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Sisley v. Lupo11/4/2002
An insurer who provides underinsured motorist coverage is entitled to stand in the shoes of the tortfeasor and take an adversarial stance in litigation against its insured. In this case, Leroy Sisley argues that his insurer waived its right to subrogation by denying the reasonableness of his medical bills and moving in bad faith to disqualify his attorney. The trial court disagreed, ruling that the insurance company had a right to protect both its right to subrogation and its interest in defending against Sisley's claim for underinsured motorist coverage. We affirm.
FACTS
Leroy Sisley and Antonio Lupo were involved in a motor vehicle collision when Lupo's vehicle struck the rear of Sisley's pickup. Sisley was insured by National Merit, under a policy that provided for both personal injury protection (PIP) and underinsured motorist coverage (UIM). National Merit paid Sisley's medical bills under the PIP coverage. Sisley retained an attorney to litigate his claim against Lupo, and National Merit requested that Sisley's attorney protect their PIP subrogation interest. Sisley's attorney agreed 'assuming no conflict of interest develops.' National Merit subsequently intervened in the lawsuit to protect its interest with respect to the underinsured motorist claim. See Fisher v. Allstate Ins. Co., 136 Wn.2d 240, 961 P.2d 350 (1998). The parties stipulated that Lupo was negligent, but reserved the issues of causation and damages for trial.
During pretrial discovery, Sisley sent National Merit a request for admissions, asking National Merit to agree that each of the medical bills to be entered into evidence at trial was reasonable, necessary, and caused by the collision with Lupo. Some of the bills identified in the request for admissions had already been paid by National Merit under the PIP coverage. National Merit denied those requests for admissions on April 20, 2001.
Sisley's attorney then sent a letter to counsel for National Merit on June 15, 2001, stating that he considered its denial of the requests for admissions as a waiver of its subrogation interest. In addition, Sisley's attorney notified National Merit that he could no longer represent its subrogation interests, as the company's interests had become adverse to Sisley's interests.
On October 10, Sisley and Lupo reached a settlement for $25,000, the policy limits of Lupo's liability policy. The UIM claim proceeded to trial between Sisley and National Merit.
On the Friday before the Monday trial date, National Merit amended its answer to the requests for admission to admit that those expenses incurred within three months of the accident were reasonable and necessary and caused by the accident. With regard to the remainder of the bills, National Merit maintained its former denial. On the same day, National Merit filed a motion to disqualify Sisley's attorney under the Rules of Professional Conduct, based on an alleged conflict of interest. Up to that point, National Merit had maintained that no conflict of interest existed and insisted that Sisley's attorney continue to protect its subrogation interest. In support of the motion, National Merit filed the declaration of a claims examiner who stated that National Merit paid PIP payments to Sisley and that National Merit asked Sisley's attorney to protect its subrogation interest. The declaration further stated that Sisley's attorney was now refusing to protect that interest. The claims examiner also quoted the report of an orthopedic surgeon who examined Sisley at Lupo's request, which indicated that only the first three months of Sisley's medical treatment were consistent with the trauma he suffered in the accident.
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