584 June 22, 2017 No. 34

IN THE SUPREME COURT OF THE

STATE OF OREGON

Alex SPEARMAN,

Petitioner on Review,

v.

PROGRESSIVE CLASSIC

INSURANCE COMPANY,

a Wisconsin corporation,

Respondent on Review.

(CC 1302-01718; CA A155674; SC S063995)

On review from the Court of Appeals.*

Argued and submitted November 14, 2016.

Willard E. Merkel, Merkel & Associates, Portland, argued

the cause and filed the brief for petitioner on review.

James B. Rich, Harris, Wyatt & Amala, LLC, Salem, 

argued the cause and filed the brief for respondent on review.

Lisa T. Hunt, Law Office of Lisa T. Hunt, LLC, Lake 

Oswego, filed the brief for amicus curiae Oregon Trial Lawyers

Association.

Before Balmer, Chief Justice, and Kistler, Walters, Landau,

and Brewer, Justices, and DeHoog, Judge of the Court of 

Appeals, Justice pro tempore.**

LANDAU, J.

The decision of the Court of Appeals and the judgment of 

the circuit court are affirmed.

____________

** Appeal from Multnomah County Circuit Court, Nan G. Waller, Judge. 276 

Or App 114, 366 P3d 821 (2016).

** Baldwin, J., retired March 31, 2017, and did not participate in the decision 

of this case. Nakamoto and Flynn, JJ., did not participate in the consideration or 

decision of this case.
Cite as 361 Or 584 (2017) 585

Case Summary: After plaintiff successfully recovered damages from his 

insurer under the uninsured motorist coverage of his automobile insurance policy, he sought attorney fees from the insurer. The insurer asserted that a fee 

award was not proper because it had met the “safe harbor” against a fee award of 

ORS 742.061(3). That safe harbor applies if (among other things) an insurer does 

not raise issues beyond the liability of the uninsured motorist and “the damages 

due the insured.” Plaintiff asserted that “damages due the insured” requires an 

insurer to agree that it owes some amount above zero in benefits, and that the 

insurer here had raised issues beyond “the damages due the insured” by challenging the nature and extent of plaintiff’s injuries and the reasonableness and 

necessity of his medical expenses. The trial court declined to award fees, and the 

Court of Appeals affirmed. Held: (1) The phrase “damages due the insured” refers 

to the type of damages that would be payable in uninsured and underinsured 

motorist cases: namely, the damages that the insured would be legally entitled to 

recover from the uninsured or underinsured motorist; and (2) the insurer did not 

raise issues beyond the “damages due the insured.”

The decision of the Court of Appeals and the judgment of the circuit court 

are affirmed
586 Spearman v. Progressive Classic Ins. Co.

LANDAU, J.

ORS 742.061(1) generally provides for an award of 

attorney fees when an insured brings an action against his 

or her insurer and recovers more than the amount tendered 

by the insurer. ORS 742.061(3) provides a “safe harbor” for 

the insurer in uninsured motorist (UM) cases: An insured 

is not entitled to attorney fees if, within six months of the 

filing of a proof of loss, the insurer states in writing that it 

has accepted coverage, that it agrees to binding arbitration, 

and that the only remaining issues are the liability of the 

uninsured motorist and the “damages due the insured.”

At issue in this case is what the safe-harbor statute 

means when it refers to the “damages due the insured.” The 

insurer, Progressive Classic Insurance Company, responded 

to plaintiff’s claim by agreeing that the accident was covered 

by the policy, but challenging the nature and extent of plaintiff’s injuries, as well as the reasonableness and necessity 

of his medical expenses. Plaintiff argues that, by reserving 

the right to challenge the nature and extent of his injuries, 

Progressive raised issues that went beyond the “damages 

due the insured.” According to plaintiff, to qualify for the 

safe harbor in ORS 742.061(3), an insurer must agree that 

it owes some amount above zero in benefits, so that the only 

remaining issues must concern the particular amount above 

zero that the insurer owes.

The trial court and the Court of Appeals, Spearman 

v. Progressive Classic Ins. Co., 276 Or App 114, 366 P3d 821 

(2016), both rejected plaintiff’s construction of the safe-harbor

statute. For the reasons that follow, we do as well and affirm 

the decision of the Court of Appeals and the judgment of the 

circuit court.

I. FACTS

Plaintiff purchased an automobile insurance policy 

from Progressive. The policy included UM coverage with a 

limit of $25,000.

