucial questions is whether an uninsured motorist carrier may receive credit for hospital liens paid by the at-fault driver’s insurance company and, thereby, reduce their liability under the uninsured motorist policy. This question was answered by State Farm Mut. Auto. Ins. Co. v. Adams, 288 Ga. 315, 316-17, 702 S.E.2d 898 (2010). Your personal injury attorney must understand the priority of payments from the at-fault driver’s insurance policy and your uninsured motorist coverage policy.
In analyzing whether an uninsured motorist policy carrier (the insurance company that the injured party paid) is on the hook for damages, Georgia courts typically begin with an analysis of the purpose of uninsured motorist coverage. As to the purpose of uninsured/underinsured motorist coverage, our appellate courts have stated:
As recognized by a leading treatise, the purpose of this statute has been previously set forth by this Court.
The purpose of uninsured motorist or UM coverage is to place the injured insured in the same position as if the offending uninsured motorist were covered with liability insurance. Stated otherwise, “[t]he purpose of uninsured motorist legislation is to require some provision for first-party insurance coverage ‘to facilitate indemnification for injuries to a person who is legally entitled to recover damages from an uninsured motorist, and thereby to protect innocent victims from the negligence of irresponsible drivers.’ ”
The Georgia uninsured motorist statute “is designed to protect the insured as to his actual loss, within the limits of the policy or policies of which he is a beneficiary.” State Farm Mut. Auto. Ins. Co. v. Murphy, 226 Ga. 710, 714, 177 S.E.2d 257 (1970).
Ga. Automobile Ins. Law § 32:3 (2010 ed.). It is this underlying purpose, not Georgia’s full compensation rule, which must guide this case because no subrogation rights of an insurer are associated with a hospital lien. See Holland v. State Farm Mut. Auto. Ins. Co., 236 Ga.App. 832(2), 513 S.E.2d 48 (1999).
State Farm Mut. Auto. Ins. Co. v. Adams, 288 Ga. 315, 316-17, 702 S.E.2d 898, 900 (2010)
In State Farm Mut. Auto. Ins. Co. v. Adams, the plaintiff’s personal injury attorney did an excellent job of attempting to structure the payouts following a car accident in an effort to maximize the recovery of his client. The attorney structured the settlement in an effort to get the most of his client’s uninsured motorist’s coverage. Unfortunately, the Georgia Court of Appeal held that the plaintiff’s uninsured motorist carrier was entitled to a credit for the amount previously allocated towards the payment of her medical liens for treatment she had received as a result of the car accident:
After being injured in an automobile accident, Randolph Adams (sometimes referred to as the insured) brought suit against the tortfeasor, who carried a $25,000 insurance policy with Nationwide. Pursuant to a negotiated settlement, Nationwide exhausted its coverage by paying (1) $15,782.34 to Adams and his attorney, and (2) $9,217.66 to Grady Hospital in order to satisfy a hospital lien for unpaid services rendered to Adams to treat his injuries. Because his damages exceeded $25,000, Adams filed a claim with his uninsured motorist carrier, State Farm, with whom Adams carried $100,000 worth of coverage. In response, State Farm paid Adams $75,000, contending that it was entitled to a credit for all of the coverage paid out by Nationwide. Adams, however, maintained that State Farm was not entitled to a credit for Nationwide’s payment of Grady Hospital’s lien.
The underlying lawsuit ensued, and based on the provisions of the uninsured motorist statute, the trial court granted summary judgment to State Farm. Adams then appealed that decision to the Court of Appeals. In Adams v. State Farm Mut. Auto. Ins. Co., 298 Ga.App. 249, 679 S.E.2d 726 (2009), the Court of Appeals reversed the trial court, finding that State Farm was not entitled to a credit against Adams’ coverage for the hospital lien paid by Nationwide. Thereafter, we granted State Farm’s petition for certiorari to determine whether the Court of Appeals erred in extending the rationale of Thurman v. State Farm Mut. Auto. Ins. Co., 278 Ga. 162, 598 S.E.2d 448 (2004), to the satisfaction of a hospital lien by the tortfeasor’s liability insurer. For the reasons set forth below, we reverse.
State Farm Mut. Auto. Ins. Co. v. Adams, 288 Ga. 315, 315, 702 S.E.2d 898, 899-900 (2010)
As stated above, the Georgia uninsured motorist statute “is designed to protect the insured as to his actual loss, within the limits of the policy or policies of which he is the beneficiary.” Murphy, supra, 226 Ga. at 714, 177 S.E.2d 257. Subtraction of a hospital lien from a tortfeasor’s insurance coverage **902 as the payment of other claims or otherwise defeats this purpose, as the resulting increase in underinsured motorist coverage has no relation to the insured’s actual loss within the limits of the policies in issue. To the contrary, treatment of a *319 hospital lien as “other claims or otherwise” may actually lead to some amount of double recovery by an insured. If such treatment were allowed, “the personal injury claimant [could] obtain payment directly from his UM carrier up to the full amount of an outstanding hospital lien and then turn around and negotiate a compromise settlement with the hospital and pocket the change.” (Emphasis supplied.) Ga. Automobile Ins. Law § 32:3 (2010 ed.). Such a result completely undermines the purposes of the uninsured motorist statute.
State Farm Mut. Auto. Ins. Co. v. Adams, 288 Ga. 315, 318-20, 702 S.E.2d 898, 901-02 (2010)
If you would like to speak with an auto accident attorney in Macon, Georgia, contact The Sessions Law Firm at (478) 254-2665.