June 2, 2011
Yesterday, the Indiana Court of Appeals taught plaintiffs' attorneys a lesson in how to achieve a pro rata reduction of a medical lien in
Wirth v. American Family Mut. Ins. Co., ___ N.E.2d ___ (Ind. Ct. App. 2011), Cause No. 22A01-1009-CT-440. In that case, the Court refused to reduce the lien, because the plaintiff did not make a sufficient showing.
less..
Wirth was injured in an automobile accident. American Family, his insurer, paid his medical expenses. Wirth settled with the tortfeasor, but was unable to reach an agreement with American Family concerning the reimbursement of medical expenses. He filed an action for a declaratory judgment on his subrogation rights. The trial court granted American Family's motion for summary judgment.
On appeal, the Court rejected Wirth's claim that American Family had no right to subrogation since he was not fully compensated by the settlement.
Wirth entered into a settlement which settled all his claims against the single tortfeasor. Wirth's tortfeasor paid the full value of the negotiated claim, i.e., $3,500, as demonstrated by the executed Release of All Claims. Regardless of Wirth's argument that his claim is actually valued $8,000, he collected a full and final settlement for his injuries and pursuant to the executed Release has no other outstanding, uncollectable losses. As such, American Family is not requesting pro tanto subrogation, but is requesting full subrogation after Wirth collected his entire settlement from the tortfeasor.
The Court then held that the trial court properly granted summary judgment to American Family because the plaintiff did not introduce evidence that the settlement was reasonable.
Here, besides his argument that the settlement was lower than the perceived value of his claims, Wirth did not designate any evidence or advance any contentions to demonstrate that his settlement was reasonable and that American Family's request for full subrogation should be diminished, if not eliminated. Wirth did not establish that comparative fault issues are at stake or that the tortfeasor carried a limited amount in liability insurance or had insufficient assets to satisfy any resulting judgment.
In sum, we cannot say that the trial court improperly granted summary judgment in favor of American Family. Wirth negotiated his settlement with the tortfeasor, which was completely satisfied as evidenced by the executed Release of All Claims form. In absence of any evidence that the settlement was reasonable and American Family's lien should be reduced, we find that American Family is entitled to complete repayment of its medical lien.
The Court relied on
Department of Public Welfare v. Couch, 605 N.E.2d 165 (Ind. 1992), when describing the considerations likely relevant to the determination of whether a settlement was reasonable:
The risk to the [plaintiff] of partial or complete reduction of an award of full damages due to allocation of comparative fault, limited availability of liability insurance or sufficient assets to pay a resulting judgment, and the presence of factors personal to the plaintiff, such as advanced age or frail health that could affect the prospects of recovery in the event of protracted litigation.
Plaintiffs' attorneys who are fighting with an insurance company regarding a reduction in the amount of a medical lien should take this case as a lesson in how not to litigate such a case. Be prepared to present evidence supporting the reasonableness of the settlement agreement, with a particular focus on the factors cited by
Couch. If you do not make such a showing, then the amount of the lien will not be reduced by the Court.
Lesson:
- An insured must show that the amount of a settlement is reasonable for a medical lien be reduced after the settlement.
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