Division I: Arbitrator can determine total collision damages and deal with offsets for PIP and 3rd Party Insurance
If you’re an MAR arbitrator, read this case.
This case involves the authority of an arbitrator under the superior court's rules. You see, when cases have a lower value, the rules allow you to avoid the rigmarole of the judge and jury, and get your case decided faster using an alternative process – arbitration. The arbitrator acts as judge and jury, and decides your case.
In this case, Julia Evans was suing to obtain UIM benefits. In doing so, she asked the arbitrator to not only give her an award, but also to determine the total amount of her damages so that the award could be determined, including offsets for previously paid monies.
Essentially, Evans was claiming the total amount of her award could be up to $75,000, and she was only seeking $50,000 from the insured as UIM benefits. The insurance company, on the other hand, was saying that she could only claim damages of up to $50,000, and it would be allowed an offset for previously paid monies, allowing it to only pay $25,000 maximum (with third-party policy limits of $25,000 already having been paid).
This case presents a few interesting issues. The first, insurance isn’t usually interjected into an arbitration proceeding. There is an evidence rule (411) that prevents the use of insurance as evidence of fault. Here, the issue of evidence has nothing to do with whether or not any party was at fault. Rather, this case is all about a breach of the insurance contract and whether the insurance company was obligated to pay. Of course insurance is going to be a part of this case. Talking about what insurance was paid prior has nothing to do with using insurance is evidence of fault.
Second, rarely do you see cases where the arbitrator is asked to determine total damages, and total damages may not necessarily be the total award.
Here, the Court looked to a previous case, Mercier v. GEICO, where the arbitrator decided that he lacked the authority to decide issues of offset and set off under the previously paid third-party insurance benefits and previously paid personal injury protection benefits – which amounted to $36,000. Thus, when the arbitrator awarded $37,000, it went back to the court for determination of offset, which meant only $1000 in new money was awarded to the plaintiff. The court decided in that case that while the arbitrator could’ve decided the issues of offset, he chose not to and determined that these were beyond his authority. It was then the court’s prerogative to determine the offset issues on which the arbitrator punted.
Here, the court determined that nothing prevented the arbitrator from coming up with the total amount of plaintiff’s damages, analyzing the offsets, and determining the total award of UIM benefits:
We are not persuaded by these unsupported claims. Mercier is clear. Nothing in the mandatory arbitration statute, rules, or any other authority "prevented the arbitrator from reading the contract, admitting evidence of insurance limits, giving GEICO appropriate credit for the payments Mercier had already received, and coming up with a net award upon which the superior court could have entered judgment without further ado.” Mercier, 139 Wn. App. at 901 (emphasis added). The arbitration will decide the question of the UIM payment due to Evans. The offset and setoff issue goes directly to the amount Metropolitan must pay, if any, in UIM benefits. . . .
The trial court erred when it granted Metropolitan's motion contesting the arbitrability of Evans's UIM case. The court improperly transferred the case to the civil trial calendar because it concluded the case was not subject to mandatory arbitration. We adhere to our rationale in Mercier. We also conclude an arbitrator is authorized to determine a UIM claimant's total collision damages, minus the setoff and offset, for a maximum net award not to exceed the statutory limit, here $50,000. We reverse the trial court's order and remand for further proceedings consistent with this opinion.