Anderson v. American Family Mut. Ins. Co.

Decision Date18 August 1993
Docket NumberNo. 92-3219,92-3219
Citation505 N.W.2d 433,178 Wis.2d 835
PartiesPhilip ANDERSON and Anne Anderson, Plaintiffs-Appellants, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent.
CourtWisconsin Court of Appeals

Before BROWN, NETTESHEIM and SNYDER, JJ.

NETTESHEIM, Judge.

The issue on appeal is whether Philip Anderson is entitled to recover medical expenses under his motor vehicle insurance policy issued by American Family Mutual Insurance Company where he has already been made whole for all of his damages. 1 Anderson contends that the policy's medical expense coverage provisions and the collateral source rule entitle him to such payment. American Family concedes that although the policy does not expressly forbid such payments, the law precludes such double recovery.

By declaratory judgment, the trial court ruled in American Family's favor. We conclude that the language of the policy permits Anderson to recover his medical expenses under the American Family policy. Therefore, we do not directly address the application of the collateral source rule to this case.

The relevant facts are undisputed. 2 American Family issued a "Family Car Policy" to Anderson. In separate sections, the policy provided liability, medical expense, and uninsured motorist coverage. By separate endorsement, the policy also provided underinsured motorist coverage. American Family charged separate premiums for each of these coverages. We will discuss the specific language of the policy when we address the appellate issue.

On May 20, 1988, Anderson was injured when his vehicle, insured by American Family, collided with a vehicle operated by Richard Hanke. Anderson sued Hanke. Because Anderson's claimed damages exceeded Hanke's available liability insurance coverage, Anderson amended his complaint to allege an underinsurance claim against his own insurer, American Family, and to seek a declaration of his rights under the American Family policy.

Eventually, Hanke's insurers paid Anderson their combined policy limits of $75,000 and Anderson dismissed his action against Hanke. 3 Thus, the only issues remaining were Anderson's underinsurance and declaratory judgment claims against American Family.

The parties then stipulated that Hanke was ninety-five percent negligent and Anderson five percent contributorily negligent. The matter went to trial on damages only. The jury returned a total damage award of $186,769.50, including awards of $35,104.22 for Anderson's past medical expenses and $5400 for his future medical expenses. Based upon his five percent contributory negligence, Anderson's net award was $177,431.02. American Family paid this amount to Anderson pursuant to its underinsurance obligation. Thus, except for the five percent reduction for his contributory negligence, Anderson has been made whole for his damages, including his medical expenses.

Nonetheless, Anderson sought further payment for his medical expenses under the medical expense coverage section of the American Family policy and under the collateral source rule. In response, American Family argued that the purpose of underinsurance is to make the insured whole. Since Anderson had been made whole, American Family contended that it was not obligated under the medical expense coverage provisions of the policy. The attorneys' arguments at the declaratory judgment hearing were not reported and, without explanation, the trial court ruled for American Family. 4 Anderson appeals.

We first examine the insurance contract language. The interpretation of an insurance policy presents a question of law. Muehlenbein v. West Bend Mut. Ins. Co., 175 Wis.2d 259, 264, 499 N.W.2d 233, 234 (Ct.App.1993). Insurance contracts are controlled by the same rules of construction as are other contracts; the goal is to ascertain the intentions of the parties. Id.

The American Family policy is divided into four separate sections, each reciting separate and specific coverages for which Anderson paid a separate premium: liability, medical expense, uninsured motorist, and, by separate endorsement, underinsured motorist coverage.

The medical expense coverage section of the policy includes a subsection entitled "Limits of Liability." This subsection includes the following reducing clause:

Any amount paid or payable for medical expenses under the Liability or Uninsured Motorists coverages of this policy shall be deducted from the amounts payable under this Part. [Emphasis added.]

