Calderon v. American Family Ins. – UM/UIM Coverage Not Offset by Med-Pay

Med-Pay in North Carolina offers a source of optional auto insurance coverage to motorists in the event they are injured. Generally, it’s low-level coverage for medical and funeral costs for the occupants of an insured vehicle. North Carolina Med-Pay coverage typically covers up to $1,000 or $2,000 in costs, although customers can ask for more coverage. It is usually the first source of coverage for those involved in a crash, and it is offered on a no-fault basis, meaning you don’t have to prove the other driver caused the crash. car crash

Similar programs exist throughout the country, although some are known as Personal Injury Protection plans, or PIP benefits. A similar program exists in Colorado, where an important question was raised before the state supreme court about whether benefits should be deducted from subsequent awards received for uninsured/underinsured motorist coverage. UM/UIM coverage is afforded to those insureds who:

  • Purchase UM/UIM benefits;
  • Were injured in an auto accident caused by another driver; and
  • Can prove the other driver was not insured or lacked enough insurance to cover his or her related injuries.

In the case of Calderon v. American Family Mut. Ins. Co., the plaintiff sustained serious injuries in a motor vehicle accident with an uninsured driver. The uninsured driver ran a stop sign and struck the plaintiff’s vehicle. His injuries kept him out of work for a full month.

At the time of the collision, the plaintiff was insured by policies issued by the defendant insurer, which provided up to $5,000 in medical payments (Med-Pay) and a maximum of $300,000 in uninsured/underinsured motorist benefits.

The insurer paid the $5,000 claim directly to the plaintiff’s medical providers. The plaintiff then made a claim for UM/UIM benefits. However, the insurer refused to pay, disputing the extent of the plaintiff’s damages. The plaintiff sued for breach of contract and, more specifically, bad faith.

Following a jury trial, a verdict was rendered in the plaintiff’s favor that awarded him $68,300. That figure included $34,400 in past medical expenses. However, the trial court reduced this damages award by $5,000, citing an off-set of the Med-Pay money the plaintiff had already received. The court ultimately entered an award of $77,500, which included prejudgment interest. The insurer paid this amount.

The plaintiff appealed the order reducing this judgment. The appeals court affirmed, holding that a set-off of these benefits wasn’t prohibited under the UM/UIM set-off provision and that to not provide a set-off would be allowing a double recovery.

The state supreme court granted review and reversed.

The plaintiff argued that reducing his judgment by a set-off from any other coverage was statutorily prohibited. The state supreme court agreed.

Also, the court noted, while double recovery in any case is generally disfavored, so too are duplicative insurance premiums. In this case, the plaintiff was paying two separate premiums – one for Med-Pay and another for UM/UIM benefits. As the plaintiff noted in his argument, it’s unlikely state legislators intended for drivers to pay twice for what really was a single payout, which is what we’d be talking about if this set-off were permitted.

Our Charlotte car accident attorneys understand that drivers are allowed to purchase both UM/UIM and Med-Pay coverage, which means they are therefore entitled to recover benefits from each of those respective policies.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

Calderon v. American Family Mut. Ins. Co., Nov. 7, 2016, Colorado Supreme Court

More Blog Entries:

State ex rel. Malashock v. Hon. Michael Jamison – Rescinding Expert Witness Designation in Crash Case, Nov. 10, 2016, Asheville Injury Lawyer Blog

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