## Facts

- Nationwide Insurance Company issued an automobile insurance policy to William Allen King that included personal injury protection (PIP) benefits, including up to $5,000 in medical-expense benefits and a $5,000 accidental death benefit, plus wage-loss coverage under stated conditions.
- King was seriously injured in an automobile accident on July 9, 1985, and died on July 12, 1985.
- King incurred medical expenses exceeding the $5,000 PIP medical limit, including bills owed to Sparks Regional Medical Center and Johnson County Regional Hospital.
- Before an administratrix was appointed for King’s estate, and at the request of King’s parents (Billy Ray King and Anna King), Nationwide paid the $5,000 PIP medical benefit directly to Sparks Regional Medical Center to reduce King’s medical debt.
- Nationwide also paid the $5,000 PIP accidental death benefit directly to King’s parents.
- After the estate was opened, Jacquelene A. Woolsey, as administratrix of King’s estate, sued Nationwide seeking (among other things) payment of the PIP benefits to the estate, contending Nationwide remained liable because it had paid the wrong recipients.
- Nationwide filed third-party claims against King’s parents and the medical providers, seeking restitution or indemnity to the extent it was required to pay the estate after having already paid others.
- King’s parents presented evidence that they used the insurance proceeds to pay expenses connected with King’s death (including funeral and medical-related expenses) that they would not have paid without the proceeds, and that they did not receive notice of the estate opening in time to seek reimbursement through estate procedures.

## Issues

1. Did the policy term providing that PIP medical benefits were payable “to or for the insured” allow Nationwide to satisfy its obligation by paying the $5,000 medical benefit directly to a hospital that was a medical creditor of the insured?
2. Under Arkansas’s mandatory PIP statute and the policy’s death-benefit clause, was Nationwide required to pay the $5,000 accidental death benefit to the insured’s personal representative (the estate), making payment to the parents improper?
3. Was the estate entitled to wage-loss benefits under the policy and the proof offered?
4. If Nationwide paid the death benefit to the wrong recipients, could Nationwide obtain restitution from the parents, and if so, to what extent given their claimed good-faith expenditures and lack of notice of the estate?

## Decision

- The court held that Nationwide’s payment of the $5,000 PIP medical benefit directly to Sparks Regional Medical Center was proper under the policy language “to or for the insured,” because the payment was made for the insured by discharging a debt the insured owed.
- The court held that Nationwide improperly paid the $5,000 PIP accidental death benefit to King’s parents; Arkansas law required that benefit to be paid to the insured’s personal representative, so the estate was entitled to recover that amount from Nationwide.
- The court denied the estate’s claim for wage-loss benefits, finding the estate did not establish entitlement under the policy and applicable law.
- On Nationwide’s restitution claim against the parents, the court limited restitution to the extent the parents were unjustly enriched; to the extent they changed their position in good faith by paying death-related expenses they otherwise would not have paid—and lacked timely notice and a fair chance to seek reimbursement through the estate—restitution was reduced or barred to that extent.

## Legal Principles

- When an insurance policy provides that medical benefits are payable “to or for the insured,” an insurer may satisfy the obligation by paying a medical provider directly if the payment discharges the insured’s medical debt.
- Mandatory statutory PIP coverage is read into the policy and controls inconsistent payment practices; under Ark. Code Ann. § 23-89-202(3), accidental death benefits must be paid to the insured’s personal representative.
- Payment to an unauthorized recipient does not discharge an insurer’s duty to the legally authorized payee; the insurer may remain liable to pay the proper recipient.
- Restitution for mistaken payment is governed by unjust enrichment limits; a good-faith recipient’s material change of position in reliance on the payment can reduce or defeat restitution, especially where estate notice failures prevented a realistic reimbursement claim.

## Conclusion

Woolsey held that Nationwide discharged its $5,000 PIP medical-benefit obligation by paying the hospital directly under a “to or for the insured” clause, but it did not discharge its statutory duty for the $5,000 accidental death benefit because Arkansas law required payment to the insured’s personal representative; the estate could recover the death benefit from Nationwide, while Nationwide’s restitution remedy against the parents was limited by unjust enrichment and the parents’ good-faith change of position without timely estate notice.


Woolsey v. Nationwide Insurance Co., 697 F. Supp. 1053 (1988)