Opinion ID: 2572696
Heading Depth: 2
Heading Rank: 3

Heading: State Farm's Arguments are Unpersuasive

Text: State Farm claims that Hamm received $8,669.71 in PIP benefits and $7,330.29 in UIM benefits. In fact, it is undisputed that the UIM arbitrator awarded plaintiff $16,000.00 in UIM benefits, not $7,330.29. The only difference between State Farm's position vis-à-vis two separate carriers providing the same types of coverage is that State Farm chose to receive its PIP reimbursement through an offset instead of the UIM carrier tendering a check for $16,000.00 and the PIP carrier receiving a check for $8,669.71. As discussed above, the fact that an insurance carrier providing both PIP and UIM coverage can account for the PIP reimbursement by using an offset does not convert the PIP reimbursement into a limitation on UIM coverage. Thus, in effect, Hamm received $16,000.00 from State Farm in its capacity as UIM carrier and no money from State Farm as PIP carrier because, as PIP carrier, State Farm was reimbursed the entire amount of its prior PIP payments. Just as any PIP carrier under Mahler and Winters, State Farm must pay a pro rata share of its insured's legal expenses in order to receive the PIP reimbursement. State Farm also suggests that Winters excludes UIM recoveries without a tortfeasor contribution from the definition of a common fund because it states when a PIP insured creates a common fund from liability payments and UIM benefits, the common fund combines liability proceeds from the tortfeasor's insurance carrier and UIM proceeds from the insured's underinsured motorist carrier. Winters, 144 Wash.2d at 880, 31 P.3d 1164 (emphasis added). This language, however, is merely descriptive of the factual situation present in Winters, and does not function as a restrictive definition of the necessary elements of a common fund. Neither Winters nor Mahler holds that a common fund cannot consist solely of UIM benefits, and we decline to do so now. Despite suggesting Winters requires the common fund to be a combination of tortfeasor recovery and UIM recovery, State Farm next argues that the money for reimbursement of the PIP carrier must come only from the tortfeasor. See Mahler, 135 Wash.2d at 411, 957 P.2d 632 (ultimate responsibility for a wrong or loss [should be imposed] on the party who, in equity and good conscience, ought to bear it). State Farm then argues that Winters recognized the insured's own insurance carrier cannot be the wrongdoer and, therefore, it is the tortfeasor who must ultimately reimburse the PIP carrier for the PIP benefits it paid. See Winters, 144 Wash.2d at 882, 31 P.3d 1164. Although we agree with State Farm that the insured's own insurance carrier is not an actual wrongdoer, State Farm's argument ignores that UIM payments are treated as if made by the tortfeasor. Winters, 144 Wash.2d at 880, 31 P.3d 1164; see also Finney v. Farmers Ins. Co., 92 Wash.2d 748, 751, 600 P.2d 1272 (1979) (the purpose of UIM coverage is to allow an injured party to recover those damages which would have been received had the responsible party maintained [sufficient] liability insurance). We reiterate that UIM payments are treated as if made by the tortfeasor. PIP carriers may be reimbursed when the insured recovers from the tortfeasor, the tortfeasor and a UIM carrier, or a UIM carrier alone. As a procedural matter, State Farm would have us hold that Hamm could not create a common fund for the benefit of State Farm as her UIM carrier because State Farm, as such, was the adverse party to the UIM proceedings. This argument fails because the common fund benefited State Farm in its capacity as PIP carrier, not as UIM carrier, and PIP carriers are not adverse parties in UIM proceedings. State Farm also argues that the common fund doctrine cannot apply because State Farm retained its right to sue the uninsured motorist to recover its PIP payments. State Farm could have pursued the uninsured motorist to recover its PIP payments but State Farm chose not to do so, perhaps realizing that it would have been as futile for it to try to extract money from an uninsured motorist as it would have been for Hamm to try to do so. Instead, State Farm recovered its PIP payments through reimbursement and must pay the required pro rata share of Hamm's legal expenses. As persuasive authority that Hamm's request for pro rata legal expenses based on the common fund doctrine be denied, State Farm cites to Johnson v. State Farm Mutual Automobile Insurance Co., 323 Ill.App.3d 376, 256 Ill.Dec. 569, 752 N.E.2d 449 (2001). Johnson, however, was based on an interpretation of specific policy language and the authority of arbitrators to consider various portions of the policy language. See id. at 383, 256 Ill.Dec. 569, 752 N.E.2d 449. As Winters clarifies, the rule requiring a pro rata sharing of legal expenses is based on equitable principles and not on construction of specific policy language. Winters, 144 Wash.2d at 878-79, 31 P.3d 1164. Accordingly, we do not find Johnson persuasive. Finally, State Farm quotes language the legislature omitted from the 1993 PIP statute, RCW 48.22.085, that would have specifically required the type of PIP pro rata sharing of legal expenses later required in Mahler and Winters. Whatever the relevance of the legislature's unknown intent in omitting this language (State Farm does not cite any legislative history explaining why the quoted language was omitted), both Mahler and Winters were decided after the effective date of the PIP statute. Nothing in the omitted language suggests that the PIP pro rata sharing rule from Mahler or Winters should not be applied in this case.