PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MARY L. ROWZIE; LOWELL R.
CARAWAY, on behalf of themselves
and all others similarly situated,
Plaintiffs-Appellants,
No. 07-2159
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the District of South Carolina, at Charleston.
David C. Norton, District Judge.
(2:07-cv-00049-DCN)
Argued: December 3, 2008
Decided: February 12, 2009
Before NIEMEYER and MICHAEL, Circuit Judges, and
Rebecca Beach SMITH, United States District Judge for the
Eastern District of Virginia, sitting by designation.
Affirmed by published opinion. Judge Smith wrote the opin-
ion, in which Judge Niemeyer and Judge Michael joined.
COUNSEL
ARGUED: George J. Kefalos, Charleston, South Carolina,
for Appellants. Peter James Valeta, MECKLER, BULGER
2 ROWZIE v. ALLSTATE INSURANCE CO.
AND TILSON, Chicago, Illinois, for Appellee. ON BRIEF:
T. Christopher Tuck, RICHARDSON, PATRICK, WEST-
BROOK & BRICKMAN, L.L.C., Mt. Pleasant, South Caro-
lina, for Appellants. M. Scott Taylor, Florence, South
Carolina; John S. Wilkerson, III, Charleston, South Carolina,
for Appellee.
OPINION
SMITH, District Judge:
Insurance policy holders Mary Rowzie and Lowell Cara-
way filed suit against their insurer, Allstate, alleging that All-
state’s policy of offsetting payments of underinsured motorist
benefits by amounts paid for medical benefits violates two
separate South Carolina statutes. The district court granted
summary judgment in favor of Allstate, and this appeal fol-
lowed. Because we find the district court’s interpretation of
South Carolina law to be correct, we affirm.
I.
Plaintiffs Mary Rowzie and Lowell Caraway are Allstate
insureds who carry, within their automobile insurance poli-
cies, underinsured motorist ("UIM") and medical payments
("PIP/MedPay")1 coverages. After separate automobile acci-
dents with underinsured motorists, they received benefit pay-
ments from the PIP/MedPay coverages of their respective
policies. When Plaintiffs then sought to recover UIM benefits,
Allstate claimed that, pursuant to the express language of
Plaintiffs’ insurance policies, it was entitled to reduce the
1
Medical payments coverage is also termed personal injury protection,
or "PIP," coverage. "PIP" is used throughout the district court’s opinion,
as well as in the South Carolina Code sections at issue. Because Allstate’s
policy language refers to medical expense benefits coverage as "MedPay,"
we will use a combination of both terms.
ROWZIE v. ALLSTATE INSURANCE CO. 3
amount payable as UIM benefits by the amounts previously
paid as PIP/MedPay benefits. Plaintiffs disputed this asser-
tion, claiming that the clear language of South Carolina Code
§§ 38-77-144 and 38-77-160 prohibits an insurer from reduc-
ing UIM benefits based on the amount disbursed as medical
payment benefits.
The Allstate policy provision at issue states that:
Subject to the above limits of liability, [UIM] dam-
ages payable will be reduced by . . . all amounts pay-
able under any workers’ compensation law,
disability benefits law, or similar law, Medical
Expense Benefits Coverage of this policy, or any
similar automobile medical payments coverage.
(J.A. 59 (emphasis added).) In order to understand the opera-
tion of this provision, and because neither party has provided
any factual backdrop for the case, a hypothetical—similar to
the one employed by the district court in its Opinion and
Order granting Allstate’s motion for summary judgment—is
helpful. Assume John Doe, an automobile insured whose pol-
icy from Allstate includes both PIP/MedPay and UIM cover-
age, is involved in an accident with an underinsured driver
who carries only the minimum insurance amount of $25,000.
The accident results in a $100,000 loss to John Doe, only
$25,000 of which is paid by the at-fault driver’s insurance
company. Allstate first pays Doe’s $10,000 worth of medical
bills from his PIP/MedPay coverage. Then, because Allstate
paid these PIP/MedPay benefits, it only pays $65,000 for
Doe’s UIM coverage, rather than the full $75,000 left uncov-
ered by the at-fault driver’s insurance. Plaintiffs contend that
South Carolina law prohibits offsetting the UIM benefits by
the PIP/MedPay benefits in this way and, thus, that Allstate
should pay Doe $75,000 in UIM coverage, in addition to the
$10,000 in PIP/MedPay benefits, resulting in a total benefits
payment of $85,000 for the two types of coverage combined.
