Dutta v. State Farm

• Decision Date: 10 April 2001
• Docket Number: No. 85,85
• Citation: 363 Md. 540,769 A.2d 948
• Parties: Sisir K. DUTTA v. STATE FARM INSURANCE COMPANY.
• Court: Maryland Court of Appeals

769 A.2d 948

363 Md. 540

Sisir K. DUTTA v. STATE FARM INSURANCE COMPANY.

No. 85, Sept. Term, 2000.

Court of Appeals of Maryland.

April 10, 2001.

Reconsideration Denied June 1, 2001.

Brian R. Frank, Rockville, on brief, for petitioner.

Leonard C. Redmond, III, Baltimore, on brief, for respondent.

Argued before BELL, C.J., and ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

CATHELL, Judge.

In March of 1997, petitioner, Dr. Sisir K. Dutta, had at least two insurance policies—one was an automobile policy with respondent, State Farm Mutual Automobile Insurance Company (State Farm), and the other was a health insurance policy with an HMO, NYLCare. After being involved in an automobile accident on March 27, 1997, petitioner received medical treatment, which was initially paid for by NYLCare. Petitioner filed a claim against the third party driver's liability insurer. Upon receiving a settlement check for this claim, petitioner reimbursed NYLCare pursuant to the HMO's alleged right of subrogation included in petitioner's policy agreement with NYLCare. Petitioner then submitted a claim for the amount paid for his treatment under his Personal Injury Protection (PIP) coverage, which was subsequently denied by State Farm. Petitioner presented one question to this Court for which we granted certiorari. We rephrase the question in order to properly address the issues presented:

Does the PIP coverage at issue require State Farm to pay for petitioner's medical treatment, even though petitioner's health care provider and/or a third party, tortfeasor, actually paid the medical bills?[¹]

We answer the question in the affirmative. We hold that the Circuit Court erred in finding that the expenses arising out of the medical treatment petitioner received at Suburban Hospital, which were initially paid for by NYLCare, were not an incurred expense for which petitioner was entitled to recover from his Personal Injury Protection coverage. We hold that the expense was incurred. Accordingly, we reverse the judgment of the Circuit Court for Montgomery County.

I. Facts²

On March 27, 1997, petitioner was injured when his vehicle was involved in an accident in Washington, D.C. At the time of the accident, petitioner was insured by a personal automobile policy through State Farm, which included PIP coverage in the amount of $10,000. He was also a member of an HMO, NYLCare, through his employer, Howard University. Petitioner underwent examination and treatment for his injuries on the day of the accident in the Emergency Room at Suburban Hospital.³ Upon being treated at the hospital, he signed a "Consent to Treat" form, which included a clause entitled "Agreement to Pay for Services."⁴

Approximately one to two months prior to the automobile accident, petitioner had suffered a heart attack for which he had received medical treatment. Because of this prior treatment, Suburban Hospital had his HMO information already on record. Unbeknownst to petitioner, Suburban Hospital and the other medical providers offering services at Suburban Hospital, submitted a claim for payment to petitioner's HMO, NYLCare, in the amount of $941.84, which was subsequently paid by the HMO to the hospital.

On or about May 8, 1997, petitioner filed a claim with State Farm for payment of expenses relating to the treatment he received at Suburban Hospital for injuries sustained by him in the accident. State Farm paid $1995.00, an amount that constituted the copayment owed by petitioner to NYLCare under his HMO membership agreement; however, it withheld reimbursement of $941.84, the amount in excess of his copay for the emergency room treatment at Suburban Hospital, because that amount had been paid by NYLCare pursuant to the terms of the HMO membership agreement.

By letter dated December 12, 1997, Healthcare Recoveries, Inc. (Healthcare)⁵ provided petitioner's attorney with an "updated Consolidated Statement of the total benefits paid/incurred by [his] client's Health Plan to date." The statement attached to the letter indicated a balance due in the amount of $941.84, a claim for services provided when petitioner was treated at the Suburban Hospital emergency room on March 27, 1997. By letter dated December 19, 1997, petitioner's attorney again requested benefits from State Farm and forwarded State Farm a copy of the letter from Healthcare accompanied by an earlier letter dated September 2, 1997, in which Healthcare requested reimbursements from petitioner for payments made by NYLCare to Suburban Hospital. State Farm advised petitioner that it would not pay him the $941.84 under his PIP coverage.

