PIP/UIM insurer must share in claimant’s attorney fees even when repaying itself
By Jeffrey P. Downer

Broadening the Mahler v. Szucs rule, the Washington Supreme Court has held that a PIP insurer that recovers subrogation must pay a share of the claimant’s attorney fees even when the funds come from the insurer’s own UIM policy.

In Winters v. State Farm Mut. Auto. Ins. Co., no. 70267-5 (Oct. 2001), two at-fault drivers injured Sara Winters. One driver, Edalgo, was uninsured, and the other, Cunningham, was underinsured. Winters had both personal-injury protection (PIP) and underinsured-motorists (UIM) coverage with State Farm. She received $8,271 in PIP benefits from State Farm in payment of medical bills and wage loss.

Winters sued Cunningham. Cunningham’s liability insurer, Leader National, paid Winters its $25,000 policy limit. Winters then made a UIM claim against State Farm. The claim went to UIM arbitration. The arbitrator awarded Winters $40,271 in total damages, including the $8,271 in medical bills and wage loss.

Winters and State Farm agreed that State Farm did not owe the $25,000 of the award that Leader National already had paid. But Winters wanted State Farm to share in her attorney fees because the attorney had caused State Farm to receive its PIP reimbursement. State Farm refused and deducted from the UIM award the full $8,271 PIP reimbursement and $25,000 representing Leader National’s prior payment of liability coverage.