Christy v. Mercury Cas. Co.

• Decision Date: 02 March 2012
• Docket Number: Record No. 102138.
• Citation: 722 S.E.2d 256,283 Va. 542
• Parties: Kevin CHRISTY v. MERCURY CASUALTY COMPANY.
• Court: Virginia Supreme Court

283 Va. 542

722 S.E.2d 256

Kevin CHRISTY

v.MERCURY CASUALTY COMPANY.

Record No. 102138.

Supreme Court of Virginia.

March 2, 2012.

J. Randall Perkins (Daniel H. Caldwell; McElroy, Hodges, Caldwell & Thiessen, on briefs), for appellant.

Mark K. Cathey (Glenn Robinson & Cathey, on brief), for appellee.

Present: KINSER, C.J., LEMONS, GOODWYN, MILLETTE, MIMS, and POWELL, JJ., and KOONTZ, S.J.

OPINION BY Senior Justice LAWRENCE L. KOONTZ, JR.

In this appeal, we consider whether the circuit court correctly determined that an exclusion in an automobile insurance policy regarding coverage for medical expenses barred the policyholder from receiving any payment for medical expenses because a portion of those expenses had been paid by workers' compensation benefits.

BACKGROUND

On November 23, 2005, Kevin Christy, a police officer in the Town of Abingdon (“the Town”), was a passenger in a Washington County Sheriff's vehicle being driven by a sheriff's deputy. The sheriff's vehicle was involved in an accident in which it was struck from behind while stopped. Christy suffered injuries as a result of this accident. The parties disagree as to the extent of those injuries. It is not disputed, however, that this accident arose out of and occurred during the course of Christy's employment by the Town.

Christy was initially treated for his injuries in the emergency room of Johnston Memorial Hospital in Abingdon on November 24, 2005. Thereafter, Christy came under the care of Dr. Timothy G. McGarry of Abingdon Orthopedic Associates for joint pain in Christy's neck and left shoulder. Dr. McGarry referred Christy to Dr. Richard Mullens of Abingdon Radiological Services, who administered an MRI examination of Christy's neck and spine on February 14, 2006 at Johnston Memorial Hospital.

In a follow-up visit on March 1, 2006, Dr. McGarry determined that Christy had a tear in the labrum of his left shoulder, commonly called a “SLAP tear,” that required surgery.¹ Dr. McGarry was of opinion that Christy's SLAP tear was caused by the November 23, 2005 accident and was not a pre-existing condition.

At the time of Christy's accident, the Town obtained its workers' compensation coverage through the Virginia Municipal League Insurance Programs (“VMLI”). At the time of his surgery, Christy received his primary health insurance through a physician-hospital organization (“PHO”) administered by John Deere Health Insurance, and subsequently by United Health Care Plan of the River Valley, Inc. Christy was also insured under an automobile liability insurance policy issued by Mercury Casualty Company which provided coverage for his two private vehicles. The Mercury Casualty policy included coverage for “ medical expense benefits as a result of bodily injury caused by an accident and arising out of the ... use of a motor vehicle as a motor vehicle” with a limit of coverage of $5000 per person for each vehicle. This policy contained a provision for the exclusion of coverage which, in relevant part, provided that the insurance does not apply “to bodily injury sustained by any person to the extent that benefits therefor[ ] are in whole or in part payable under any [workers'] compensation law.”

For purposes of our resolution of this appeal, it will suffice to briefly summarize the total medical expenses that Christy incurred, including those for the treatment of his shoulder, and the payments made by the various insurance providers after contract adjustments accepted by the medical service providers. The total medical expenses incurred by Christy amounted to $16,564.00. VMLI paid $1,815.18 on claims submitted by Johnston Memorial Hospital for Christy's emergency room visit, the MRI examination performed at the hospital, Dr. Mullens' claim for evaluating this MRI, and for Dr. McGarry's claim for Christy's initial visit. However, VMLI denied the claims for the March 24, 2006 surgery submitted by Johnston Memorial Hospital and Dr. McGarry, asserting that the SLAP tear was a pre-existing condition and not compensable under the workers' compensation policy. Christy concedes that he “did not pursue a [workers' compensation] claim” against VMLI. The balance of $13,458.27, after applying contract adjustments, for the claims of the hospital and Dr. McGarry for the shoulder surgery was ultimately paid or otherwise resolved by Christy and Christy's PHO.²

On April 20, 2009, Christy submitted a claim to Mercury Casualty regarding his medical expenses incurred following the November 23, 2005 automobile accident, asserting that he was entitled to payment under the medical expenses coverage of his policy. On June 12, 2009, Mercury Casualty denied the claim, asserting the application of the exclusion to coverage provision of the policy and maintaining that “[t]he bills in this case were, at least in part, ‘payable’ under the workers' compensation law.”