4 ROWZIE v. ALLSTATE INSURANCE CO.
Plaintiffs, on behalf of themselves and all others similarly
situated, brought suit against Allstate, claiming that the policy
provision violates South Carolina law by reducing the amount
due to them under UIM coverage by the amount paid from
their PIP/MedPay benefits. On March 23, 2007, Allstate filed
a motion for summary judgment and, on April 12, 2007,
Plaintiffs filed a cross-motion for summary judgment or,
alternatively, for certification of the question to the South
Carolina Supreme Court.
After conducting a hearing on the cross-motions, the dis-
trict judge issued an Order and Opinion on October 11, 2007,
granting summary judgment in favor of Allstate. The district
court found that Allstate’s policy did not violate either § 38-
77-144 or § 38-77-160. As the law surrounding the issue was
clear, the court declined to analyze the parties’ public policy
arguments. The district court also held that South Carolina
law is "not so unclear in this area as to require the submission
of a certified question." (J.A. 215.) As such, Plaintiffs’ alter-
native motion to certify a question of law to the South Caro-
lina Supreme Court was denied.2
II.
We review de novo a district court’s grant of summary
judgment, viewing the facts and inferences drawn from them
in the light most favorable to the non-moving party.3 See
Blaustein & Reich, Inc. v. Buckles, 365 F.3d 281, 286 (4th
Cir. 2004). We review any conclusions of law, including
questions of statutory interpretation, de novo. Id.
2
By order dated February 4, 2008, a panel of this court denied plaintiffs’
motion to place this case in abeyance pending referral of a certified ques-
tion to the South Carolina Supreme Court.
3
The facts are not in dispute. As outlined above, the district court, not-
ing that the parties had not provided detailed facts surrounding Plaintiffs’
dealings with Allstate, constructed a hypothetical scenario to illustrate
how the coverage worked.
ROWZIE v. ALLSTATE INSURANCE CO. 5
III.
A.
Plaintiffs first allege that the Allstate policy provision is
prohibited by South Carolina Code § 38-77-144, which pro-
vides:
Personal injury protection (PIP) coverage not man-
dated. There is no personal injury protection (PIP)
coverage mandated under the automobile insurance
laws of this State. . . . If an insurer sells no-fault
insurance coverage which provides personal injury
protection, medical payment coverage, or economic
loss coverage, the coverage shall not be assigned or
subrogated and is not subject to a setoff.
S.C. Code Ann. § 38-77-144.
The South Carolina Supreme Court analyzed the back-
ground and purpose of this section in State Farm Mut. Auto.
Ins. Co. v. Richardson, 313 S.C. 58, 60 (1993). Prior to South
Carolina’s comprehensive automotive insurance reform legis-
lation in 1989, a tortfeasor was able to reduce his liability to
a claimant by the amount of PIP/MedPay benefits received by
the claimant. This liability reduction, termed a "set-off," was
eliminated during the 1989 reform legislation with the provi-
sion cited above.4 The court in Richardson interpreted this
provision "to apply only to the tortfeasor," and not to serve as
a general prohibition against all reductions of automotive
insurance based upon PIP/MedPay coverage. Richardson, 313
S.C. at 61 (holding that the insurance policy at issue in that
case did not violate this section because it was not a set-off
used to reduce a tortfeasor’s liability).
4
The provision was originally enacted as § 38-77-145, which contained
identical wording as the section here discussed and currently in effect.
6 ROWZIE v. ALLSTATE INSURANCE CO.
The district court, following the reasoning in Richardson,
held that Allstate’s policy does not violate § 38-77-144
because the set-off does not reduce a tortfeasor’s liability but,
rather, reduces the amount of benefits Allstate pays on other
types of coverage by the amount it pays in PIP/MedPay bene-
fits. Further, the district court reasoned that, because UIM
coverage is optional in South Carolina, "there is no prohibi-
tion on an insurer’s ability to reduce the amount paid by refer-
ence to the insured’s PIP coverage." (J.A. 213.) Moreover,
South Carolina law does not specifically prohibit UIM set-
offs, and the state’s courts have expressly permitted insurers
to offset UIM benefits based on worker’s compensation bene-
fits. See State Farm Mut. Auto. Ins. Co. v. Calcutt, 340 S.C.
231 (2000) (neither public policy nor South Carolina law pro-
hibits such a set-off); Williamson v. United States Fire Ins.