It is critical to note that while this reducing clause allows for the deduction of medical expenses paid under the liability and uninsured motorist coverage from any payments made under the medical expense coverage, it does not provide for such reduction when medical expense payments have been made pursuant to the underinsurance coverage of the policy. A principle of contract construction holds that specific mention of one or more matters is considered to exclude other matters of the same nature not expressly mentioned. Goebel v. First Fed. Sav. & Loan Ass'n, 83 Wis.2d 668, 673, 266 N.W.2d 352, 355 (1978). When an expression of intent is apparent as to one portion of the agreement, this rule may be extremely useful in determining the intent of the parties as to a related portion. Park View Manor, Inc. v. Housing Auth., 300 N.W.2d 218, 226 (N.D.1980). Here, by contracting to allow American Family to reduce its medical expense coverage payments for prior liability or uninsured coverage payments which included medical expenses, but failing to so provide regarding underinsurance payments, the parties have made their intent self-evident. 5

In addition, the underinsurance endorsement provisions of the policy support our conclusion. Like the medical expense coverage section, this endorsement also has a reducing clause. It allows American Family to reduce its underinsurance payments for: (1) payments made by another legally liable; (2) payments made under the liability provisions of the American Family policy; and (3) payments made pursuant to worker's compensation, disability or similar law. Here again, American Family had the opportunity to utilize language which would allow it to avoid making duplicate medical expense payments to Anderson. But again, as with the medical expense reducing clause, American Family saw fit to write in reducing language only in certain situations, but not with regard to medical expense payments. 6

Thus, the parties' contract addresses the scope and effect of reducing clauses in various settings. If the parties (especially American Family) had wished to extend the medical expense reducing clause or the underinsurance reducing clause to avoid duplicate payment for medical expenses, they clearly had the opportunity to do so. They did not. Thus, although the result is one we do not necessarily favor, Anderson is entitled to payment of his medical expenses even though he has already been made whole pursuant to the underinsurance provisions of the policy.

American Family argues that "a policy need not expressly provide that a given coverage shall not duplicate another coverage." 7 However, we do not conclude that in all instances a policy must expressly provide against duplicate coverage. Our holding is only that, under the language of this particular policy, where the parties have consciously allowed for a deduction in payments as to certain types of coverage but not as to other kinds of coverage, the intent of the parties is self-evident.

American Family also argues that "[underinsurance] coverage begins only when other insurance resources have been exhausted." We have no quarrel with this statement as a general proposition. However, this argument begs the appellate question of whether an insured is entitled to payment under the medical expense section of the policy where the parties' reducing clause language does not apply to prior underinsurance payments.

American Family also argues that according to Wood v. American Family Mutual Insurance, 148 Wis.2d 639, 436 N.W.2d 594 (1989), an underinsurer indemnifies the insured. Thus, American Family reasons that Anderson is not entitled to separate and duplicate payment under the medical expense coverage of the policy.

American Family cites Wood out of context as it...

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  • Gurney v. Heritage Mut. Ins. Co., 92-3157
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    ...on grounds that (1) WPS is not entitled to recover on its subrogation, (2) our recent holding in Anderson v. American Family Mut. Ins. Co., 178 Wis.2d 835, 505 N.W.2d 433 (Ct.App.1993), supports the trial court's holding, and (3) the collateral source rule permits their recovery notwithstan......
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    ...the warranty must cover all cases of condensation that are not caused by high humidity. See Anderson v. American Family Mut. Ins. Co., 178 Wis.2d 835, 840, 505 N.W.2d 433 (Ct.App.1993) ( “[S]pecific mention of one or more matters is considered to exclude other matters of the same nature not......
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    ...cover all cases of condensation that are not caused by high humidity. See Anderson v. American Family Mut. Ins. Co., 178 Wis. 2d 835, 840, 505 N.W.2d 433 (Ct. App. 1993) ("[S]pecific mention of one or more matters is considered to exclude other matters of the same nature not expressly menti......
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    ...of construction as are other contracts; the goal is to ascertain the intentions of the parties. Anderson v. American Family Mut. Ins. Co., 178 Wis.2d 835, 839, 505 N.W.2d 433, 435 (Ct.App.1993). We may not modify the unambiguous language of an insurance contract. See Fletcher v. Aetna Cas. ......

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