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Beam v. Wausau Insurance Company2/27/2001
al court erred by allowing Wausau to set off the entire amount of worker's compensation benefits paid to Beam from the jury's award. Beam argues that the lien reduction statute should apply and that Wausau should be entitled to a credit against the judgment of only a percentage of the judgment recovered by Beam. In other words, Beam argues that Wausau's interest is a subrogation claim or a lien against the judgment and not, as Wausau argues, enforcement of a provision of the policy.
Subrogation has been defined as "the substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim." BLACK'S LAW DICTIONARY 1279 (5th Ed.1979). See also, Home Owners' Loan Corp. v. Henson, 217 Ind. 554, 29 N.E.2d 873, 876 (1940). A lien is defined as a claim which one person holds on the property of another as a security for an indebtedness or charge. Hubble v. Berry, 180 Ind. 513, 103 N.E. 328, 330 (1913). In the present case, Wausau is not attempting to sue another person in Beam's stead. Furthermore, Wausau did not assert a lien on any of Beam's property. The posture of this case is insured, Beam, suing insurer, Wausau, for coverage under the terms of the policy issued. Since Wausau is liable to Beam for underinsured motorist coverage, Wausau is entitled to a credit against that amount for payments already made. Without the credits provided for in the policy, Beam would receive a greater compensation than that to which he was entitled.
The purpose of underinsured motorist (UIM) coverage is to provide individuals indemnification in the event negligent motorists are not adequately insured for damages that result from motor vehicle accidents. Veness v. Midland Risk Ins. Co., 732 N.E.2d 209, 212 (Ind. Ct. App. 2000). Beam agrees that he is entitled to $701,371.00 in order to make him whole. Wausau contends that it should be able to set off the amounts Beam already has recovered from the underinsured liability. If Wausau were not allowed to set off those amounts Beam would receive a windfall to which he is not entitled.
The present case is very similar to the facts presented to a different panel of this court in Standard Mutual Ins. Co. v. Pleasants, 627 N.E.2d 1327 (Ind. Ct. App. 1994). Pleasants was injured in an accident and received $5,000.00 pursuant to the medical payments coverage of her automobile insurance policy with Standard Mutual. The tortfeasor had no automobile insurance coverage at the time of the accident. Standard Mutual and Pleasants disagreed regarding liability for the accident and the matter was referred to arbitration pursuant to the terms of the insurance contract. Pleasants' total damages were determined to be $100,000.00, but Pleasants was established to be fifty percent at fault. Therefore, Standard Mutual was liable to Pleasants for $50,000.00. The terms of the contract also explicitly provided that double recovery was prohibited. In other words, Pleasants could not recover damages under both the medical payments portion of the contract and under the UIM portion of the contract. Standard Mutual tendered a check for $45,000.00 to Pleasants. On appeal, Pleasants argued that the lien reduction statute should be applied to that dispute. A panel of this court stated as follows:
This provision is inapplicable in this case. It applies to claims by the insurer against some other party. Clearly, the claim in question is the claim by Pleasants against the insurer, not a claim by the insurer against Pleasants. Standard Mutual makes no claim to recover amounts paid to Pleasants under the medical payments coverage. It asserts only its contractu
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