The Indiana Court of Appeals recently resolved a dispute as to the availability of underinsured coverage in an Indiana motor vehicle accident case. In Catanzarite v. Safeco Ins. Co. of Indiana, the Plaintiff, Christine Catanzarite, suffered severe injuries when another driver, Timothy Smith, turned his vehicle in front of her vehicle, causing a collision. Catanzarite incurred $269,841.32 in medical expenses at Memorial Hospital in South Bend, Indiana. Smith had a $100,000.00 liability insurance policy. Catanzarite had a $100,000.00 underinsured policy with Safeco.
Smith’s auto insurer offered Catanzarite Smith’s liability insurance limits of $100,000.00. Memorial Hospital asserted a hospital lien for the medical bills incurred by Catanzarite, which it subsequently reduced to $25,000.00. A perfected hospital lien gives a hospital a direct right to insurance proceeds which are paid to the patient by an at-fault party. Catanzarite filed a motion for declaratory judgment against Safeco, upon which she filed a motion for summary judgment, seeking a determination that Smith, as a result of Memorial Hospital’s hospital lien, was an underinsured driver and Catanzarite was entitled to $25,000.00 in underinsured coverage.
Underinsured motorist coverage ensures an insured person receives the recovery he or she would have received if the at-fault driver had carried adequate insurance; it helps protect persons against inadequately insured negligent motorists. Under Indiana law, an underinsured motor vehicle is an “insured motor vehicle where the limits of coverage available for payment to the insured under all bodily injury liability policies covering persons liable to the insured are less than the limits for the insured’s underinsured motorist coverage at the time of the accident…” Ind. Code § 27-7-5-4(b).
Catanzarite argued that the actual amount payable to her from Smith, after payment of the hospital lien, would be $25,000.00 less than her underinsured policy limit, thereby entitling her to collect the same from Safeco. The trial court granted summary judgment for Safeco, finding that Smith’s insurer’s payment of the hospital lien did not reduce Smith’s liability policy limit so as to make him underinsured with regards to the collision. On appeal, Safeco argued that Catanzarite was not entitled to underinsured coverage because (1) Smith’s liability insurance policy limits were equal to Catanzarite’s underinsured policy limits and (2) the hospital lien did not reduce Smith’s liability insurance policy limit so as to allow Catanzarite to collect under her underinsured policy.
In rejecting Safeco’s first argument, the Indiana Court of Appeals reviewed prior Indiana Supreme Court precedent, which provides that a limits-to-limits comparison is not the appropriate approach to determine whether a vehicle is underinsured. Rather, one must compare the amount received from the tortfeasor’s policy with the per-person underinsured limits, with the term “available for payment” under Indiana Code § 27-7-5-4(b) construed as “money present or ready for immediate use by the insured, not amounts potentially accessible.” However, as to Safeco’s second argument, the Court found that Smith’s entire $100,000.00 liability policy limit was actually available for Catanzarite’s immediate use and benefit, even though $25,000.00 was not actually passing through her hands, but being used to pay the hospital lien, for which she was responsible. Since payment of the hospital lien did not reduce the actual amount Catanzarite received from Smith, the Court held that Smith had adequate liability insurance coverage, that is, was not an underinsured motorist, and Catanzarite was not entitled to collect underinsured benefits from Safeco.
You can read the full opinion here.