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Catanzarite v. Safeco Ins. Co. of Indiana, 2020 WL 1465936 (Ind. Ct. App. 2020)

In Catanzarite, the plaintiff was injured in a car accident caused by the negligence of another motorist. The plaintiff’s auto policy provided underinsured motorist (“UIM”) coverage with a limit of $100,000, which was also the liability limit of the tortfeasor’s auto liability coverage. The tortfeasor’s insurer agreed to pay the $100,000 liability limit to the plaintiff, who had an unpaid hospital lien of $25,000 for her accident-related medical expenses The plaintiff accepted the settlement and then looked to her UIM coverage because her net recovery (the actual available amount) from the tortfeasor’s policy—after payment of the hospital lien—would be $75,000. Thus, she argued that she was entitled to $25,000 in UIM coverage, the difference between her UIM coverage limit and the funds she would receive from the tortfeasor’s insurer after her hospital lien was paid. Both the trial court and the Indiana Court of Appeals rejected the plaintiff’s argument and ruled in favor of her UIM insurer.

The Court of Appeals held that the payment of the motorist’s medical lien from the tortfeasor’s liability policy would not reduce the limit of liability under the tortfeasor’s policy for purposes of determining whether the tortfeasor was underinsured. Under Indiana law, whether a motor vehicle is considered an “underinsured motor vehicle” turns on whether the amount “available for payment” to the insured under the tortfeasor’s liability policy is less than the limits of the insured’s UIM coverage. Relying on its past decision, the Court of Appeals noted that the phrase “available for payment” means “money present or ready for immediate use by the insured, not amounts potentially accessible.”

The Court of Appeals found the $100,000 settlement from the tortfeasor’s insurer was available for the motorist’s immediate use. While the payment of the lien by the tortfeasor’s insurer directly to the hospital would “diminish the amount of funds actually passing through [the motorist’s] hands,” the Court of Appeals noted, it would not “diminish the $100,000 settlement proceeds she is receiving from [the tortfeasor’s insurer][.]” Thus, the Court of Appeals held that the tortfeasor was not an underinsured motorist, and the motorist was not entitled to UIM coverage.

The decision in Catanzarite is well reasoned and expected because, as the Court of Appeals noted, if the motorist had also been permitted to receive UIM coverage, she would have received a “windfall,” which would contravene the purpose of the UIM coverage. See Corr v. Am. Fam. Ins., 767 N.E.2d 535, 540 (Ind. 2002) (UIM coverage is meant “to give the insured the recovery he or she would have received if the underinsured motorist [the tortfeasor] had maintained an adequate policy of liability insurance”).