Allstate Ins. Co. v. Eaton

• Court: Virginia Supreme Court
• Writing for the Court: KEENAN
• Citation: Allstate Ins. Co. v. Eaton, 248 Va. 426, 448 S.E.2d 652 (1994)
• Decision Date: 16 September 1994
• Docket Number: No. 931468,931468
• Parties: ALLSTATE INSURANCE COMPANY v. Carol K. EATON. Record

Page 652

448 S.E.2d 652

248 Va. 426

ALLSTATE INSURANCE COMPANY v. Carol K. EATON.

Record No. 931468.

Supreme Court of Virginia.

Sept. 16, 1994.

Henry S. Carter, Glen Allen (Schaffer & Cabell, on briefs), for appellant.

James G. Harrison, III and Ray P. Lupold, III, Hopewell (Marks & Harrison, on brief), for appellee.

Present: All the Justices.

KEENAN, Justice.

We awarded this appeal to determine whether a medical payments coverage provision in an automobile insurance policy was breached when an insured refused to submit to an independent medical examination, because she intended to bring a separate claim under the uninsured motorist (UM) provisions of the policy.

In April 1989, Carol K. Eaton was injured in an automobile accident. She was insured under a family automobile policy, issued by Allstate Insurance Company (Allstate), which provided her medical payments coverage up to $15,000. In August 1990, after paying Eaton $2,762.97 under this policy provision, Allstate requested that she submit to an independent medical examination. Eaton refused this request and did not provide Allstate any reason for her decision.

The applicable policy language provided that "[t]he injured person shall submit to physical examination by physicians selected by the Company when and as often as the Company may reasonably require." Relying on this policy condition and Eaton's failure to comply with it, Allstate refused to pay additional bills submitted by Eaton.

On January 21, 1992, Eaton filed a motion for judgment seeking $3,322.75 in damages against Allstate, alleging that this amount represented the unpaid balance of her medical bills. Eaton also had instituted an action against Allstate, under the UM provisions of her policy, for her damages arising from the same automobile accident. Allstate's registered agent was served with a copy of Eaton's pleading in the UM action on January 30, 1992.

In the medical payments action, the parties entered into a stipulation, dated April 7, 1993, stating that Eaton's medical bills proximately resulted from the April 1989 automobile accident, that the treatments rendered were medically necessary, and that the charges for these treatments were reasonable and customary for the Richmond/Central Virginia area. Allstate also stipulated that its only defense to nonpayment of the bills was Eaton's refusal to submit to an independent medical examination.

Eaton testified that she refused Allstate's request, based on the advice of her attorney, because she intended to bring a UM claim under her policy. Lynette Brown, the Allstate claims representative who handled Eaton's medical payment claims, testified that she requested the independent medical examination in August 1990, because Eaton had sought treatment for recurrent back pain, despite an earlier medical report that had indicated she was asymptomatic.

In addition, Brown stated that Eaton was pregnant at the time of her renewed complaints, and that "based on [this fact] and the fact she had improved at one point, we were concerned of whether the pregnancy would have some impact on her injuries so we wanted to do an independent medical exam." Brown also testified that Allstate first received notice of Eaton's intent to assert a UM claim in April 1991.

After hearing argument of counsel, the trial court ruled that, since Eaton's refusal to submit to the examination was based on her intent to file a UM claim, her refusal did not constitute a breach of contract under the medical payments provisions of the policy. The trial court further stated that its ruling was mandated by specific language in Code § 38.2-2206, the uninsured motorist statute, which provides that "nor may anything be required of the insured except the establishment of legal liability." Code § 38.2-2206(H). Based on these rulings, the trial court entered judgment for Eaton in the amount requested.

Allstate contends that the trial court erroneously relied on the UM statute in interpreting the contract provisions regarding medical payments coverage. Allstate notes that the medical payments statutes, Code §§ 38.2-2201 and 38.2-2202(A), do not contain any language restricting the right of an insurer to require an independent medical examination when a UM claim either is contemplated or is made. Thus, Allstate asserts that there are no applicable statutory restrictions, that the terms of the parties' contract are controlling, and that, under the policy terms, Eaton's refusal constituted a breach of her contract with Allstate.

In response, Eaton first argues that Allstate's pre-trial stipulation, as to the reasonableness, necessity, and causation of her medical expenses, bars consideration of the merits of this appeal. Alternatively, Eaton asserts that the trial court's judgment is supported by the language of Code § 38.2-2206(H). We disagree with Eaton as to both arguments.

Initially, we hold that Allstate's pre-trial stipulation does not bar consideration of the merits of this appeal. In its ruling, the trial court decided an issue of law based on its interpretation of the effect of Code § 38.2-2206(H) on a medical payments claim. The parties' pre-trial stipulation as to Eaton's medical expenses is not relevant to our consideration of this issue of statutory and contract interpretation. In addition, the stipulation as to Eaton's...