Ludwig v. Farm Bureau Mutual Insurance Co.

393 N. W. 2d 143 (1986)

Iowa Supreme Court
Facts

Ludwig- P
Insured by Farm-D
She and 2 other people are traveling in Kansas and hit by a truck
Sued truck company
Farm gave notice of subrogation rights to the truck company
Received 45k settlement
13223.26 is subrogated for the 3 victims remaining balance
distributed to 3 plaintiffs
truck insurance pays subrogation directly to farm bureau
Ludwig files suit

Claim is that insurance company under its medical protection clause shall be
made whole when the insured receives medical payments from a 3rd party
judgment.

Insured must be made whole.

Ludwig argues all settlements are by their nature compromises and
necessarily result in less than full compensation.
Further claims that she avoided trial to avoid delay and mental stress

Farm argues when a settlement is made without the subrogee, the insured is
presumed to be made whole.

Trial court instead analyzed whether Ludwig had been fully compensated for
medical expenses, lost wages, and damages.

Holding
Iowa Supreme Court:
An insured need not be paid in full for pain and suffering and disability before
subrogation for medical expenses is allowed.
Ludwig was to receive 20k for her other damages

The purpose of subrogation is to prevent unjust enrichment of one party at

the expense of another
When the total of the insured recovery from a third party, and the insurance
companys payments under the policy, still are less than the loss sustained,
the insured has not been made whole, and the insurer may not recover
against him
Insured policy did not cover P&S or disability, and denial of farms claim for
medical expenses because Ludwig had not recovered would have the effect
of making Farm an insurer against those losses as well.