Co., 314 S.C. 215 (1994) (reasoning that a set-off was permis-
sible because, among other reasons, the employer was not sta-
tutorily required to carry a certain amount of UIM coverage).
Because UIM coverage is not mandatory, and since the set-off
based on PIP/MedPay benefits is not contrary to § 38-77-144,
the district court concluded that it "must give effect to the
terms of the policy." (J.A. 213.)
As referenced above, the court in Calcutt considered an
insurance policy provision very similar to the Allstate provi-
sion at issue here, also reducing UIM benefits payable by
amounts received as workers’ compensation benefits. Because
the UIM coverage was voluntarily provided, and since
employers "should not be subject to duplicative recoveries by
their employees" when voluntarily providing UIM coverage,
the court held that the policy did not conflict with South Caro-
lina law or the public policy of the state. Calcutt, 340 S.C. at
236. Although the current dispute deals with set-offs based on
PIP/MedPay, not workers’ compensation, similar reasoning
applies.5
5
In addition to reducing UIM benefits based on PIP/MedPay benefits,
the Allstate policy provision at issue also reduces UIM coverage by the
amount payable under "any workers’ compensation law." (J.A. 59.) This
provision closely mirrors the provision discussed in Calcutt.
ROWZIE v. ALLSTATE INSURANCE CO. 7
The linchpin of Plaintiffs’ argument is that a "fundamental
tenet" of automobile insurance law requires UIM carriers,
such as Allstate, to "step into the shoes" of the at-fault driver
in determining benefits owed under an insurance policy.
(Appellants’ Br. 8.) Relying on the language in Richardson,
313 S.C. at 60, that a tortfeasor may not reduce his liability
to an injured party by the amount of PIP/MedPay benefits
received from the injured’s insurer, Plaintiffs reason that their
UIM recovery from Allstate should not be reduced by the
PIP/MedPay benefits they received. In short, Plaintiffs argue
that because Allstate has "step[ped] into the shoes" of the at-
fault driver, Allstate may not reduce the UIM benefits payable
to Plaintiffs by the PIP/MedPay benefits already disbursed.
Plaintiffs’ argument overlooks the specific finding in Rich-
ardson that the set-off prohibition applies "only to the tortfea-
sor." Id. at 61.
Moreover, subsequent to the decision in Richardson, the
South Carolina Supreme Court further ruled that, "[a]lthough
the UIM carrier ‘steps into the shoes’ of the underinsured
motorist, it has rights separate and distinct from those of the
underinsured motorist." Broome v. Watts, 319 S.C. 337, 340
(1995); see also Ex Parte Allstate Ins. Co., 339 S.C. 202, 206
(Ct. App. 2002) (noting that UIM carriers have a limited right
to defend a tortfeasor in certain cases, but that the insurer has
legal rights distinct and separate from those of the tortfeasor).
Reasoning from this proposition, the district court specifically
found that a UIM carrier "does not stand in the shoes of the
tortfeasor in UIM cases," and, therefore, the statutory provi-
sion at issue, § 38-77-144, is inapplicable to Allstate. (J.A.
212 (emphasis added).)
As the court in Richardson made clear, the South Carolina
legislature drafted § 38-77-144 with the intention that the set-
off prohibition would "apply only to the tortfeasor." 313 S.C.
at 61. Further, as the court in Broome clarified, the UIM
insurer "has rights separate and distinct" from the tortfeasor.
319 S.C. at 340. We agree with the district court that Allstate,
8 ROWZIE v. ALLSTATE INSURANCE CO.
as an UIM carrier, is not the legal equivalent of the at-fault,
underinsured driver in each of Plaintiffs’ accidents and, thus,
§ 38-77-144 does not apply to Allstate. Accordingly, the dis-
trict court did not err in granting summary judgment on this
claim.
B.
Plaintiffs next contend that the Allstate policy provision is
prohibited by South Carolina Code § 38-77-160. That statute
provides, in pertinent part:
Additional uninsured motorist coverage; underin-
sured motorist coverage. . . . Such carriers shall also
offer, at the option of the insured, underinsured
motorist coverage up to the limits of the insured lia-
bility covereage to provide coverage in the event that
damages are sustained in excess of the liability limits
carried by an at-fault insured or underinsured motor-
ist or in excess of any damages cap or limitation
imposed by statute. . . . Benefits paid pursuant to this
section are not subject to subrogation and assign-
ment.
