Adams v. State Farm Mut. Auto. Ins. Co.

The insurer was not entitled to set off the insured's uninsured motorist coverage by the full $25K paid from the tortfeasor's insurance carrier, since part of the payment was used to pay off the insured's hospital bill.

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This appeal addresses the amount State Farm Mutual Automobile Insurance Company owes in uninsured motorist benefits to Randolph Adams, a State Farm insured who was seriously injured in a car wreck. The facts are undisputed. Adams sued the tortfeasor to recover for injuries sustained in the car wreck. During the course of the underlying litigation, Nationwide Insurance Company, the tortfeasor’s automobile liability insurer, made two payments that exhausted its $25,000 policy limits: 1 payment in the amount of $9,217.66 to Grady Hospital to compromise its hospital lien for medical services provided to Adams, and 2 payment in the amount of $15,782.34 to Adams for a limited release. Adams then sought additional compensation for his injuries under his insurance policy with State Farm, which provided him with $100,000 uninsured motorist coverage. A dispute arose, however, over the amount of State Farm’s coverage available. State Farm contended it should be able to set off or take credit for the entire $25,000 that Nationwide paid as its total liability coverage, but Adams contended that State Farm should only get credit for the $15,782.34 paid to him personally, and not the $9,217.66 paid by Nationwide directly to Grady Hospital to satisfy its lien.

After both parties filed motions for summary judgment, the trial court denied Adams’ motion and granted State Farm’s motion, allowing State Farm credit for the entire $25,000 paid by Nationwide. The trial court found that State Farm was entitled to set off from its $100,000 uninsured motorist coverage the full $25,000 paid from the tortfeasor’s liability policy. The court held that Adams’ election to voluntarily divert part of the $25,000 liability payment to Grady Hospital to satisfy his hospital bill did not reduce the available liability coverage below $25,000 or increase his uninsured motorist coverage.

Adams v. State Farm Mut. Auto. Ins. Co.

The insurer was not entitled to set off the insured's uninsured motorist coverage by the full $25K paid from the tortfeasor's insurance carrier, since part of the payment was used to pay off the insured's hospital bill.

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