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Can You Owe Your Own Insurance Company Money After Winning a Personal Injury Judgment?

Following a car accident, you may receive certain benefits from your own insurance company. If you later end up suing a negligent third party for damages related to the accident, your insurer may have the right to recover part of any money you receive from the case. To put it another way, you may not be allowed to recover twice for the same injury–once from your insurance company, and then again from the negligent driver in court.

Appling v. State Farm Fire and Casualty

A recent Georgia Court of Appeals decision, Appling v. State Farm Fire & Casualty, offers a helpful example. In 2013, the plaintiff was injured in a car accident. The other driver’s insurance company agreed to settle with the plaintiff for the limits of the policy, which was $25,000. As this was not enough to compensate the plaintiff for his total injuries, he then filed a claim with his own uninsured/underinsured motorist (UM) carrier, which was State Farm.

This led the plaintiff to formally sue the other driver in court. State Farm actually defended the case on behalf of the underinsured other driver. Among other damages, the plaintiff sought compensation for his accident-related medical bills, which were more than $106,000.

The jury determined the other driver was 95% liable for the accident. The jury further calculated the plaintiff’s total damages at $192,000. From this amount, the court deducted $25,000 to account for the prior insurance settlement, and an additional $9,600, which represented the plaintiff’s 5% contributory negligence. This left a judgment of $157,400.

State Farm then asked for an additional offset of approximately $22,000, which the insurer said it paid for the plaintiff’s medical expenses prior to the trial. The plaintiff objected, noting that State Farm did not introduce evidence of these prior payments at trial. In any event, the jury’s verdict did not specify “which parts of the award were intended to compensate for which losses.”

The trial judge ruled in favor of State Farm. The court directed the plaintiff’s attorney–who had been holding the insurer’s payment of the personal injury award in trust–to return the $22,000 to State Farm. The plaintiff then appealed.

The Court of Appeals, however, affirmed the trial judge’s decision. The appeals court explained that just because the jury used a “general verdict form,” that did not bar State Farm from asking for and receiving its offset. The Court noted that at trial, the plaintiff “presented to the jury evidence of more than $106,000 in incurred medical expenses.” While the plaintiff alleged other types of damages–such as pain and suffering–he did not “present any evidence ascribing a monetary value to any of these losses.”

It was therefore reasonable to assume the jury’s verdict took into account “damages for medical expenses for which State Farm had already compensated” the plaintiff. Likewise, it was reasonable for the trial court to order the offset in order to prevent the plaintiff from “double recovery” of his medical expenses from State Farm. In fact, the plaintiff’s UM policy with State Farm expressly prohibited such double recovery.