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State Farm Spanked by Indiana Court of Appeals

Guy DiMartino Oct. 31, 2014

Michigan City car accident lawyer discusses recent Indiana Court of Appeals opinion that highlights State Farm's unreasonableness in some circumstances.

State Farm is the largest automobile insurer in the nation. It is certainly the big boy on the block and sometimes it likes to wheel its muscle. In the recent case of State Farm v. Young the court did not allow it to bully folks injured in an automobile accident.

Facts of the Case

A guy was injured in a car crash when he was rear-ended by Young. He received medical treatment for his injuries. Most of the medical expenses were paid by two insurance companies. First, the vehicle he was driving in was covered under a policy of insurance with State Farm that had $5,000.00 in medical payments coverage. Med-Pay provides the first line of medical payments for folks injured in car accident. The remaining $19,000.00 was paid by the injured person's health insurance.

When somebody is involved in a car accident and their insurance policy pays for the medical expenses they are entitled to repayment of a portion of the money from the injured person's settlement.

The injured guy filed a lawsuit and at mediation, Young's insurance company (State Farm). So State Farm was on both sides of the claim. Young had an insurance policy of $100,000 and the company settled the claim for about $17,000.00. The injured guy's attorney asked the insurance companies (State Farm being one) to accept 17% of their lien amount. The health insurance agreed but State Farm did not. State Farm wanted about $3,200, which included a statutory reduction for the injured person's attorney's fees.

The Court's Ruling

The court looked at the facts and said that it is clear the injured person did not get the full value of his claim because the claim settled for about $7,000.00 less than the total medical bills paid. Additionally, the court said that the purpose of subrogation is to avoid unjust enrichment, and in this case, it reduced State Farm's lien to $581.00. If State Farm were to receive $3,200.00 it would have been the one that was unjustly enriched in this matter.

The appellate court did not set out the facts showing why the underlying settlement was only $17,000.00, but it appears that State Farm was being pretty unreasonable regarding its subrogation interest in this matter.

If you have any questions about subrogation or a claim against State Farm, contact one of our Michigan City Car Accident lawyers at or fill out the internet consultation form on the right.