After a serious car accident, there is likely to be at least some negotiation with one or more auto insurance company. It’s common for these firms to refuse payment or offer settlement for far less than what the plaintiff should receive, based on the extent of injuries.
But sometimes, even when there is a dispute, the insurer will make an advance payment for less than what plaintiff asking, with the understanding this will be applied as credit that will be offset with any higher future damages awarded by a judge or jury. This promotes expedient relief of some losses to the plaintiff, and it also reduces the amount of prejudgment interest that may be imposed on an insurance company if the plaintiff ultimately prevails.
In the recent case of Doe v. Pak, a woman struck by a hit-and-run driver in November 2009 sought recovery of damages from her own insurance company via uninsured motorist coverage. This case was in West Virginia and there, as in South Carolina (per S.C. Code Ann. 38-77-170(2)), a motor vehicle is considered uninsured if the owner/ operator is unknown or when the vehicle is operated by someone who did not have authorization to do so.
According to court records, the unknown vehicle traveling in the opposite direction traveled into plaintiff’s lane of travel and struck her vehicle. The unknown driver did not stop. Plaintiff suffered physical injury, which she said kept her from performing housework. (Although an expert witness testified as to the value of that housework, she did not indicate to the court that she paid or incurred an obligation to pay someone for help with that housework.)
Pursuant to her own auto insurance policy, she was paid $25,000 for coverage of her medical bills. Beyond that, she had a $100,000 uninsured motorist coverage policy, from which she sought the full amount.
The insurer refused to pay the policy limits, but instead extended an offer to settle for $30,630. She refused this offer, and filed a lawsuit against the unknown driver, informing the insurer of her intent to collect UM damages.
Prior to trial, in June 2012, insurer contacted plaintiff’s attorney and sent a check for $30,628.15, which it indicated was an advance payment that would be “credited against any final determination of damages.” The letter clearly indicated that acceptance of that payment would not hinder plaintiff’s efforts to retain a higher award through the court.
A trial was held in September 2013, with jurors returning a damage award of $101,000, which included $25,000 for medical expenses, $30,000 loss of earning capacity, $10,000 for loss of household services, $6,000 for pain, suffering, mental anguish and loss of life enjoyment now and $30,000 for these losses in the future. Trial court reduced these damages under comparable negligence principles to $70,700 because jurors deemed plaintiff 30 percent responsible for the accident.
Trial court did offset this final amount by $25,000 for the medical expenses insurer already paid, but refused to credit the $30,600 advance payment, which the court characterized as “a gift.” The court also imposed prejudgment interest on this amount, as well as on the loss of household services amount, despite the fact that plaintiff hadn’t paid anything for this particular loss.
West Virginia Supreme Court justices reversed on appeal and remanded. The court noted advance payments to injured insureds are not intended to create double recovery for the injured. Insurers would lose all incentive to advance these payments if they weren’t given credit for them by the court. The trial court’s assertion that the payment was in fact a “gift” or “gratuitous offer” was characterized by the state high court as, “wrong with the force of a five-week-old, unrefrigerated dead fish.”
The court also reversed with regard to prejudgment interest on both the $30,600 and the $10,000 for household services losses.
In the end, plaintiff still prevailed in her car accident lawsuit by receiving more than what the insurer was offering her. She just wanted entitled to recover twice for the same injuries.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Doe v. Pak, Jan. 26, 2016, West Virginia Supreme Court of Appeals
More Blog Entries:
U.S. Supreme Court Weighs Accident Victims’ Rights, Jan. 17, 2016, Greenville Car Accident Attorney Blog