Winters v. State Farm Mutual Automobile Insurance Co.

Summary

The Washington Supreme Court held that a personal injury protection insurer must pay a pro rata share of the insured’s legal expenses when the insured’s efforts create a common fund from which the insurer recoups previously paid benefits. The court concluded that the fund may consist of liability insurance proceeds and underinsured motorist benefits, and that the insured must be fully compensated before the insurer may recover. The cases were affirmed and remanded to determine State Farm’s pro rata share of expenses.

Holdings

1. When an insured who has received PIP benefits obtains liability and UIM proceeds that fully compensate the insured and thereby create a common fund from which the PIP insurer recoups its payments, the PIP insurer must pay a pro rata share of the reasonable legal expenses incurred to generate that fund.
2. When liability proceeds and UIM benefits combine to fully compensate an insured, the combined proceeds constitute the common fund from which the PIP insurer may recoup its payments.

Questions Presented

1. Whether a PIP insurer that offsets or recoups PIP benefits from liability and UIM proceeds must pay a pro rata share of the insured's attorney fees and litigation costs incurred to obtain those proceeds.

Disposition

affirmed