S.C. Code Ann. § 38-77-160. The district court held that the
Allstate policy did not violate this provision because there is
no "subrogation" or "assignment," within the meaning of
those terms. Subrogation is the substitution of one person in
place of another with reference to a lawful claim or right. See
Kuznik v. Bees Ferry Assocs., 342 S.C. 579, 608 (Ct. App.
2000). South Carolina law defines an assignment as "the act
of transferring to another all or part of one’s property, interest,
or rights." Moore v. Weinberg, 373 S.C. 209, 219 (Ct. App.
2007) (internal citation omitted). Both subrogation and
assignment, then, imply that Plaintiffs have transferred or oth-
erwise lost some right they had. It is undisputed that Plaintiffs
were paid the amount to which they were entitled under their
ROWZIE v. ALLSTATE INSURANCE CO. 9
PIP/MedPay coverage. Any subrogation or assignment, there-
fore, must be of Plaintiffs’ UIM coverage.
Under South Carolina law, UIM coverage is not mandatory
and must be paid only up to the amount of damages incurred
by the injured driver. See Broome, 319 S.C. at 341 (noting
that the injured motorist’s total recovery is "not to exceed the
damages sustained")(internal quotation omitted). The district
court reasoned that, because Plaintiffs received UIM benefits
up to a level that—when combined with their PIP/MedPay
benefits—compensated them for their entire loss, they
received all of the "rights" to coverage to which they were
entitled, both under the terms of Allstate’s policy and under
South Carolina law. The district court, therefore, concluded
that Allstate’s policy does not create a subrogation or assign-
ment of Plaintiffs’ UIM benefits, and does not violate § 38-
77-160. We agree with the district court.
At the core of Plaintiffs’ argument that Allstate’s policy
does constitute a prohibited assignment or subrogation of
UIM benefits under § 38-77-160, is their contention, as dis-
cussed above, that Allstate steps into the shoes of the tortfea-
sor for insurance purposes and is liable to the same extent as
the at-fault driver in a car collision. Since a tortfeasor could
not reduce his obligation by the PIP/MedPay benefits received
from the injured’s insurance carrier, Plaintiffs contend neither
should Allstate be able to do so. Additionally, Plaintiffs argue
that public policy favors their reading of the two statutes at
issue: because Plaintiffs paid separate premiums for
PIP/MedPay and UIM coverages, they should be entitled to
the full amount of benefits under each type of coverage pur-
chased. To allow otherwise, Plaintiffs argue, would give a
"windfall recovery" to Allstate. (Appellants’ Br. 6.)6
6
As noted above, since South Carolina law provided sufficient guidance
to apply the statutes at issue in this case, the district court found it unnec-
essary to consider the parties’ public policy arguments.
10 ROWZIE v. ALLSTATE INSURANCE CO.
To the extent Plaintiffs assert that the PIP/MedPay and
UIM coverages they received from Allstate are based in sepa-
rate, distinct contracts not appropriate for assignment or sub-
rogation, their argument fails. Plaintiffs have one insurance
policy contract in which UIM and PIP/MedPay coverages are
separate provisions and, by the terms of which, Allstate will
reduce the UIM benefits paid by the PIP/MedPay benefits
paid. There is simply no assignment or subrogation of any
right to UIM benefits under the terms of the Allstate contract.
Further, the central purpose of the UIM statute is to provide
coverage where the injured party’s damages exceed the liabil-
ity limits of the at-fault motorist. See Floyd v. Nationwide
Mut. Ins. Co., 367 S.C. 253 (2005); Cobb v. Benjamin, 325
S.C. 573, 588 (Ct. App. 1997). In this case, Plaintiffs received
all of the PIP/MedPay benefits to which they were entitled, as
well as an additional sum of UIM benefits to fully compensate
them for their losses. Allowing Plaintiffs to recover UIM ben-
efits totaling the entire amount left uncompensated by the at-
fault motorist, without any deduction of PIP/MedPay benefits
already paid, would require Allstate to doubly compensate
their insureds for medical damages sustained in accidents with
underinsured motorists and would, in effect, give a "windfall
recovery" to Plaintiffs. As an injured insured may not recover
more than the total damages she sustained, Broome, 319 S.C.
at 342, the district court was correct in granting summary
judgment on this claim.
IV.
For the foregoing reasons, we hold that the Allstate policy
section at issue, which provides for a reduction of underin-
sured motorist damages payable by amounts paid as
PIP/MedPay benefits, does not violate either South Carolina
Code § 38-77-144 or § 38-77-160. Thus, we affirm the judg-
ment of the district court in favor of Allstate.
AFFIRMED