Crediting Insurers for Payments Made in Uninsured Motorist Lawsuits – Doe v. Pak

that-hurt-1450455-1279x923When dealing with injuries resulting from an automobile accident, uninsured motorists are often a victim’s worst nightmare.  While a victim can seek coverage for medical bills from his or her insurance provider, the lack of an identifiable driver who caused the accident can make it difficult to obtain damages for pain and suffering or a lost ability to work.  For this reason, many drivers also obtain uninsured motorist coverage, which permits them to bring personal injury lawsuits against an anonymous uninsured motorist, which the insurance company may or may not choose to defend.

In Doe v. Pak, a victim of a hit and run accident, Ms. Hasil Pak, filed an uninsured motorist suit against the unknown driver of the car that had caused her injuries and prevented her from continuing to work after the accident. Ms. Pak had automobile insurance with State Farm, including uninsured motorist coverage.  State Farm offered to settle her uninsured motorist claim for damages of approximately $30,000, but Ms. Pak rejected the offer. Instead, she filed a lawsuit against the anonymous hit and run driver and notified State Farm. Under West Virginia law, State Farm chose to defend the lawsuit as an interested third party acting on behalf of the anonymous defendant. However, as both the insurer of the plaintiff and a party defending the lawsuit, State Farm was in a unique situation.  It chose to offer Ms. Pak the amount it had previously offered in settlement negotiations as an advance on the costs Ms. Pak would incur to take her lawsuit to trial, assuming that such funds would be reimbursed if Ms. Pak lost, or would be credited to the ultimate insurance payout owed to Ms. Pak if she were successful.

Ms. Pak was successful in her lawsuit at trial and was awarded $70,000 in damages by the jury.  However, the West Virginia trial court refused to credit State Farm for the money that it had already provided to Ms. Pak through the advancement of her costs and expenses to litigate.  Instead, it considered the advance payment to be a gratuitous payment on the part of State Farm that could constitute a gift. Unsurprisingly, State Farm appealed.

On appeal, the West Virginia Supreme Court sided with State Farm, holding that Ms. Pak’s receipt of the initial advance to pay for her litigation expenses, plus the recovery of the damages awarded by the jury, amounted to a double recovery for her injuries. Moreover, the court noted that crediting insurers for advanced payments made to their policy holders encourages insurers to continue to advance such money to litigants in economic need, who might not otherwise be able to afford to wait for the duration of a trial in order to receive payment for their damages. Accordingly, the appeals court overturned the trial court’s decision and remanded the case back to the trial court for a new determination of damages, including the required credit.

If you or a loved one has been injured in an automobile accident, the Wolfe Law Firm can help. Our West Virginia car accident lawyers have been serving clients throughout the state for more than 25 years. Located in Elkins, West Virginia, the firm represents clients in a wide range of injury, criminal defense, and bankruptcy matters. Call us at 1-877-637-5756 or contact us online for a free consultation.

More blog posts:

Expert Evidence Issues in West Virginia Accident Cases – Turner v. Speedway, LLC

Comparative Negligence in West Virginia Car Accident Cases – Comer v. Bloch

Negotiating with Insurance Companies in West Virginia Car Accident Cases – Tuttle v. State Farm