Plaintiff was injured in an automobile accident with 

an uninsured motorist. Plaintiff filed a proof of loss for UM 

benefits with Progressive. Within six months, Progressive 

sent a letter to plaintiff that stated:
Cite as 361 Or 584 (2017) 587

“Pursuant to ORS 742.061(3)(a) and (b), please be 

advised that Progressive Classic Insurance Company has 

accepted coverage for the above matter and the only issues 

are the liability of the [u]ninsured motorist and damages 

due to [plaintiff]. Progressive Classic consents to submit 

this case to binding arbitration if we cannot resolve this 

matter.”

Progressive paid plaintiff some benefits, but the 

parties were unable to resolve their dispute about the extent 

of the insurer’s UM liability. So plaintiff filed an action 

against Progressive in circuit court. Plaintiff’s complaint 

alleged:

“4. That on or about August 5, 2012, Plaintiff, an 

insured person under the terms of Defendant’s aforesaid 

insurance policy, was operating the insured vehicle southbound on NE 82nd Avenue near its intersection with NE 

Brazee Street, public roadways in Portland, Multnomah 

County, Oregon, when he stopped his automobile [for] traffic stopped ahead and was struck by an automobile operated by [a named driver].

“5. That the aforesaid accident was caused by an uninsured vehicle and motorist as defined in the policy and at 

ORS 742.502(2)(a).”

It further alleged that, as a result of the accident, plaintiff was required to incur medical expenses that should 

have been reimbursed as part of his uninsured motorist 

coverage. And it alleged that plaintiff had “performed all 

preconditions to the recovery of benefits under the policy of 

insurance” that Progressive had issued. Plaintiff prayed for 

an award of his unpaid UM damages in an amount not to 

exceed the $25,000 UM policy limit.

In its answer, Progressive alleged that it “[a]dmits 

the allegations contained in paragraph 4, except that [it] 

lacks information and knowledge as to whether or not plaintiff was stopped at impact.” Progressive further stated that 

it “admits that plaintiff sustained ‘some’ injury as a result 

of the alleged accident; but disputes the nature and extent 

of plaintiff’s alleged injuries.” It also admitted that plaintiff had submitted a claim for some medical expenses, but 

denied “the reasonableness and necessity of some of plaintiff’s accident-related medical expenses.”
588 Spearman v. Progressive Classic Ins. Co.

Plaintiff served Progressive with a request for admissions. In response, Progressive admitted that plaintiff had 

done everything required of him to be eligible for uninsured motorist benefits; admitted that plaintiff had suffered 

“some” injury, although Progressive disputed the nature and 

extent of the injury; and admitted that plaintiff had suffered 

“some” economic damages, although Progressive denied “the 

reasonableness, necessity, relatedness, and extent” of the 

economic damages that plaintiff had claimed.

The matter was transferred to the court’s arbitration program, and the arbitrator awarded plaintiff $6,022.80 

under the UM provisions of the policy. Plaintiff requested 

attorney fees under ORS 742.061(1). Progressive asserted 

that it was entitled to the safe harbor of ORS 742.061(3). 

The arbitrator agreed with Progressive and denied the fee 

request.

Plaintiff challenged in circuit court the arbitrator’s 

failure to award attorney fees. The parties did not dispute 

that the conditions generally necessary for a fee award under 

ORS 742.061(1) had been met. The sole dispute was over 

whether Progressive had met the requirements for the safe 

harbor set out in ORS 742.061(3). Relying on this court’s 

decision in Grisby v. Progressive Preferred Ins. Co., 343 Or 

175, 182-83, 166 P3d 519, adh’d to as modified on recons, 343 

Or 394, 171 P3d 352 (2007), plaintiff argued that, because 

Progressive had raised issues that could have resulted in 

an award of zero damages, the insurer had raised issues 

beyond “the damages due the insured.” Plaintiff argued 

that, although Grisby concerned a statutory provision that 

applied only to personal injury protection (PIP) benefits, its 

holding should be extended to this case. That means, he contended, that Progressive “was required to frame its pleadings to concede that the trier of fact was required to award 

some damages.” (Emphasis in original.)

The trial court rejected plaintiff’s argument and 

denied the fee request. Plaintiff appealed. Before the Court of 

Appeals, he advanced the same argument that he had in the 

circuit court: that Grisby’s reasoning as to the PIP safe harbor should apply to ORS 742.061(3), and that Progressive’s 

dispute as to the reasonableness of plaintiff’s medical bills 
Cite as 361 Or 584 (2017) 589

meant that Progressive had raised issues beyond the quantum of “damages due the insured.”

