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Primary UIM Insurer May Not Offset Medical Payments Made by Injured Passenger’s Insurance Company in Tennessee

In Powell v. Clark, a passenger was hurt in a Tennessee motor vehicle collision that was caused by another motorist. Unfortunately, the at-fault driver did not carry liability insurance when the traffic wreck occurred. Following the accident, the injured passenger sought to recover uninsured motorist (“UIM”) accident benefits. At the time of the crash, her insurance policy included UIM and medical payments coverage of up to $100,000.  In addition, the driver of the vehicle the injured woman was riding in also carried $100,000 in UIM benefits, but only up to $2,000 in medical payments. Under Tenn. Code Ann. § 56-7-1201(b)(3), the driver’s insurer was the primary carrier for purposes of UIM coverage.

After the driver’s insurer paid the injured passenger the full medical payments policy limits of $2,000, the passenger’s insurance company paid her more than $70,000 in medical payments. Next, the injured passenger filed a lawsuit against the at-fault driver in a Tennessee court. Both insurers were issued a summons and filed an answer in the case. About one month after the injured passenger’s insurer filed its answer, the company was dismissed from the lawsuit.  Additionally, the at-fault driver failed to appear.

In October 2012, the injured passenger asked the trial court to issue a declaratory judgment stating the driver’s insurer was not entitled to offset the medical payments made by her insurance company against its own UIM limits. In response, the trial court complied with the woman’s request. According to the trial court, to hold otherwise would encourage insurers to withhold payment until all other payments were made and result in a windfall to the driver’s insurance company.

The Court of Appeals of Tennessee at Nashville denied the insurer’s interlocutory appeal request and the trial court held a final hearing on damages. In its order, the court stated that the injured passenger should be paid the full UIM policy limits of $100,000 less $2,000 by the driver’s insurance company. The insurer then filed an appeal with the Nashville appellate court.

On appeal, the driver’s insurer argued that it was entitled to reduce its UIM benefit payment to the injured passenger by the amount of medical payments she recovered from her own car insurance company. After examining the language of the policy, the Court of Appeals stated the insurer was legally responsible for all UIM benefit payments in the case. The appellate court said allowing the insurance company to offset its UIM benefit payment by the amount already paid to the injured passenger would violate the intent of the Tennessee uninsured motorist law. Under the law, offsets are limited to those payments made by “legally responsible parties.” In addition, the court added that the passenger’s insurer may instead have a subrogation action against the driver’s insurance company.

Finally, the Court of Appeals of Tennessee at Nashville affirmed the trial court’s order and assessed costs related to the appeal to the driver’s UIM insurer.

The knowledgeable attorneys at the Hartsoe Law Firm, P.C. help individuals who were injured in a car wreck in Eastern Tennessee recover the damages they deserve based on the severity of their accident injuries. To discuss your case with a seasoned personal injury lawyer today, do not hesitate to call the Hartsoe Law Firm, P.C. at (865) 524-5657 or contact us online.

Additional Resources:

Powell v. Clark, Tenn: Court of Appeals 2014

Related Blog Posts:

Tennessee Court Denies Grocery Store’s Motion for Summary Judgment in Premises Liability Case, January 21, 2014, Knoxville Injury Lawyer Blog

Tennessee Appeals Court Affirms Damages Award in Rear-End Collision Case, December 15, 2014, Knoxville Injury Lawyer Blog


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