Case Details

Attorneys at Graham Lundberg & Peschel argued before the Washington Supreme Court in the case of Hamm v. State Farm Mutual Automobile Insurance Company, 151 Wn.2d 303; 88 P.3d 395 (2004). This case spent many years in the Court of Appeals before the Supreme Court heard argument in 2004. The case stands for the equitable doctrine that in order for an uninsured motorist insurance carrier to take a personal injury protection (PIP) reimbursement offset from any settlement, award or verdict, the insurance carrier must pay a pro rata share of the legal expenses incurred by the insured in bringing the uninsured motorist claim.

In November 1994, Rebecca Hamm was injured in an automobile accident with an uninsured motorist. Ms. Hamm carried both personal injury protection (PIP) and uninsured motorist coverage with State Farm Insurance Company. Ms. Hamm hired the attorneys at Graham Lundberg & Peschel. She received PIP medical benefits totaling $8,669.71 related to the accident. She presented an uninsured motorist claim and settlement efforts were unsuccessful, so she pursued arbitration under her insurance policy. The arbitrator awarded Ms. Hamm $16,000.00, including medical expenses. State Farm then offset the $8,669.71 paid in PIP medical benefits and sent Ms. Hamm a check for only $7,330.29.

The parties disputed the proper amount of the offset, and Ms. Hamm eventually brought a lawsuit for declaratory relief. The trial court permitted State Farm to offset the total amount of benefits it paid as PIP carrier from the amount of benefits that the arbitrator determined it was obligated to pay as the uninsured motorist carrier.  The trial court, citing Mahler v. Szucs, 135 Wn.2d 398, 957 P.2d 632, 966 P.2d 305 (1998), ordered State Farm to pay its pro rata share of legal expenses (which it sent at $6,634.06) that Ms. Hamm incurred in arbitrating the underinsured motorist claim. Because the PIP offset represented approximately 54 percent of the total recovery, State Farm was ordered to pay 54 percent of Ms. Hamm's legal expenses.

State Farm appealed the trial court decision, and the Court of Appeals reversed the trial court's decision, Hamm v. State Farm Mutual Automobile Insurance Company, 101 Wn.App. 360, 3 P.3d 761 (2000). The Supreme Court then accepted Ms. Hamm's petition for review and the case was remanded to the Court of Appeals for reconsideration in light of the Supreme Court's then recent decision in Winters v. State Farm Mutual Automobile Insurance Company, 144 Wn.2d 869, 31 P.3d 1164, 63 P.3d 764 (2001) (where the court ordered that an insurance company must pay a pro rata share of legal expenses incurred by an insured in bringing an underinsured motorist claim, where the underinsured insurance carrier claims an offset for PIP benefits paid). On remand, the Court of Appeals considered Winters, concluded it did not apply, and declined to amend its earlier opinion. Hamm v. State Farm Mutual Automobile Insurance Company, 115 Wn.App. 773, 60 P.3d 640 (2002). The Supreme Court again accepted Ms. Hamm's petition for review the Court of Appeals decision not to apply Winters. Hamm v. State Farm Mutual Automobile Insurance Company, 149 Wn.2d 1017, 72 P.3d 762 (2003).

The Supreme Court reversed the Court of Appeals and held that the equitable principals enunciated in Mahler and Winters applied in uninsured motorist cases because the uninsured monies were to be treated as though they came from the tortfeasor (wrongdoer). The Court also addressed the inequity of the different outcomes between injured motorists who had recovered from the tortfeasor, or the tortfeasor and the underinsured insurance carrier, and those that had only the option to recover from their uninsured motorist carrier. The Court found that, unless the principal of equitable sharing of the legal expenses was applied to the Hamm factual scenario, those people similarly situated would be deprived of the net recovery they would achieve had the tortfeasor been fully insured.

Ten years after Ms. Hamm's automobile accident and the work of her attorneys at Graham Lundberg & Peschel, her case made new law in Washington. That new law has benefited hundreds of injured people in Washington since that time.

CALL THE ATTORNEYS AT GRAHAM LUNDBERG & PESCHEL:

In the North Puget Sound, which includes Seattle, and King, Snohomish, Island, Skagit, San Juan and Whatcom Counties at:

1-800-422-4610

In the South Puget Sound, which includes Tacoma, Port Orchard and Pierce, Thurston, Kitsap, Mason and Lewis Counties at:

1-800-273-5005