The Shoes Don’t Fit: Inapplicability of Medical Services Liens to UIM Benefits

 In Insurance

We all know the drill by now:  some “third party liability” (TPL) vendor like Hunter Donaldson or Avectus gets wind that our clients have received some insurance payments and starts demanding payment on a chapter 60.44 RCW medical services lien.  “But these are UIM benefits,” you might say.  The TPL vendor’s stock response: “Medical services liens entitle us to any payments from the tortfeasor.  Such liens apply to UIM benefits because the UIM insurer steps into the shoes of the tortfeasor and payments made by the UIM insurer are treated as if they were made by the tortfeasor.”

Don’t fall for it.  That statement originates from Hamm, 151 Wn.2d 303, 308 (2004), and it was made in the context of determining how to account for overlapping types of insurance coverage—i.e., how to calculate an insurer’s offsets and setoffsThe Washington Supreme Court has never said that UIM payments are treated as being made by the tortfeasor for purposes of a lien.  And California—who has medical services lien statutes similar to Washington’s—has rejected the applicability of medical services liens to UIM payments because, in reality, they’re payments from a first-party insurer, not a third party insurer.  Weston Reid, LLC v. American Ins. Group, Inc., 174 Cal. App. 940, 948-951, 94 Cal. Rptr. 3d 748 (2009).  (Fun fact:  Weston Reid was the predecessor to Hunter Donaldson).  Next time, tell TPL vendors to keep their hands off your clients’ UIM benefits.

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