In Holland v. Indiana Farm Bureau Insurance Company, the Indiana Court of Appeals decided a dispute between an Indiana lawyer and an automobile insurer concerning the reimbursement of medical payments coverage provided by the automobile insurer to the injured client of the lawyer in a personal injury lawsuit. After the lawyer’s client was injured in a vehicle collision and sustained medical bills as a result of injuries suffered in the collision, the client’s automobile insurer paid $5,000.00 towards the client’s medical bills. The automobile insurer put the attorney on notice of its subrogation claim, which entitled it to partial reimbursement of the amount it paid out of its medical payments coverage.
Under Indiana law, the amount of an automobile insurer’s subrogation claim for medical expenses paid on behalf of an injured party is diminished in the same proportion as a personal injury claimant’s recovery is diminished by comparative fault, or by reason of the uncollectability of the full value of the claim for personal injuries or death resulting from limited liability insurance. Ind. Code § 34-51-2-19. The amount of the automobile insurer’s subrogation claim is also reduced by a pro-rata share of the claimant’s attorney’s fees and litigation expenses. Id.
In this case, the personal injury lawsuit against the at-fault party was settled in the client’s favor. The client’s attorney and the automobile insurer were unable to reach an agreement as to the reimbursement amount due the automobile insurer from the personal injury settlement. More than two (2) years after the Indiana attorney and the automobile insurer reached an impasse and communication ceased between them concerning the medical payments subrogation lien, the automobile insurer filed a lawsuit in state court in Indiana against the Indiana attorney. While the trial court initially found in favor of the automobile insurer, the Indiana attorney appealed the decision, and the Indiana Court of Appeals reversed the decision of the trial court, finding in favor of the Indiana attorney based upon a two (2) year statute of limitations for breach of fiduciary duty.