Reimbursed PIP insurer must pay share of claimant’s fees out of its own UM policy
By Jeffrey P. Downer

A personal-injury-protection insurer that receives PIP reimbursement from its own uninsured-motorists coverage must pay a proportionate share of claimant’s attorney fees, the Washington Supreme Court has held.

In Hamm v. State Farm Mut. Auto. Ins. Co., 88 Wn.2d 395 (April 22, 2004), Rebecca Hamm was injured in an accident with a driver who had no insurance. Hamm’s PIP insurer, State Farm, paid her medical bills. Hamm also had UM coverage with State Farm, and she and her lawyer later won a UM arbitration award against State Farm. State Farm reduced its UM check to Hamm by $8,669.71, the sum of its prior PIP payments. Hamm claimed that that reduction should be one-third smaller, under the rule that generally awards PIP claimants their attorney fees incurred in achieving the PIP reimbursement. Under Winters v. State Farm Mut. Auto. Ins. Co., 144 Wn.2d 869 (2001), an underinsured-motorists insurer must share in such fees, because the PIP reimbursement came from a “common fund” of both liability and UIM coverage. State Farm replied that unlike in Winters, Hamm’s attorney deserved no credit for causing State Farm essentially to reimburse itself. Hamm sued State Farm for those fees, and the trial court awarded them.

The Hamm Court affirmed. The Court ignored the central rationale of Winters and instead said that refusal to award such fees here would put Hamm in a worse position than if she had bought separate coverages from separate insurers.