Progressive responded it had satisfied the safeharbor requirements of ORS 742.061(3) in that it had 

accepted coverage, agreed to arbitration, and challenged 

only the damages due plaintiff. Grisby, it argued, was distinguishable because that case had interpreted a different statute with different text concerning PIP—not UM—benefits.

Sitting en banc, the Court of Appeals affirmed. 

Key to understanding the safe-harbor statute, the court 

explained, is the nature of the particular category of insurance to which it applies, namely, UM coverage. At the core 

of every action to recover UM benefits is the idea that the 

uninsured motorist “would be liable to the insured in a civil 

action for some amount of damages for bodily injury.” 276 Or 

App at 121. Thus, the court reasoned, the phrase “damages 

due the insured” in ORS 742.061(3) refers to “the amount 

of damages (if any) that the insured would be entitled to 

recover from the uninsured motorist.” Id. at 127. A dispute 

over the “damages due the insured” in the context of a claim 

for UM benefits might well result in an award of zero benefits, the court said. But that does not foreclose the application of the safe-harbor statute. Id. at 127-28.

The court concluded that Grisby was distinguishable in that it construed the safe-harbor provision that 

applies only to PIP benefits, and not UM. In particular, the 

court noted that the statutory safe-harbor provision relating 

to claims for UM benefits permits an insurer to contest the 

liability of the uninsured motorist. Id. at 123. There is no 

parallel provision in the PIP provision, the court observed, 

and plaintiff’s proposed interpretation fails to take into 

account that key textual distinction. Id.

II. ANALYSIS

On review, plaintiff argues that the Court of 

Appeals erred in drawing on the nature of UM coverage in 

interpreting the safe-harbor statute. In his view, although it 

is true that the purpose of UM coverage is to put the injured 

person in the same position as he or she would have been if 

injured by an insured motorist, “the legislative history of 
590 Spearman v. Progressive Classic Ins. Co.

ORS 742.061(3) does not suggest that the safe harbor statute was intended to have that scope.” Rather, he argues, the 

legislature intended the safe-harbor statute that applies to 

UM claims to have the same effect as the parallel provision 

that applies to PIP claims. Because Grisby already has held 

that the safe-harbor statute for PIP claims applies only if 

the insurer agrees that it owes something more than zero 

benefits, plaintiff concludes that the same must apply to 

ORS 742.061(3).1

 In this case, he asserts, Progressive lost 

the protection of the safe harbor because it failed to agree 

that it owed him something more than zero in UM benefits.

The issue is one of statutory construction, which we 

resolve by applying familiar rules requiring us to determine 

the meaning of the words of the statute most likely intended 

by the legislature that enacted it, taking into account its 

text in context and the relevant legislative history. State v. 

Gaines, 346 Or 160, 171-73, 206 P3d 1042 (2009).

We begin with the text of the statute at issue. ORS 

742.061(1) sets out the general rule concerning the availability of attorney fees in insurance claims:

“(1) Except as otherwise provided in subsections (2) 

and (3) of this section, if settlement is not made within six 

months from the date proof of loss is filed with an insurer 

1 In his brief, plaintiff advances an additional argument in favor of his 

contention that defendant is not entitled to the safe harbor of ORS 742.061(3). 

According to plaintiff, Progressive failed to “accept[] coverage,” as the statute 

requires. As plaintiff sees it, “[w]hen Progressive denied that plaintiff’s accident 

had occurred, it violated the ‘coverage accepted’ prong of the statute and lost safe 

harbor.”

We readily reject the argument for either of two reasons. First, the argument 

was not preserved. We have examined the record of arguments that plaintiff 

raised before the trial court and the Court of Appeals, and nowhere do we find 

an assertion that defendant is not entitled to the safe harbor because it failed 

to state that it had “accepted coverage” within the meaning of the safe-harbor 

statute. Having failed to raise the issue below, plaintiff may not raise it now. See, 

e.g., ORAP 9.20(2) (generally, issues on review before Supreme Court are “all 

questions properly before the Court of Appeals that the petition *** claims were 

erroneously decided by that court” (emphasis added)); State v. Ghim, 360 Or 425, 

442, 381 P3d 789 (2016) (“When a party has lost in the Court of Appeals, that 

party cannot ask us to reverse the Court of Appeals decision on a ground that 

the party did not raise in that court.”). Second, and in any event, plaintiff’s argument rests on a factually erroneous premise—namely, that Progressive “denied 

that plaintiff’s accident had occurred.” That assertion is flatly contradicted by 

the allegations of Progressive’s answer, in which—as we have noted above—it 

specifically and expressly admitted that the accident had occurred.
Cite as 361 Or 584 (2017) 591

and an action is brought in any court of this state upon any 

policy of insurance of any kind or nature, and the plaintiff’s 

recovery exceeds the amount of any tender made by the 

defendant in such action, a reasonable amount to be fixed 

by the court as attorney fees shall be taxed as part of the 

costs of the action and any appeal thereon.”

