Credits and Setoffs From Uninsured Motorist Coverage Payments in North Carolina

In a North Carolina car crash decision, the plaintiff appealed from a trial court’s judgment that permitted the defendant’s motion for credits and setoffs against the tort judgment received by the plaintiff through their underinsured motorist coverage insurer. The trial court found that the insurer had waived its right to subrogation and didn’t have any further duty.

On appeal, the plaintiff argued that the trial court shouldn’t have permitted the credit, and it was an abuse of discretion not to let the plaintiff depose the defendant’s insurer, among others.

The case arose when the plaintiff sued the defendant, trying to obtain damages after a car crash. The jury found that the defendant’s negligence caused the plaintiff’s injuries, and the damages were $263,000. The defendant filed a motion for setoffs and credits against this judgment. The trial court reduced the award to $230,000.00 after making a finding that the defendant was entitled to credits or setoffs that totaled $33,000.00, based on the defendant’s motion. It found setoffs and credits would need to be applied so that the judgment would be $230,000.00. The order found that the parties had disagreed about whether the defendant should get a credit for what the plaintiff had gotten from their underinsured motorist coverage insurer.

The plaintiff responded. The plaintiff’s insurer filed an affidavit that included a settlement agreement between itself and the plaintiff, in which it agreed to pay $145,000 in underinsured motorist coverage under the plaintiff’s policy. The affidavit specified that the insurer paid what was left of the $145,000.00 of its coverage to the plaintiff in exchange for a release, including a release from its right of reimbursement. The insurer didn’t require the plaintiff to hold what it got from the defendant in trust.

The trial court held a hearing. It determined that the uninsured motorist coverage carrier waived its rights of subrogation and that it had paid the plaintiff $145,000.00, which represented what it owed based on the underinsured claim. The plaintiff executed a release against the insurer. The defendant’s liability carrier mailed the plaintiff $97,000.00.

The appellate court explained that a plaintiff is not allowed a double recovery for an injury in North Carolina. An underinsured motorist insurer is entitled to receive a right by assignment from the claimant or be subrogated to the claimant’s rights regarding any claim they have against the underinsured driver.

In this case, the defendant was given a credit for the $97,000.00 paid by their insurer, as well as a credit for the $145,000.00 paid by the plaintiff’s underinsured motorist coverage carrier. The plaintiff argued that the underinsured motorist coverage was a collateral source, but the court decided against this. It also concluded that since no subrogation rights were left, the defendant was entitled to a credit for the $145,000.00 payment and its own insurer’s payment. The plaintiff’s requests to take depositions were denied.

The plaintiff appealed. He argued that underinsured motorist benefits were a collateral source, such that the defendant couldn’t reduce his liability for benefits received from the plaintiff’s insurer. The goal of the collateral source rule in personal injury cases is to leave out evidence of payments made to a plaintiff by sources other than the defendant when it was provided to reduce the defendant’s liability to the plaintiff. The appellate court explained that the rule was to prevent the defendant from a windfall when part of the plaintiff’s damages were paid by a collateral source. The appellate court found this issue irrelevant to this case because the rule wasn’t being applied in connection with trial evidence. Instead, the issue was the allocation of liability between the carriers and the defendant.

The appellate court found that the plaintiff’s insurer was not a party and had no right to subrogation. Since the insurer waived its right to subrogation, it was appropriate for the trial court to decide the insurer’s payment could be used as a credit against the verdict against the defendant.

For this and other reasons, the judgment was affirmed.

If you have been harmed due to the wrongful conduct or negligence of another party, the experienced Charlotte car accident attorneys at Maurer Law may be able to help you recover compensation. We represent clients in the Charlotte, NC metro area and also Greensboro, NC and Winston-Salem, NC. Contact us at 888-258-1087 or via our online form.

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