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Pay Your Insurer Back For Medical Treatment? Maybe Not - The Make Whole Rule

If you are in a car accident and you have PIP (or med-pay) insurance that pays for your medical treatment, you may be contractually obligated to re-pay a portion of these costs after you recover from the other party. Normally this is no problem - if you have great results from your personal injury claim there is plenty of money to go around.

But what if there is not enough money to go around and the medical bills exceed the policy limits of the other driver? For example: You are sitting at a red light in downtown Oakland. A car rear-ends you at high speed, and you break your leg and ankle. The other driver has a minimum policy (of only $15,000) and you do not have uninsured motorist coverage or underinsured motorist coverage because you were trying to save a few bucks. You do, however, have medical payment insurance. Your total medical bills dwarf your the proceeds you receive from your settlement.

If this sounds like your case, you need to consider the Make Whole Rule. At its most basic level, the Make Whole Rule means that you get paid before the insurer gets paid. This is a gross oversimplification, but this is the gist of it.

The court in Sapiano v. Williamsburg National Ins. Co., (1994) 28 Cal.App. 4th 533 adopted The Make Whole Rule in California and held that an insurer cannot recover on its reimbursement claim until the insured is made whole. This rule was recognized by the Ninth Circuit in 1995, when it adopted The Make Whole Rule in Barnes v. Independent Auto Dealers of Calif., (9th Cir. 1995) 64 F.3d 1389. Barnes defines what constitutes being made whole and includes in the competition past and future medicals, loss of earnings, pain and suffering, and attorneys fees. Further, it should be noted that Progressive West Insurance Company v. Superior Court, (2005) 135 Cal.App. 4th 263, held that the make whole rule applies to med pay cases in California.

Pete Clancy is a personal injury lawyer in Oakland. He can be reached at 925-835-7500.