On September 4, 2009, Christy filed a warrant in debt against Mercury Casualty in the Washington County General District Court seeking $10,000 in contract damages. He obtained a judgment for $9,500 and attorney's fees. Mercury Casualty appealed this judgment to the Circuit Court of Washington County.

The case was submitted to the circuit court on a joint stipulation of facts and supporting briefs. Following oral argument of the parties, the court issued an opinion letter dated April 29, 2010, in which it concluded that based on the unambiguous language of the exclusion, “payment of [workers'] compensation, even in part, as a result of this accident triggers the exclusion and precludes payment” by Mercury Casualty of the portion of Christy's medical expenses not paid by VMLI. By order dated May 25, 2010, the court entered judgment consistent with this opinion, but retained jurisdiction over the matter to consider a motion for reconsideration filed by Christy prior to entry of the order. By letter opinion thereafter, the court affirmed its prior ruling, and entered final judgment granting summary judgment for Mercury Casualty on August 12, 2010. We awarded Christy this appeal.

DISCUSSION

The dispositive issue in this appeal is whether the language of the exclusion in Mercury Casualty's policy bars recovery when its insured suffers injury in a work-related motor vehicle accident and any portion of the medical expenses incurred as a result are paid by a workers' compensation carrier. Because this issue was decided by the circuit court based on stipulated facts and involves the interpretation of a written contract, we apply a de novo standard of review. Farmers Ins. Exch. v. Enter. Leasing Co., 281 Va. 612, 617, 708 S.E.2d 852, 855 (2011); Johnson v. Hart, 279 Va. 617, 623, 692 S.E.2d 239, 242 (2010).

Our analysis begins with the undisputed fact that the November 23, 2005 accident arose out of and occurred during the course of Christy's employment. As such, any injury Christy sustained in the accident would be subject to coverage under the Workers' Compensation Act.Code § 65.2–300. However, if an employee suffers from a pre-existing condition at the time of the covered accident, compensation will only be payable for expenses incurred if the accident “accelerates or aggravates [the] pre-existing condition.” Ohio Valley Construction Co. v. Jackson, 230 Va. 56, 58, 334 S.E.2d 554, 555 (1985); see also Combs v. Virginia Elec. & Power Co., 259 Va. 503, 511, 525 S.E.2d 278, 283 (2000); Olsten of Richmond v. Leftwich, 230 Va. 317, 319–20, 336 S.E.2d 893, 895 (1985). In the present case, VMLI, the workers' compensation carrier, paid only a portion of Christy's claimed medical expenses after concluding that Christy's SLAP tear was a pre-existing condition. ³

Christy stresses that he does not challenge the validity of the exclusion in Mercury Casualty's policy. Rather, he maintains that the plain language of the exclusion means that it applies only “to the extent” some portion of his medical expenses were paid as a workers' compensation benefit, without regard to whether he might have successfully pursued a claim against VMLI for all the medical expenses. Thus, he contends that the exclusion acts only to offset any amount actually paid by VMLI for his medical expenses as a workers' compensation benefit. Mercury Casualty responds that the language of the exclusion is clear that no coverage is available under its policy if any portion of the medical expenses incurred is subject to workers' compensation, even if those expenses are not actually paid by the employer's workers' compensation carrier.

In Baker v. State Farm Mutual Automobile Insurance Co., 242 Va. 74, 405 S.E.2d 624 (1991) and again in Scarbrow v. State Farm Mutual Automobile Insurance Co., 256 Va. 357, 504 S.E.2d 860 (1998), we addressed nearly identical exclusions as the one at issue in this case. In Baker, a bus driver who was injured in an automobile accident while in the course of his employment sought to recover related medical expenses under the medical expenses coverage of his personal automobile liability insurance. We said that the action was intended “to recover a portion of the medical expenses” Baker incurred as a result of his injury in a work-related accident. Baker, 242 Va. at 75, 405 S.E.2d at 625. In the present case, it was a point of contention in the circuit court and on appeal as to whether this statement meant that only a portion of these expenses actually had been covered by workers' compensation.

We have reviewed the record in Baker and have determined that all of the medical expenses for the injury arising from the work-related accident in that case were paid by the workers' compensation carrier. It was because these...