Bacchus v. Farmers Ins. Group Exchange
| Decision Date | 08 October 1970 |
| Docket Number | No. 10052--PR,10052--PR |
| Citation | 106 Ariz. 280,475 P.2d 264 |
| Parties | Reggie BACCHUS and Helen Bacchus, husband and wife, Appellants, v. FARMERS INSURANCE GROUP EXCHANGE, Appellee. |
| Court | Arizona Supreme Court |
Russo, Cox & Dickerson, by Vernon F. Dickerson, Tucson, for appellants.
Chandler, Tullar, Udall & Richmond, by D. B. Udall, Tucson, for appellee.
American Trial Lawyers Assn., Arizona Chapter, by William B. Revis, Langerman, Begam & Lewis, Phoenix, for amicus curiae.
The appellants, Reggie and Helen Bacchus (appellants) suffered severe injuries in an automobile accident on April 7, 1967. At that time they were covered by an insurance policy issued by the appellee, Farmers Insurance Group Exchange (Farmers) which policy 1 included Uninsured Motorist Coverage as required by § 20--259.01 A.R.S. in the minimum amounts of $10,000 per person and $20,000 per occurrence. The other motorist involved in the accident was uninsured and, for the purposes of this appeal, there is no question concerning his sole liability for the accident nor of the injuries to the appellants. Apparently the appellants and Farmers could not agree on the amount that should be awarded in recompense for their damages and the matter was submitted to arbitration in accord with Farmers' policy provision.
The arbitrator, Edward I. Kennedy, a member of the American Arbitration Association, held a hearing and as a result awarded the sum of $8,200.00 to Reggie T. Bacchus and $10,000.00 to Helen V. Bacchus. Again, there is no complaint by Farmers as to the reasonableness of these amounts.
However, the arbitrator excluded from these awarded amounts any reimbursement to Farmers in the sum of $2,339.28, which was paid by Farmers under other provisions of the policy; that of Medical Payments, which are contained in a separate section of the policy, require a separate premium and are referred to by Farmers as 'advancements'. Farmers paid the award determined by the arbitrator but withheld the $2,339.28 in contravention of the arbitrator's decision. Appellants then filed suit in the superior court which entered judgment on stipulated facts in favor of Farmers on the basis that the insurer, Farmers, 'did not intend to submit to the arbitrator the issue of interpretation of the policy' as it relates to the refund of payments made under the Medical Payment coverage, and deductible from the payments under the Uninsured Motorist provision. The judgment was affirmed by the Arizona Court of Appeals, Division Two, 12 Ariz.App. 1, 467 P.2d 76 primarily on the grounds that the issue was not submitted to the arbitrator and secondarily that the medical payment setoff is valid under the case of Caballero v. Farmers Insurance Group, 10 Ariz.App. 61, 455 P.2d 1011. Because of the uncertainty in this area which has resulted from this and other decisions in the Court of Appeals, we granted the petitions for review in this case and in two related cases, Porter v. Empire Fire and Marine Insurance Company, 106 Ariz. 274, 475 P.2d 258, and Transportation Insurance Company v. Wade, 106 Ariz. 269, 475 P.2d 253.
Reduced to its basics, the only question here is can the insurer, Farmers, deduct the payments it has made to its insured, under the Medical Payments Provision of the policy, from those payments it is obligated to pay under the separate policy provision for Uninsured Motorist Coverage? Obviously under the contract of insurance it can, because the policy is clear and unambiguous on its face that medical payments are 'advancements' when other insurance coverage is available and must be repaid by the insured in the form of a setoff against other insurance available under another provision of the same policy. Contractually there can be no argument that the appellants would have to reimburse Farmers for the advancements made under the Medical Payment coverage.
Of course, it is rather difficult to understand why an insured should be obliged to repay the proceeds from his medical payment coverage from other policy proceeds for which separate premiums are paid, and to require repayment or setoff as 'advancements' seems to give such payments the nature of a loan rather than insurance. In Harleysville Mutual Insurance Company v. Lea, 2 Ariz.App. 538, 410 P.2d 495, the Court of Appeals seemingly disapproved of reimbursement albeit on different grounds. However, in Caballero v. Farmers Insurance Group, supra, Judge Malloy expressly approved such a practice on the grounds that medical payments is a voluntary coverage and the setoff was merely a question of contract between the insured and the insurer.
The Court of Appeals' affirmance of the judgment in the instant case rested squarely on the Caballero decision. But neither Caballero nor Lea, supra, involved an offset against Uninsured Motorist coverage, which coverage has been made mandatory by the Legislature and not merely a matter of grace on the part of the insurers. Of course, the insured can reject it in writing but the insurer must make it available. In fact the opinion in Caballero carefully noted this distinction:
(Emphasis added).
Permitting offsets of any type would allow insurers, by contract, to alter the provisions of the statute and to escape all or part of the liability which the Legislature intended they should provide. The medical payment coverage part of the policy is independent of the uninsured motorist coverage and should be treated the same as if it were carried with a different company. In Stephens v. Allied Mutual Insurance Company, 182 Neb, 562, 156 N.W.2d 133, the Nebraska Supreme Court considered the ramifications of this problem (the Arizona and Nebraska uninsured motorist statute...
To continue reading
Request your trial
-
Rashid v. State Farm Mut. Auto. Ins. Co.
...clause dealing with similar coverages. State Farm concedes it cannot offset mandatory coverages. See Bacchus v. Farmers Ins. Group Exch., 106 Ariz. 280, 475 P.2d 264 (1970). Nonetheless, it claims an insurer may invoke its escape clause once the insured has collected from another insurer an......
-
Nelson v. Employers Mut. Cas. Co.
...Ins. Co. of America v. Jones (1970), 286 Ala. 606, 243 So.2d 736 (clause invalid under statute).Arizona--Bacchus v. Farmers Ins. Group Exch. (1970), 106 Ariz. 280, 475 P.2d 264; Porter v. Empire Fire and Marine Ins. (1970), 106 Ariz. 274, 475 P.2d 258.Florida--Sellers v. United States Fidel......
-
Cundiff v. State Farm Mut. Auto. Ins. Co.
...(1974) (finding workers' compensation offset invalid). The courts in Larriva and Karasek relied on Bacchus v. Farmers Insurance Group Exchange, 106 Ariz. 280, 282, 475 P.2d 264, 266 (1970), in which our supreme court rejected a UIM policy offset provision for medical paid under an automobil......
-
Webb v. State Farm Mut. Auto. Ins. Co., 25659
...Law. (In accord: Tuggle v. Government Employees Insurance Co. (Fla.), 207 So.2d 674, 675(1); Bacchus v. Farmers Insurance Group Exchange, 106 Ariz. 280, 475 P.2d 264, 267(1, 2); Stephens v. Allied Mutual Insurance Company, 182 Neb. 562, 156 N.W.2d 133, 139(11); all of which construe uninsur......