Diana L. Powell v. Penny D. Clark
487 S.W.3d 528
Tenn. Ct. App.2015Background
- Powell, a guest in Collins's vehicle, was injured when Collins's car was hit by Clark, who was uninsured and 100% at fault.
- Allstate insured Collins and provided uninsured motorist (UM) coverage; State Farm provided medpay for Powell; State Farm was the primary UM carrier for Powell.
- State Farm paid Powell $70,021.32 in medical payments; Allstate paid $2,000 in medical payments under Collins’s policy.
- Powells sued Clark; State Farm answered and was later dismissed; Allstate sought a declaratory judgment on offset rights regarding State Farm’s payments.
- Trial court held Allstate could not offset State Farm’s medical payments against Allstate’s UM limits; final damages awarded Powell $200,000 with Allstate responsible for $98,000 after Medpay deduction; Allstate appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May Allstate offset State Farm medical payments against UM limits? | Powell argues policy allows setoff for medical payments and that statutes permit reductions by responsible-party payments. | Allstate argues offsets apply to payments by those legally responsible, including medical payments, to avoid duplication. | No; offset not permitted for State Farm medical payments under the contract and statutory framework. |
| Does the uninsured motorist statute permit reductions beyond those paid by legally responsible parties? | Powell asserts offsets permitted by statute to prevent duplication of benefits. | Allstate contends statutory offsets extend to all amounts from responsible sources, including medical payments by others. | Statutes authorize offsets only to amounts from legally responsible parties; State Farm not legally responsible in this case, so no offset. |
| How should the contract be interpreted when it conflicts with statutory intent? | Powell contends the policy language should be read to allow offsets per the contract. | Allstate argues the contract language should be read in pari materia with the statute to allow offsets. | Statutory intent controls; broad offset language cannot override the legislature's limited-offset principle. |
| Does the 'limited coverage' framework affect whether Allstate pays full UM limits? | Powell argues Allstate should pay up to policy limits with subrogation rights applied for State Farm’s payments. | Allstate seeks to reduce its liability by State Farm’s medical payments under the policy’s terms. | The court favors limited coverage interpretation; Allstate cannot offset State Farm’s medical payments. |
Key Cases Cited
- Sherer v. Linginfelter, 29 S.W.3d 451 (Tenn. 2000) (insurer may recover only amounts from the person or entity causing damages)
- Clark v. Shoaf, 302 S.W.3d 849 (Tenn. Ct. App. 2008) (uninsured motorist offset against amounts from other sources to avoid duplication)
- Green v. Johnson, 249 S.W.3d 313 (Tenn. 2008) (offsets applicable under UM endorsements and applicable law)
- Poper ex rel. Poper v. Rollins, 90 S.W.3d 682 (Tenn. Ct. App. 2002) (insurer may offset insured's recoveries from non-tortfeasors)
- Edmondson v. Solomon, no official reporter (Tenn. Ct. App. 1999) (discussed in context of disability benefits and uninsured motorist offsets)