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Washington PIP Payments

Matsyuk v. State Farm Fire & Cas. Co., 173 Wash. 2d 643, 272 P.3d 802 (2012) serves as another landmark case on the Washington PIP scheme. In Matsyuk, the plaintiff was a passenger injured by the negligence of the driver. Id. Matsyuk received PIP benefits in the amount of $1,874, and also sought recovery under the underlying tortfeasors liability policy. Id. Following the settlement, State Farm required reimbursement of the PIP payment as an offset, or reduction against Plaintiff’s settlement amount. Plaintiff demanded State Farm pay a pro rata share of the legal expenses as required by Mahler.

Mahler held while an insured is required to reimburse his/her insurer for the PIP payments made on the insureds behalf from the settlement funds, the insurer must pay a “proportionate share of fees and expenses” (pro rata share) an injured party incurred to acquire the funds.

The Court in Matsyuk held the pro rata share also applies to cases in which the injured party is covered under a PIP policy held by the tortfeasor, and recovers under the torfeasor’s liability policy. In reaching this conclusion, the Court looked at Winters v. State Farm Mutual Insurance Company, 144 Wash.2d 869m 31 P.3d 1164 (2001) and Hamm v. State Farm, 151 Wash. 2d, 88 P. 3d 395. In Winters, the Court held an insured who recovered PIP benefits and policy limits from the torfeasor and brought a lawsuit for UIM benefits was not required to offset the full amount of PIP from the UIM benefits. The Court in Winters stated the “insureds created a common fund from which the insurer was able to recoup payments it had made, thus the insured was required to pay a pro rata share of the legal costs associated with recovery.” In Hamm, a no-fault motorist was injured in an accident with an uninsured tortfeasor. Plaintiff recovered under her State Farm PIP policy and sought recovery from her UIM policy. The insurer attempted to offset its PIP payment from Hamm’s UIM award. The Court held that in order to do so, State Farm must pay its pro rata share of the insured’s legal expenses.

In Matsyuk, the Court found a common fund was created by Plaintiff. Matsyuk, 173Wash.2d 643, 272 P.3d 802(2012). The court further stated when one person forms a fund, and another takes from it, the two should share, the fees and costs incurred in creating the fund at a pro rata share. Id. The Court further stated, “The rule requiring a pro rata sharing of legal expenses is based on equitable principles and not on construction of specific insurance policy language.” Id.

Matsyuk differs from Mahler whereas in Mahler, the PIP coverage was paid for by the Plaintiff, in Matsyuk, the Plaintiff was covered by the at fault driver’s PIP coverage, and the insurance company is still entitled to a pro rata share of PIP reimbursement. This is an important decision because it provides a consistent and clear rule regarding the obligation of insurer to contribute to the legal expenses incurred by the injured party when seeking reimbursement of PIP benefits.

Tyson & Mendes’ February Newsletter provided an overview of Washington’s PIP “equitable fee sharing rule.” Read our February Article here.

ABOUT THE AUTHOR: Angelina Petrosyan is an associate attorney in Tyson & Mendes’ Seattle office. Ms. Petrosyan specializes in general liability, employment, and construction litigation. Contact Angelina at 206.420.4267 or apetrosyan@tysonmendes.com.