Healthsouth Rehab. Hosp. of N.M., Ltd. v. Brawley

• Decision Date: 16 December 2015
• Docket Number: No. 33,593.,33,593.
• Citation: 369 P.3d 27
• Parties: HEALTHSOUTH REHABILITATION HOSPITAL OF NEW MEXICO, LTD., d/b/a HealthSouth Rehabilitation Hospital, Plaintiff, v. Terry A. BRAWLEY, individually, and Terry A. Brawley as personal representative of the Estate of Joye Brawley, deceased, Defendants/Third–Party Plaintiffs/Appellants, and The Board of Regents of New Mexico Institute of Mining and Technology, Third–Party Defendant/Appellee.
• Court: Court of Appeals of New Mexico

369 P.3d 27

HEALTHSOUTH REHABILITATION HOSPITAL OF NEW MEXICO, LTD., d/b/a HealthSouth Rehabilitation Hospital, Plaintiff,

v.Terry A. BRAWLEY, individually, and Terry A. Brawley as personal representative of the Estate of Joye Brawley, deceased, Defendants/Third–Party Plaintiffs/Appellants,andThe Board of Regents of New Mexico Institute of Mining and Technology, Third–Party Defendant/Appellee.

No. 33,593.

Court of Appeals of New Mexico.

Dec. 16, 2015.

Certiorari Denied, March 30, 2016, No. S-1-SC-35690.

Steven J. Vogel, Corrales, NM, Janice K. Woods, Socorro, NM, for Defendants/Third–Party Plaintiffs/Appellants.

Rodey, Dickason, Sloan, Akin & Robb, P.A., Jocelyn Drennan, Edward Ricco, Albuquerque, NM, for Third–Party Defendant/Appellee.

OPINION

BUSTAMANTE

, Judge.

{1} Third–Party Plaintiff Terry A. Brawley was severely injured in an accident while riding his all-terrain vehicle. He sought coverage under a health plan provided by his wife's employer, New Mexico Institute of Mining and Technology (NM Tech). NM Tech denied Brawley's claims on the ground that Brawley's injuries were sustained while Brawley was under the influence of alcohol and hence his injuries were excluded from coverage under the terms of the health plan. After a bench trial, the district court found that NM Tech had breached its statutory duty to properly investigate the claims, but also found that Brawley's injuries were not covered by the health plan because Brawley was under the influence of alcohol at the time of the accident and that the influence of alcohol was "a cause" of the accident. Brawley appeals, arguing that the district court and NM Tech erred in relying on a certain blood alcohol content report and that his claims should be covered under the "concurrent cause" or "independent intervening cause" doctrines. We conclude that Brawley's evidentiary arguments do not present reversible error and that Brawley failed to preserve his arguments as to causation. We therefore affirm.

BACKGROUND

{2} On the evening of August 1, 2009, Brawley was drinking in the Mountain View Bar in Lemitar, New Mexico. One of the last to leave, Brawley told the bartender, "my ride is here" as he left the bar. This statement was consistent with Brawley's testimony, corroborated by other witnesses, that he customarily had friends or colleagues drive him home after he had been drinking. Later that night, Brawley was found unconscious near his all-terrain vehicle (ATV) on an unlighted road between the bar and his home. Brawley apparently had been thrown off the ATV when he encountered a "wash[ ]out" in the road measuring fifteen feet wide and five feet deep. He suffered extensive injuries, and after being treated for several hours at Socorro General Hospital, was airlifted to the University of New Mexico Hospital in Albuquerque, New Mexico. In total, Brawley was treated at four different hospitals over a period of approximately fourteen weeks. He incurred over $500,000 in charges for this care.

{3} Brawley was provided medical benefits through his wife's employer, Defendant NM Tech. The self-funded Health Benefit Plan (the Plan) was administered for NM Tech by a third-party, HCH Administration (HCH), although NM Tech retained the right of final determination as to any claim made under the Plan and had the power to accept or reject HCH's recommendations. The Plan was subject to the provisions of the New Mexico Insurance Code, NMSA 1978, §§ 59A–1–1

to –61–6 (1978, as amended through 2014). The Plan provides that

no benefits are payable under [the] Plan for expenses incurred or in connection with ... injury or sickness sustained ... while under the influence of alcohol ... [provided that] there is a direct relationship between [being under the influence of alcohol] and the sickness or injuries sustained.

This provision also states that "[f]or purposes of this section, a person shall be presumed to be under the influence of alcohol if his blood alcohol level equals or exceeds the limit for driving under the influence of alcohol as determined by the law of the state in which the [i]njury occurred."

