As discussed in a prior post, in Alabama, medical payments (“med-pay”) coverage is often written into personal auto liability insurance policies. Once a med-pay claim is made by an insured, an insurer becomes obligated to make the medical payment when its insured can show he suffered a bodily injury, as defined in the medical payments provision of the auto policy, in an accident (regardless of fault) and thereafter incurred medical expenses in the treatment of that injury.

However, the act of an insurer making a medical payment, standing alone, is not an admission of liability in the context of the insured also making a claim for uninsured/underinsured (UM/UIM) motorist coverage benefits. An insured is entitled to recover UM/UIM, when he has made a showing that he is legally entitled to recover damages from the owner or operator of a vehicle that is either uninsured or in excess of the tortfeasor’s available liability policy coverage. The term “legally entitled to recover damages” means that the insured must be able to establish that the uninsured/underinsured motorist is at fault for the accident.[1] The burden is on the plaintiff to prove that the driver and/or operator of the other vehicle involved was uninsured or underinsured.

It is much easier for an insured to satisfy the burden requiring the insurer to make medical payments, than to establish liability for a UM/UIM claim. Therefore the fact of payment of med-pay benefits standing alone is insufficient to create a reasonable inference that the insurer was admitting liability and had made a determination internally that it was liable.[2] “The fact of payment of medical, repair, and similar expenses made in an attempt to compromise or settle a claim, whether before or after litigation is commenced, standing alone, is not sufficient to create a reasonable inference one way or the other as to a defendant’s assessment of its liability.”[3]

Where an insurer is unable to show that the insured, by making medical payments to the insured, was admitting liability and was not merely attempting to settle or compromise on the insured’s claim against it, the evidence of a made medical payment is not sufficient to establish liability and is inadmissible at trial. Relatedly, where there is no evidence from which a fact finder could reasonably infer that an insurer ever admitted liability for damage or injury sustained by the insured, evidence that a medical payment was made is likewise inadmissible.[4] Under these circumstances, a trial court commits reversible error “in allowing the plaintiff to introduce evidence of, and to comment on, the fact that” defendant had made medical payments to the plaintiff.[5]

[1] See State Farm Mut. Auto. Ins. Co. v. Griffin, 286 So.2d 302 (Ala. 1973).

[2] Lowery v. Ward, 662 So. 2d 224, 228 (Ala. 1995).

[3] Ex parte Proactive Ins. Corp., 668 So.2d 512 (Ala. 1995).

[4] Lowery, 662 So.2d at 227-28; see cf., Norfolk Southern R.R. v. Thompson, 679 So.2d 689, 695 (Ala. 1996). The Supreme Court of Alabama held in Lowery v. Ward that documents related to the insurer’s partial payment for plaintiff’s damages were not admissible as evidence of admission of liability by the insurer. The Lowery Court extensively cited Universal Underwriters Ins. Co. v. Sherrill, in which evidence of med pay benefits were admitted as evidence to the jury; however, the Lowery Court distinguished its case from that of Sherrill where the evidence of med pay benefits was used in answering a question of coverage, not of liability. “The evidence of payment of the medical benefits in Sherrill was proper, because the payment could be taken as an admission of liability under the terms of the policy. In the present case, however, the plaintiffs failed to show that Alfa, by paying for the damage to the plaintiffs’ automobile, was admitting liability and was not merely attempting to settle or compromise the plaintiffs’ tort claim against its insureds.” Lowery, 662 So. 2d at 228-29.

[5] Ex parte Proactive Ins. Corp., 668 So.2d at 512.