That general rule is subject to either of two enumerated 

exceptions, or “safe harbors.” The first exception, specified 

in subsection (2), applies to claims for PIP benefits:

“(2) Subsection (1) of this section does not apply to 

actions to recover personal injury protection benefits if, in 

writing, not later than six months from the date proof of 

loss is filed with the insurer:

“(a) The insurer has accepted coverage and the only 

issue is the amount of benefits due the insured; and

“(b) The insurer has consented to submit the case to 

binding arbitration.”

ORS 742.061(2). The second exception is stated in subsection (3) and applies to claims for UM benefits or underinsured motorist (UIM) benefits:

“(3) Subsection (1) of this section does not apply to 

actions to recover uninsured or underinsured motorist benefits if, in writing, not later than six months from the date 

proof of loss is filed with the insurer:

“(a) The insurer has accepted coverage and the only 

issues are the liability of the uninsured or underinsured 

motorist and the damages due the insured; and

“(b) The insurer has consented to submit the case to 

binding arbitration.”

To claim the benefit of either safe harbor, the insurer 

must accept coverage and be willing to engage in binding 

arbitration on a limited set of issues. In the case of claims 

for PIP benefits, the only issue is “the amount of benefits 

due the insured.” In contrast, in the case of claims for UM or 

UIM benefits, the issues are the liability of the uninsured or 

underinsured motorist and the “damages due the insured.”

The fact that the two safe-harbor provisions are set 

out separately and with different conditions that apply to 
592 Spearman v. Progressive Classic Ins. Co.

claims for PIP and UM/UIM claims, respectively, suggests 

that the legislature, in enacting those provisions, saw some 

significant differences between the two categories of claims. 

So we digress briefly to address the relevant differences 

between the two.

Both PIP and UM/UIM refer to types of insurance 

that the law requires all motor vehicle liability policies to 

include. See generally Dowell v. Oregon Mutual Ins. Co., 

361 Or 62, 67-68, 388 P3d 1050 (2017) (PIP); Vogelin v. 

American Family Mutual Ins. Co., 346 Or 490, 501-06, 213 

P3d 1216 (2009) (UM/UIM). The former refers to a form 

of no-fault insurance coverage that requires “payments for 

expenses, loss of income and loss of essential services” as 

provided elsewhere by statute. ORS 742.520(3). In general, that amounts to payments for “medical expenses and 

loss of income.” Kessler v. Weigant, 299 Or 38, 40 n 3, 699 

P2d 183 (1985). An insurer is required to pay PIP benefits “promptly after proof of loss has been submitted to the 

insurer.” ORS 742.520(4). As this court explained in Perez 

v. State Farm Mutual Ins. Co., 289 Or 295, 300, 613 P2d 32 

(1980), “the obvious purpose of [the PIP statutes] is to provide, promptly and without regard to fault, reimbursement 

for some out-of-pocket losses resulting from motor vehicle 

accidents.”

The latter type of insurance refers to coverage for 

the risk of injury or death arising from an accident involving 

a vehicle that is either not insured at all in accordance with 

the state financial responsibility law (UM) or is insured at a 

level that is insufficient to pay the injured driver’s damages 

in full (UIM). See generally Vogelin, 346 Or at 501-06 (summarizing nature of UM/UIM coverage). The law requires 

that such insurance pay all sums that the insured “is legally 

entitled to recover as damages from the owner or operator” of 

the uninsured or underinsured vehicle. ORS 742.504(1)(a).

The focus of that particular type of insurance is thus “‘to 

place the injured policyholder in the same position he would 

have been in if the tortfeasor had had liability insurance.’” 