Petitioner had also filed a claim against the third party driver's liability insurer with regard to his bodily injuries. That case was settled. In connection with the settlement against the third party driver, NYLCare notified petitioner's attorney of petitioner's alleged subrogation responsibilities under the Member Agreement. On December 29, 1997, petitioner, through his attorney, paid NYLCare $941.84 pursuant to the subrogation clause of the Member Agreement.⁶

On March 22, 1999, having never received any funds from State Farm in respect to PIP coverage and almost two years after the injuries giving rise to the treatment costs were incurred, petitioner filed an action against State Farm in the District Court of Maryland sitting in Montgomery County, alleging that State Farm had failed to comply with the Personal Injury Protection provisions contained in petitioner's policy. State Farm filed a Notice of Intention to Defend and Demand Proof denying liability. The District Court awarded judgment in the amount of $941.84 plus pre-judgment interest of $494.55 and costs of $28.20 in favor of petitioner.

On January 13, 2000, State Farm filed a Notice of Appeal pursuant to Maryland Rule 7-104 and this matter was transferred to the Circuit Court for Montgomery County. State Farm filed a Motion to Dismiss or in the Alternative for Judgment in which it argued: (1) that NYLCare was statutorily prohibited from recovering medical expenses from its members in excess of deductibles or copays and, therefore, petitioner did not incur medical expenses; (2) that to require PIP insurers to provide benefits for covered services contravenes the express intention of the Legislature; and (3) that State Farm is not statutorily obligated to coordinate its benefits with HMOs. Petitioner filed a Response to the Motion to Dismiss or for Judgment as well as a Motion for Summary Judgment in which he argued that: (1) NYLCare was entitled to reimbursement; (2) State Farm was both contractually and statutorily required to pay petitioner for the expenses he incurred as a result of his payment to NYLCare; and (3) the Maryland Legislature, by enacting Senate Bill 903 in 2000, allowed for the HMO to recover, through subrogation, monies paid to petitioner by a third party.

On July 10, 2000, the Circuit Court granted the Motion for Judgment filed by State Farm. In doing so, the Circuit Court said:

Okay. I have had occasion to review all of the pleadings and to consider the arguments of Counsel, and while it does appear to me that it is somewhat unfair I have to say that I end up being more persuaded by the logic of Mr. Redmond's [State Farm's attorney] arguments in that I don't believe that the expense in this case was an expense that Dr. Dutta incurred within the meaning of the statute, and therefore, I do not believe that there is an obligation for the PIP carrier to pay it.

....

My sympathies are with you, but logic tells me that Mr. Redmond is probably correct and that this is what the legislature had intended.

As we indicated earlier, we disagree and, therefore, reverse the judgment of the Circuit Court.

II. Analysis

To resolve the issue before this Court, we must ascertain whether the cost of the emergency treatment petitioner received while at Suburban Hospital was an incurred expense for which petitioner was entitled to recover from his PIP coverage through State Farm.⁷ Our decision is controlled by Maryland Code (1995, 1997 Vol.), Title 19, subtitle 5 of the Insurance Article,⁸ and the express language of petitioner's State Farm policy.

a. Background

Before discussing the issue at bar, we feel it is helpful to define the purpose behind the passage of PIP legislation in Maryland. PIP coverage was first enacted by the Maryland Legislature in 1972 in order "to offer those injured in an `incident' with an automobile to have `quick' no-fault compensation for medical bills and lost wages up to a minimum amount, generally $2,500." Robert H.B. Cawood, Personal Injury Protection—A Primer, 2 (MICPEL) (2000). We said in Insurance Commissioner v. Property & Casualty Insurance Guaranty Corporation, 313 Md. 518, 532, 546 A.2d 458, 465 (1988) "that one of subtitle 35's[⁹] fundamental aims is the speedy provision of PIP benefits without the lengthy delays entailed by tort litigation. Such prompt payment is a basic purpose of no-fault insurance generally." We have additionally noted on numerous occasions that "[t]he primary purpose [behind requiring PIP coverage] is to assure financial compensation to victims of motor vehicle accidents without regard to the fault of a named insured or other persons entitled to PIP benefits." Pennsylvania Nat'l Mut. Casualty Ins. Co. v. Gartelman, 288 Md. 151, 154, 416 A.2d 734, 736 (1980); see Smelser v. Criterion Ins. Co., 293 Md. 384, 393, 444 A.2d 1024, 1029 (1982)

("The purpose of [PIP legislation was] to put a limited amount of money in the hands of an injured individual under certain circumstances without regard to whether another person is liable for the injuries which the claimant sustained."); see also Bishop v. State Farm, 360 Md. 225, 230, 757 A.2d 783, 785 (2000); Clay v. GEICO, 356 Md. 257, 265-66, 739 A.2d 5, 10 (1999); Tucker v. Fireman's Fund Ins. Co., 308 Md. 69, 75-76, 517 A.2d 730, 733 (1986). Additionally, in Insurance Commissioner, ...