The state agency responsible for making good on the debts of insolvent insurance companies is entitled to offset some of what it owes to one resident injured in an auto accident, the state’s Supreme Court ruled Oct. 29. In a case of first impression, the court held unanimously that the South Carolina Property & Casualty Insurance Guaranty Association was entitled to a set off in the amount of all other insurance benefits the injured man received from solvent insurers.
Roger Brock was severely injured when the car in which he was a passenger got into a wreck with a logging truck. The driver of the logging truck was insured through a policy issued to the logging company by Aequicap Insurance Company. Brock settled his claim against the driver and company for $185,000, but before he received any payment, Aequicap was declared insolvent. Because Aequicap was an insurer licensed to do business in South Carolina and Brock a South Carolina resident, the claim was referred to the Guaranty.
Brock made a demand for the full $185,000, but the Guaranty argued that it was entitled to reduce its payout by the amount Brock received from other insurers. Brock received over $93,000 between his health insurance, his uninsured motorist insurance (which kicked in once Aequicap was declared insolvent), and the insurance policy of the driver of the car in which Brock was a passenger.
A Charleston County trial court judge found that the state’s statutes were ambiguous, and held that the Guaranty could offset the uninsured motorist coverage, but not the payouts from the other driver’s insurance company or from Brock’s health insurer. But on appeal, the Supreme Court reversed that ruling, finding that state law was unambiguous and that the Guaranty was entitled to a credit for all the insurance payments that Brock received.
Brock had argued that allowing the Guaranty to offset the amount that he received from other insurers would violate the state’s collateral source rule, a rule of fairness applied by the courts. The rule holds that if one person harms another, then the person who caused the harm shouldn’t be able to benefit, in the form of mitigated damages, from the fact that the injured person received compensation from an independent source.
But Justice Costa Pleicones, writing for the court, held that Brock’s case wasn’t comparable to the traditional application of the collateral source rule, “since Guaranty is neither the wrongdoer nor the insurer of a wrongdoer, but is instead a statutory entity that exists to provide some protection for the insureds of insolvent insurance companies.” As such, granting the Guaranty an offset did not violate the rule.
Howard VanDine, Mattison Bogan, Erik Norton and Tara Sullivan of Nelson Mullins Riley & Scarborough in Columbia represented the Guaranty. Andrew Gowdown and Timothy Muller of Rosen, Rosen & Hagood in Charleston represented Brock.
The six-page decision is South Carolina Property & Casualty Insurance Guaranty Association v. Brock (Lawyers Weekly No. 010-122-14). The full text of the opinion is available online at sclawyersweekly.com.
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