Thoughts About A Doctor Paying A Judgment in Quarters

Dr. Roger Herrin, upset that he had to share money with those who were injured in a car wreck that also  took his son’s life, paid the $500,000 he owed in quarters.   7,500 hundred pounds of quarters.  Why quarters?  "Because I couldn’t do it in pennies," Herrin reportedly said.

There has been lots of press about this event, but none of it gave me a clear picture of the legal dispute that gave rise to Herrin acting in such a fashion.  Here is what my research revealed:

In what all would agree was a tragic event, Herrin’s 15-year old son was killed and three other people were injured in an intersection wreck in 2001.   The at-fault driver had $100,000 in applicable liability insurance limits; this sum was paid into court.  No agreement could be reached on how to divide the $100,000, so the trial judge decided the value of each individual case and divided the money pro rata.  The Herrin death case was given the greatest value – a little over $10,000,000, just over 90% of the total damages the judge found to be present (almost $11,000,000 for all plaintiffs.)

Herrin filed a separate lawsuit against various companies he claimed had uninsured motorist coverage applicable to his son’s death.  It was determined that there was $5,500,000 in such coverage available. This coverage was available only to Herrin and not to the other occupants of the vehicle.  Herrin later settled his UM claim against his own carrier for $1,650,000.  There is no public information available that I have found that reveals why the case was settled for this amount.

That left the UM coverage on the host vehicle – the vehicle in which Herrin’s son and the other people were riding at the time of the accident.  After litigation which included an appeal to the Illinois Court of Appeals, the UM coverage on that vehicle was determined to be $900,000.

The trial judge then attempted to divide the $900,000 under his or her view of Illinois law.  The judge ultimately determined that Herrin was entitled to about two-thirds (a little over $667K) of the money.  An appeal followed.

In Columbia Mut. Ins. Co. v. Herrin, 965 N.E.2d 422 (Ill.App. 5 Dist. 2012), the Illinois Court of Appeals ruled that the trial judge did not follow Illinois law in dividing the host car’s uninsured motorist proceeds. The controlling case on point in Illinois is Janes v. Western States Ins. Co., 783 N.E.2d  37 (Ill. 2001).  This case holds that when dividing up a limited amount of UM insurance coverage, the trial judge has to first take into account the amount that each individual received from his or her own UM carrier. This result worked to the detriment of Herrin; recall that he had $5,500,000 of UM coverage applicable to the claim (and settled that claim for $1,650,000).

The court then looked to how the trial judge valued the claims in the original trial which sought to divide the $100,000 in available liability insurance.  The court noted that the four claimants’ (other than Herrin) claims were valued at $955,552.31, an amount less than what Herrin received from his own UM insurance carrier.  Thus, the court determined that under the Janes case, Herrin did not have a right to any of the UM coverage available to the occupants of the host car. (There was a dispute about whether the $1.65M or the $5.5M should be used to determine if Herrin could recover any monies, but the court did not reach the issue, noting that both numbers were greater than the value of all of the other cases; and thus it was unnecessary to determine which number should be used.)

There was also a dispute over whether the true value of each claim should have been determined in arbitration rather than by the trial court.  The court affirmed the use of the trial judge’s values for division of the $100,000 liability case for the distribution of the $800,000 in UM monies.

The intermediate court remanded the case for further proceedings.  The Illinois Supreme Court refused to hear the case. 979 N.E.2d 877 (Ill. 2012).

In summary, the Court of Appeals determined that, under Illinois law, Herrin had no right to any part of the $900,000 of UM money because he had already received. $1.65M from his own UM carrier, and that amount – which exceeded the damages suffered by the other victims – left him unable to receive any money from the UM coverage for the host car.  (The result would be different in Tennessee, but different states approach this issue differently.)

So, how did Herrin end up having to pay $500,000?  Because Herrin obtained a court order getting the funds paid by the UM carrier and (temporarily) allocated by the trial court for his son’s claim into the estate of his son while the appeal was pending.  (No bond was posted on this amount.) He then distributed that money to his late son’s family while the appeal was pending.   When the appeal on the UM issue was lost, he was (appropriately) ordered to pay the money he distributed  back to the clerk of the trial court for the benefit of the people who were legally entitled to it.   In re Estate of Herrin, 2012 WL 7069953 (Ill. App. Dist. 5 Nov. 26, 2012). 

Apparently, some sort of settlement was reached with the other passengers and Herrin was permitted to pay only $500,000 out of the $677,851.06 that the estate actually received from the host driver’s UM policy.  Thus, Herrin (or members of his family) got to keep $177,851.06 that the Illinois Court of Appeals said did not belong to him.  (At least one newspaper article refers to  "confidentiality agreements," so I assume that a deal to let Herrin keep part of the money to avoid future litigation is what was settled.)

No doubt that Herrin is still hurting over the loss of his son – who wouldn’t be?.  And no doubt that it would hurt to have to pay $500,000 out of pocket to cover the risk Herrin took when he disbursed money to others that was not finally determined to belong to his son’s estate.  One can understand that he might disagree with Illinois UM law.  And one can understand why Herrin might be second-guessing his decision to settle with his own UM insurer for $1.65M when there was $5.5M available and the loss was so huge.

But paying what you owe in quarters? 

That is just plain childish.