Vega v. Farmers Ins. Co., 323 Or 291, 305-06, 918 P2d 95 

(1996) (quoting Peterson v. State Farm Ins. Co., 238 Or 106, 

112, 393 P2d 651 (1964)).
Cite as 361 Or 584 (2017) 593

Accordingly, in contrast with PIP coverage, UM/

UIM coverage is predicated on the fault of the uninsured 

or underinsured motorist. As this court explained in Vega, 

“the insurer’s obligation to pay [is] coextensive with the 

responsible party’s liability,” so that the “insured is placed 

in the same position—no better and no worse—than he or 

she would have occupied had the responsible party been 

insured.” 323 Or at 306. The insured, in other words, is 

“legally entitled to recover” only to the extent that he or she 

could recover directly from the tortfeasor. Id.

Given the differences between PIP and UM/UIM 

coverage and benefits, it made sense for the legislature 

to phrase differently the issues that may be submitted to 

arbitration under the two different safe-harbor statutes. 

Because PIP is a no-fault type of insurance coverage, ORS 

742.061(2) provides that the only issue will be the particular 

amount of benefits owed the insured. But because UM/UIM 

coverage entails the fault of the uninsured or underinsured 

motorist, ORS 742.061(3) provides that the issues that may 

include the liability of that motorist.

With that in mind, we return to the text of ORS 

742.061(3), which specifies that the issues that the insurer 

may dispute without losing the benefit of the safe harbor 

include the “damages due the insured.” The fact that the 

phrase “damages due the insured” appears in the safeharbor provision concerning UM/UIM benefits strongly 

suggests that it refers to the type of damages that would be 

payable in that type of case, namely, the damages that the 

insured would be “legally entitled to recover” from the uninsured or underinsured motorist.

Nothing in the text of ORS 742.061(3) suggests that 

the “damages due the insured” must be some amount above 

zero. As we have explained, the nature of UM/UIM damages 

is that they constitute the amount that an insured would be 

“legally entitled to recover” from the uninsured or underinsured motorist. At least in some cases, that amount will be 

zero, because the uninsured or underinsured motorist was 

not liable in the first place. Confirming that very point is 

the fact that ORS 742.061(3) expressly includes “the liability of the uninsured or underinsured motorist” as one of the 
594 Spearman v. Progressive Classic Ins. Co.

issues that may be submitted to arbitration without losing 

the benefit of the safe-harbor statute.

Plaintiff insists that this court’s decision in Grisby

forecloses that reading of ORS 742.061(3). He reasons that, 

because the court in that case concluded that the safe harbor that applies to PIP claims under ORS 742.061(2) is not 

available unless the insurer agrees that it owes some quantum of benefits above zero, the same rule should apply to 

the safe harbor for UM/UIM claims under ORS 742.061(3). 

According to plaintiff, Grisby’s interpretation of ORS 

742.061(2) applies to ORS 742.061(3) because the statutory 

phrase at issue in that case—the “amount of benefits due 

the insured”—is functionally the same as the “damages due 

the insured” under ORS 742.061(3).

Plaintiff acknowledges the difference in wording 

between the two statutes, as well as the fact that the term 

“damages” in the statutes governing UM/UIM coverage is 

used to refer to those damages that an insured is “legally 

entitled to recover” from the uninsured or underinsured 

motorist. He nevertheless urges the court to ignore references to any statutory provisions governing the nature of 

UM/UIM coverage because “the legislative history of ORS 

742.061(3) does not suggest that the safe harbor statute was 

intended to have that scope.” To the contrary, he contends, 

the legislative history “demonstrates an intent that both 

ORS 742.061(2) and (3) have the same meaning.” (Emphasis 

omitted.)

Plaintiff’s arguments are unavailing. In Grisby, the 

plaintiff was injured in an automobile accident and filed a 

claim for PIP benefits. The parties disputed the insurer’s 

liability to pay PIP benefits. Plaintiff sued the insurer, prevailed, and asked for attorney fees under ORS 742.061(1). In 

response to the claim for attorney fees, the insurer claimed 

the benefit of the safe harbor that applied to PIP claims 

under ORS 742.061(2). This court rejected the insurer’s 

argument, concluding that, because the insurer had disputed 

more than the “amount of benefits due the insured,” the safe 

harbor did not apply. 343 Or at 182-83. The court’s decision 

turned on the particular phrasing of ORS 742.061(2) and 

its reference to disputes over the “amount” of benefits. Id.
Cite as 361 Or 584 (2017) 595

The court concluded that the legislature’s use of that word 

suggested a dispute about a “quantity” of benefits in excess 

of zero. Id.