{4} Based on this exclusion, called the "alcohol exclusion" by the parties, HCH denied the Brawleys' claims related to the accident. In its decision to deny the claims, HCH relied on "the police report and preliminary medical records only." Neither HCH nor NM Tech contacted Brawley or his wife (collectively, the Brawleys) or the investigating police officer or emergency medical personnel at the accident scene prior to denying the claims. No one from HCH or NM Tech went to the accident scene to investigate the accident. Finally, HCH and NM Tech did not interview the Mountain View Bar bartender or patrons of the bar, analyze the circumstances of the blood test upon which they relied to assure its reliability, talk with Brawley's medical care providers, or follow up on the issuance and later dismissal of the DWI citation issued to Brawley after the accident. The district court found that these steps would have constituted a reasonable inquiry under the circumstances.

{5} The present matter was initiated when HealthSouth Rehabilitation Hospital of New Mexico, Ltd., d/b/a HealthSouth Rehabilitation Hospital (HealthSouth), sued the Brawleys to recover the amount of their bills unpaid by NM Tech. The Brawleys filed an answer and third-party complaint naming HealthSouth and NM Tech as third-party defendants. The complaint alleged breach of contract, bad faith, violation of the Insurance Code, and violation of the Unfair Practices Act, NMSA 1978, §§ 57–12–1

to –26 (1967, as amended through 2009). The Brawleys also sought a declaratory judgment establishing that their claims are covered under the Plan.

{6} HealthSouth was dismissed from suit based on a settlement agreement and the matter proceeded to a bench trial against NM Tech. At trial, the Brawleys tendered testimony by an accident reconstructionist who opined that the washout was the sole cause of the accident and an insurance expert who testified that NM Tech failed to properly investigate the accident and, more specifically, whether Brawley's alleged intoxication had a "direct relationship" to the accident. NM Tech presented testimony by its own insurance expert who testified that HCH and NM Tech properly denied the claims based on a medical report showing Brawleys' blood alcohol level and that no further investigation was required. The parties stipulated that the amount remaining unpaid was $308,391.89.

{7} The district court entered a number of findings of fact. First, it found that "[a] blood test performed some time after the crash, and after ... Brawley had been hospitalized, indicated that he had a blood alcohol level nearly double the New Mexico threshold for a presumption of intoxication" and that "[t]his was confirmed by the testimony of [NM Tech's witness]." As to the alcohol exclusion, the district court found that, although the phrase "direct relationship" is not defined in the Plan, "[t]he parties have uniformly and consistently represented to the [c]ourt, and to each other, that the ‘direct relationship’ [required by the provision] is functionally the same as causation." The district court rejected the expert testimony to the effect that the washout was the sole cause of the accident and found that "Brawley's alcohol use on the night of [the accident] was a cause of the ATV crash in which he was injured, and which generated the medical bills at [the] root of this litigation." As discussed above, the district court found that neither HCH nor NM Tech undertook a reasonable investigation into the Brawleys' claims. It also found that the Brawleys "did not suffer any actual damages as a result of NM Tech's ... lack of an appropriate thorough and complete investigation into the [accident] ... prior to the denial of medical benefits at issue." See § 59A–16–30 (stating that a person "who has suffered damages as a result of a violation of [the Insurance Code] by an insurer or agent is granted a right to bring an action in district court to recover actual damages"). The district court did not enter findings of fact specifically addressing the Brawleys' common law bad faith claim or request for punitive damages. The Brawleys make no argument on appeal as to the district court's failure to address their common law bad faith claim or their request for punitive damages under that claim.¹

{8} Based on its findings, the district court concluded that NM Tech "violated [t]he Insurance Code by failing to have a licensed adjustor[,] and by failing to adopt and implement a reasonable plan for the appropriate investigation of claims in general and as to the Brawley claims in specific." Second, the court concluded that "[n]otwithstanding [NM Tech's] violation of the Insurance Code," the denial of benefits to the Brawleys was appropriate because there was sufficient evidence that the accident bore a "direct relationship" to Brawley's "ingestion of alcohol" and was otherwise supported by sufficient evidence. The court entered judgment in favor of NM Tech.

DISCUSSION

{9} On appeal, the Brawleys argue that the judgment must be reversed for two reasons. First, they argue that it was error for NM Tech and/or the district court to rely on an inadmissible document as evidence that Brawley was under the influence of alcohol and that, without this document, there was insufficient evidence that Brawley was under the influence of alcohol at the time of the accident. Second, they argue that, even if alcohol use and resultant impairment was a cause of the accident as the district court found, the district court erred in its application of the law of causation in insurance cases. We address each of the Brawleys' arguments in turn.

A. The District Court's Admission of Exhibit B is Not Reversible Error

{10} "We review the admission or exclusion of evidence for abuse of discretion." Progressive Cas. Ins. Co. v. Vigil, 2015–NMCA–031, ¶ 13, 345 P.3d 1096

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