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Keenan v. Industrial Indemnity Insurance Co.6/11/1987
An automobile insurer who had issued an insurance policy providing both personal injury protection (PIP) and underinsured motorist coverages seeks reimbursement of PIP benefits previously paid to the insured, pursuant to a reimbursement provision in the policy. At issue is whether this reimbursement provision is enforceable to the extent that it prevents the insured from receiving a double recovery for her damages. The trial court disallowed any reimbursement of PIP benefits. We accepted direct review and reverse.
On March 13, 1981, while driving her automobile plaintiff Genevieve Keenan was hit head-on by Buell Wood. She suffered severe injuries. The plaintiff was insured under a
single insurance policy issued by the defendant, Industrial Indemnity Insurance Company. She paid separate premiums for both PIP coverage and underinsured motorist coverage. Under her PIP coverage she was entitled to receive certain no-fault benefits, including up to $10,000 for medical and hospital expenses and up to $10,000 in income continuation (wage loss) benefits. The PIP portion of the policy also contained the following provision:
Our Right To Recover Payment
2. If we [Industrial Indemnity] make a payment under this coverage and the person to or for whom payment is made recovers damages from another, that person shall reimburse us to the extent of our payment.
During the first year after the automobile collision, Industrial Indemnity paid the plaintiff a total of $9,999.90 under the PIP endorsement.
The tortfeasor, Wood, had a $25,000 liability policy. The plaintiff settled her claim against Wood for the full amount of the policy. The plaintiff then requested additional compensation from Industrial Indemnity under her underinsured motorist coverage, which had a limit of $35,000. An amount of compensation could not be agreed upon, so an arbitration was conducted pursuant to the terms of the policy to determine the plaintiff's total damages. The plaintiff submitted all of her claimed general and special damages to the arbitrators, including her claims for medical expenses, hospital expenses, and lost wages. The arbitrators, after consideration of the evidence presented, entered the following finding:
he claimant, Genevieve Keenan, is legally entitled to collect damages from the owner or driver of the underinsured motor vehicle and has been damaged in the total amount of $44,478.28.
The arbitrators, by agreement of the plaintiff and Industrial Indemnity, were not to consider any questions regarding offsets or reductions from this award.
Industrial Indemnity then tendered the plaintiff a check
for $9,478.38 in underinsured motorist benefits. This figure was obtained by deducting, from the total damages of $44,478.28, both the $25,000 the plaintiff had received from the tortfeasor's insurer and the $9,999.90 which the plaintiff had received in previous PIP benefits from Industrial Indemnity. The plaintiff did not object to the $25,000 offset. She did object to the additional $9,999.90 reduction, however, arguing that this offset to effect reimbursement of previous PIP payments was invalid. She sought a declaratory judgment on this question.
The trial court found that:
Industrial Indemnity Insurance Company does not have the right to reduce or offset payments made under its Personal Injury Protection endorsement from the amounts due to [plaintiff] under its Underinsured Motorist Provision of the insurance contract between [plaintiff] and Industrial Indemnity Insurance Company.
The trial court also entered an order confirming the arbitrator's a
Page 1 2 3 4 5 Washington Personal Injury Attorneys
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