Grisby does not control our decision in this case. The 

court’s decision as to the requirements of the safe-harbor 

provision for PIP claims in ORS 742.061(2) explicitly rested 

on its interpretation of wording that does not appear in 

the safe-harbor provision for UM/UIM claims. As we have 

noted, the two provisions are worded differently, and for reasons that have to do with significant differences between 

PIP and UM/UIM claims. To hold that Grisby controls our 

interpretation of ORS 742.061(3) would require us to ignore 

those differences. Specifically, it would require us to ignore 

the fact that the safe-harbor provision that applies to UM/

UIM claims does not refer to disputes over an “amount” of 

benefits. Rather, it refers to disputes over the “damages due 

the insured,” which, given the nature of UM/UIM claims, 

may in some cases be zero.

Plaintiff’s reliance on the legislative history of the 

safe-harbor provisions is likewise unavailing. He contends 

that it “demonstrates” that the safe-harbor provisions for 

PIP and UM/UIM claims “have the same meaning.” But he 

cites no legislative history that actually says that. To the 

contrary, the legislative history indicates that the legislature created two separate provisions precisely because of 

the differences between PIP and UM/UIM claims.

Before 1999, ORS 742.061 (1997)—now ORS 

742.061(1)—generally provided for attorney fees whenever 

an insured prevailed in an action against his or her own 

insurer and recovered more than what the insurer had previously tendered. In the case of UM/UIM claims, though, the 

existing state of the law created an anomaly: If an injured 

motorist prevailed against a tortfeasor who had insurance, 

there was no provision in the law for the recovery of attorney 

fees. But, if the tortfeasor had no insurance, then a plaintiff 

otherwise in the same circumstances could seek recovery 

from his or her own insurer plus (potentially) attorney fees 

under ORS 742.061 (1997). It was precisely that anomaly 

that prompted representatives of the insurance industry to 

propose an amendment through Senate Bill 504 in 1999. 
596 Spearman v. Progressive Classic Ins. Co.

The amendment, as originally proposed, would have completely exempted UM and UIM claims (as well as PIP claims) 

from ORS 742.061 (1997). See Exhibit A, Senate Judiciary 

Committee, SB 504, April 29, 1999 (proposed amendments 

to SB 504).

Tom Mortland, an insurance industry attorney, 

explained in some detail how the existing law operated to 

encourage injured insureds to avoid negotiating with his or 

her insurer and instead proceed as quickly as possible to 

litigation:

“An example illustrates the dynamics which are now in 

place. Picture an auto collision. Driver A negligently hits 

Driver B and injures B. In one scenario Driver A has 

insurance, in another he doesn’t. Driver B has insurance 

which includes the required PIP and UM benefits. Driver 

B retains an attorney to represent her in recovering damages, or benefits, for her injury. Consider the scenario in 

which Driver A has liability insurance. B and her attorney present a claim to the liability insurer and resolve it 

through negotiation, or possibly mediation, or arbitration, 

or even through a civil suit which ends in a jury trial. In 

any event Driver B’s attorney will very likely be paid on a 

contingency basis, the fee being a percentage, typically a 

third, of the recovery.

“Now consider the scenario in which Driver A doesn’t 

have insurance. Driver B presents a UM claim to her own 

insurer, and her attorney is faced with a choice. On one 

hand, the attorney can resolve this claim through negotiation, mediation[,] or arbitration, just as in the first scenario, and be paid an attorney fee which is a percentage 

of the recovery. On the other hand, the attorney can file 

suit against B’s insurance company and possibly recover 

attorney fees in addition to the recovery. The advantage, 

and necessity, of filing suit is being recognized by attorneys all over the state. I say necessity because to not take 

advantage of the opportunity for attorney fees on top of the 

recovery could well constitute legal malpractice.”

Testimony, Senate Judiciary Committee, SB 504, Apr 29, 

1999, Ex B, at 2 (testimony of Tom Mortland) (emphases in 

original).

The problem with the existing law was not just that 

it created incentives to litigate UM/UIM claims against 
Cite as 361 Or 584 (2017) 597

insurers. It also was that, in so doing, the law compromised 

the very purpose of UM and UIM coverage, which, as we 

have noted, is “to place the injured policyholder in the same 

position he would have been in if the tortfeasor had had 

liability insurance.” Vega, 323 Or at 305-06 (internal quotation marks and citation omitted). As Mortland’s example 

made clear, an insured who had been injured by an uninsured motorist actually was put in a better position than 

he or she would have been had the tortfeasor been insured: 

With an insured tortfeasor, the net recovery would be damages minus attorney fees, while with an uninsured motorist, the net recovery might be damages plus attorney fees. 

Susan Youngstrom, a claims adjuster, made that point in 

her testimony:

“Since an attorney can file suit and claim attorney fees 

under this statute, a person with an uninsured claim is 

suddenly in a better position than a person with a claim 

against a known, insured party. The [insured’s] attorney 

can go to court and if he gets one dollar more than what 

was offered by the claims adjuster, he will get his attorney 

fees from the date he sent the [proof of loss] letter. *** That 

means his client gets to keep all of the award and the judge 

will grant his attorney fees in addition to that amount.”

Testimony, Senate Judiciary Committee, SB 504, Apr 29, 

1999, Ex C, at 1 (testimony of Susan Youngstrom).

Representatives of the private plaintiffs’ bar opposed

the bill. But, in the end, they and insurance industry representatives negotiated a compromise bill that would have 

limited the exemption from ORS 742.061 (1997) to UM, 

UIM, and PIP claims in which the insurer accepted coverage and consented to binding arbitration, so long as the 

only contested issues were “the liability of the uninsured or 

underinsured motorist and the damages due the insured.” 

Exhibit L, Senate Judiciary Committee, SB 504, May 20, 

1999 (proposed amendments to SB 504) (reflecting consensus proposal and including changes announced orally by 

witnesses at work session on May 13, 1999).

Robert Neuberger, an attorney appearing on behalf 

of the plaintiffs’ bar, explained the compromise proposal in 

the following terms:
598 Spearman v. Progressive Classic Ins. Co.

“The concept that we have before you *** is this, and here’s 

how it would work for PIP, UM, and UIM claims: It’ll still 

be just like always. The insured suffers a loss, files a proof 

of claim, er, notice of claim, and (if it is in one of those cases 

that isn’t resolved short of litigation) the case goes into 

litigation. Generally now [under this bill] there would be 

an exception for PIP, UM, and UIM claims if the insurer 

did the following—within that six-month period in which 

a proof of claim was made, it did the following in writing: 

agree that there was no dispute as to coverage, and that 

for UM and UIM claims that the only issue was going to 

be the liability of the uninsured or underinsured motorist and the amount of the damages to the injured party, 

and consented * * * that it would use binding arbitration as 

alternative dispute resolution.”

Audio Recording, Senate Judiciary Committee, SB 504,

May 13, 1999, at 4:20 (testimony of Robert Neuberger),

http://records.sos.state.or.us/webdrawer/webdrawer.dll/

webdrawer/rec/4234645/ (accessed June 12, 2017). Neuberger

then explained how the compromise would work in the case 

of an uninsured motorist claim. If the insurer wanted to 

avoid attorney fees:

“They can simply write a letter, no legal form required, 

and say, ‘There’s no dispute about coverage—the premiums 

were paid, it wasn’t a stolen car, you weren’t using * ** your 

car for business purposes and got hurt on the job—and so 

the only issues that are left are liability for the UM and 

UIM claim and damages, and we also’—insurance company say[s]—’and we also consent to be bound by arbitration, to use binding arbitration.’ Now it kicks back over to 

the insured, the person who paid the premiums, and they 

can elect to stay in court, in circuit court, and have their 

case tried to a judge or a jury, but not get attorney’s fees, 

or they can go to binding arbitration. * ** It’s no stick, it’s 

all carrot.”

Id. at 6:15. On the other hand, Neuberger explained, the 

insurer could raise other issues, but at the risk of facing 

attorney fees:

“If the insurance company * ** disputes coverage, says 

we’re not only going to dispute liability or damages, we 

don’t even think you’re covered, or says we won’t be bound 

by arbitration, we won’t use binding arbitration, then the 
Cite as 361 Or 584 (2017) 599

insured—the person who pays the premiums—gets to keep 

their case in court If * * * they prevail and they beat the 

offer, ** * then the court is to award reasonable attorneys 

fees.”

Id. at 7:15.

Tom Mortland, again appearing on behalf of the 

insurance industry, confirmed that Neuberger had accurately represented the substance of the compromise. Id. at 

8:10 (testimony of Tom Mortland).

Staff counsel for the Senate Judiciary Committee, 

however, noted that the proposed bill, as amended, treated 

UM/UIM and PIP claims the same, which made no sense 

in light of the differences between the types of insurance. 

In particular, she noted, PIP involves no issues of fault. 

Apparently, the issue had already been raised in the House, 

and there was agreement in advance to address PIP and UM/

UIM claims in separate subsections. As counsel explained it 

to the Senate Judiciary Committee, there was 

“concern that condition (a), the second half of it, those 

issues [‘the liability of the uninsured or underinsured 

motorist and the damages due the insured’] would never 

arise in a personal injury protection instance and so they 

have agreed in the House to better specify the fact that

(a) and (b) actually will apply in uninsured and underinsured motorist cases and (b) will apply in the PIP cases.”

Audio Recording, Senate Judiciary Committee, SB 504, May 

20, 1999, at 49:30 (statement of staff counsel Anne Tweedt), 

http://records.sos.state.or.us/webdrawer/webdrawer.dll/

webdrawer/rec/4234649/ (accessed June 14, 2017). With an 

appropriate amendment to separate UM and UIM claims 

from PIP claims, the bill passed both houses and was signed 

into law.

The legislative history thus offers two insights that 

are pertinent to the issues in this case. First, the impetus 

for the legislation that ultimately resulted in the enactment 

of the two safe-harbor provisions in 1999 was the fact that 

existing law undercut the basic, underlying principle of UM 

and UIM coverage, which is “to place the injured policyholder in the same position he would have been in if the 
600 Spearman v. Progressive Classic Ins. Co.

tortfeasor had had liability insurance.” Vega, 323 Or at 305-

06 (internal quotation marks and citation omitted). Second, 

while the initial draft of the bill that ultimately was codified 

at ORS 742.061(2) and (3) treated PIP and UM/UIM claims 

the same, the legislature made a conscious choice to create 

separate safe-harbor provisions for each, to reflect the differences between the two types of insurance. In both respects, 

the legislative history lends support for the interpretation of 

ORS 742.061(3) that we have concluded is evident from its 

text in context. And, in both respects, it contradicts plaintiff’s proposal that we treat the two safe-harbor provisions 

as having identical effect.

III. APPLICATION

We turn, then, to the facts of this case. As we noted 

above, in response to plaintiff’s proof of loss for uninsured 

motorist benefits, Progressive sent a letter that fully complied 

with ORS 742.061(3). The letter stated that Progressive had 

accepted coverage and agreed to binding arbitration, reserving only the issues of the liability of the uninsured motorist 

and the damages due to plaintiff. That much is undisputed.

The question for us is whether, in response to plaintiff’s subsequent claim against Progressive, the insurer 

raised issues beyond “the damages due the insured,” thus 

placing it outside the safe harbor. Kiryuta v. Country 

Preferred Ins. Co., 360 Or 1, 5, 376 P3d 284 (2016) (examining issues as framed by pleadings to determine whether 

issues were limited to those listed in ORS 742.061(3)).

We conclude that Progressive’s pleadings did not 

raise any issue that would remove it from the safe harbor 

of ORS 742.061(3). When plaintiff filed his claim against 

Progressive in the trial court, the insurer admitted that 

plaintiff had insurance coverage and that plaintiff was 

injured in an automobile accident with an uninsured motorist, but disputed the “nature and extent of plaintiff’s alleged 

injuries,” as well as the “reasonableness and necessity of 

some of plaintiff’s accident-related medical expenses.” And, 

in response to requests for admissions, Progressive admitted 

that plaintiff had done everything required of him to be eligible for UM benefits, though it denied “the reasonableness, 

necessity, relatedness, and extent” of plaintiff’s damages.
Cite as 361 Or 584 (2017) 601

Plaintiff argues that, because it is conceivable that, 

as framed by the foregoing pleadings, Progressive could 

have established that it owed plaintiff nothing, those issues 

go beyond those listed in ORS 742.061(3). We accept for the 

sake of argument that it is at least possible that Progressive 

could have established that it owed plaintiff nothing in UM 

benefits because, although Progressive admitted that plaintiff was injured in an accident with an uninsured motorist, 

plaintiff may not have incurred reasonable and necessary 

medical expenses resulting from those injuries.2

 As we have 

concluded, that does not establish that the insurer raised 

issues beyond the “damages due the insured,” as that term 

is used in ORS 742.061(3). Because Progressive fell within 

the safe harbor of ORS 742.061(3), it was not subject to the 

attorney fee provision of ORS 742.061(1). The trial court correctly denied plaintiff attorney fees.

The decision of the Court of Appeals and the judgment of the circuit court are affirmed.

2 This case does not require us to consider whether an insurer that contests 

whether any of a plaintiff’s injuries were caused by an uninsured motorist, as 

opposed to contesting the “reasonableness, necessity, relatedness and extent” of 

that plaintiff’s injuries and medical expenses, is entitled to the benefit of the safeharbor provisions.