House v. American Family Mut. Ins. Co.

• Court: Kansas Supreme Court
• Writing for the Court: SIX; ALLEGRUCCI
• Citation: House v. American Family Mut. Ins. Co., 251 Kan. 419, 837 P.2d 391 (Kan. 1992)
• Decision Date: 10 July 1992
• Docket Number: No. 66481,66481
• Parties: James P. HOUSE, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellee.

Page 391

837 P.2d 391

251 Kan. 419

James P. HOUSE, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellee.

No. 66481.

Supreme Court of Kansas.

July 10, 1992.

Syllabus by the Court

1. The fundamental rule of statutory construction is that the intent of the legislature governs. When construing a statute, a court should give words in common usage their natural and ordinary meaning.

2. K.S.A. 40-3110(a) clearly states that personal injury protection benefits are primary; however, benefits payable under the Workers Compensation Act shall be credited against personal injury protection benefits.

3. Insurance policies are to be enforced as written so long as the terms do not conflict with pertinent statutes or public policy. Where terms are ambiguous, the policy shall be construed to mean what a reasonable person in the position of the insured would have understood them to mean. A policy is not ambiguous, however, unless there is genuine uncertainty as to which of two or more possible meanings is proper.

4. The plain meaning of K.S.A. 40-3110(a) and the reduction of Personal Injury Protection benefits language in the auto insurance policy are discussed herein. If the intent of the Kansas Legislature was to make workers compensation benefits primary, but to require the payment of any remaining uncompensated losses by auto insurers as excess coverage, that intent would be apparent somewhere in the language of the pertinent statutes. We find no suggestion that any such result is expected or intended.

Kathryn D. Meyers, of Bryan, Lykins & Hejtmanek, P.A., Topeka, argued the cause, and John J. Bryan, of the same firm, was with her on the briefs, for appellant.

Steven R. Fabert, of Fisher, Patterson, Sayler & Smith, Topeka, argued the cause, and was on the brief, for appellee.

SIX, Justice:

This is a first-impression statutory interpretation case. The statute in question is K.S.A. 40-3110(a) (personal injury protection [PIP] benefits under no-fault auto insurance credited by workers compensation benefits paid). The crafting of a resolution requires the blending of statutory and insurance policy references to PIP payments and workers compensation benefits. Our resolution is linked to legislative intent and the language of the insurance policy.

The district court entered summary judgment for American Family Mutual Insurance Company (American Family), James House's auto insurance carrier. The Court of Appeals affirmed in an unpublished opinion filed December 13, 1991. 822 P.2d 80.

We granted House's petition for review.

The issue is whether, under K.S.A. 40-3110(a), House is entitled to PIP benefits from his carrier, American Family. Is the statutory credit for workers compensation benefits to be applied to the total wage loss, i.e., House's pre-accident monthly income, or to the maximum PIP benefits payable under the policy? We endorse the latter, affirming the district court and the Court of Appeals.

Facts

House was injured in a vehicle accident in the course of his employment as a bus driver. He received workers compensation benefits, including $983.67 per month for lost wages.

His average monthly income before the accident was $1,475.50. There was a difference of $491.83 per month between his wages and his workers compensation benefits.

House's personal automobile policy with American Family included PIP coverage of 85% of lost wages not to exceed $650 per month. The PIP endorsement to the policy provided that the PIP coverage would be reduced by the amount payable for bodily injury under any workers compensation law.

The Parties' Contentions

American Family contends that it has no liability to House for PIP benefits because the amount of his workers compensation benefits exceeds the policy limits, i.e., $983.67 is greater than $650.

House contends that his monthly PIP benefits should be $418.06. $418.06 is 85% of $491.83, which is the difference between his pre-accident monthly income ($1,475.50) and his monthly workers compensation benefits ($983.67).

House also filed suit against the bus company's insurer and Kansas Insurance Guaranty Association; both were eventually dismissed from the action.

Lower Court Rulings

The material facts are not in dispute and the issue before the trial court was a question of law; the case was ripe for summary adjudication. See Patterson v. Brouhard, 246 Kan. 700, 702-03, 792 P.2d 983 (1990).

The district court and the Court of Appeals agreed with American Family's contention, concluding that House was not entitled to PIP benefits because PIP benefits were to be reduced by any workers compensation benefits. The maximum PIP benefits payable under the American Family policy ($650) minus his monthly payment under workers compensation ($983.67) is zero.

As a threshold observation we note that K.S.A. 40-3110(a) provides: "No claim for personal injury protection benefits may be made after two (2) years from the date of the injury." House was injured in 1984; the petition was filed in 1989. American Family raised the statute of limitations as a defense to House's claim. Neither the district court nor the Court of Appeals reached the limitation claim. Because we find that House is not entitled to receive PIP benefits under the policy, there is no need for us to address the issue.

K.S.A. 40-3110(a)

PIP benefits are defined in the Kansas Automobile Injury Reparations Act (no-fault act), K.S.A. 40-3101 et seq., as "disability benefits, funeral benefits, medical benefits, rehabilitation benefits, substitution benefits and survivors' benefits required to be provided in motor vehicle liability insurance policies pursuant to this act." K.S.A.1991 Supp. 40-3103(q). "Disability benefits" are defined to include lost wages. K.S.A.1991 Supp. 40-3103(b). K.S.A. 40-3107(f) provides, in part, that every policy of vehicle liability insurance issued to an owner residing in Kansas shall "include personal injury protection benefits to the named insured ... not exceeding the limits prescribed for each of such benefits, for loss sustained by any such person as a result of injury."

K.S.A. 40-3110(a) provides in part:

"Except for benefits payable under any workmen's compensation law, which shall be credited against the personal injury protection benefits provided by subsection (f) of K.S.A. 40-3107, personal injury protection benefits due from an insurer or self-insurer under this act shall be primary and shall be due and payable as loss accrues, upon receipt of reasonable proof of such loss and the amount of expenses and loss incurred which are covered by the policy issued in compliance with this act." (Emphasis added.)

House's motor vehicle liability insurance policy with American Family contained a PIP endorsement with the following provisions:

"2. Limits of Liability

....

"c. For work loss the maximum amount payable:

(1) Shall not exceed $650 per month for a period of no more than 1 year ...; and

(2) Shall be limited to 85% of any such work loss....

....

"g. Any amount payable by us under this coverage shall be reduced by the amount payable for bodily injury under the workmens' compensation law or disability benefits law or any similar law."

House argues that the purpose of the no-fault act and Kansas case law favoring insureds require us to afford him the greatest possible protection. He cites K.S.A. 40-3102: "The purpose of this act is to provide a means of compensating persons promptly for accidental bodily injury arising out of the ownership, operation, maintenance or use of motor vehicles in lieu of liability for damages to the extent provided herein." As expressions of policy favoring the insured, House relies on Clayton v. Alliance Mutual Casualty Co., 212 Kan. 640, 646, 512 P.2d 507 (1973) (superseded by K.S.A. 40-3108[a], which permits an insurer to disallow "stacking" of certain PIP benefits), and on Van Hoozer v. Farmers Insurance Exchange, 219 Kan. 595, 549 P.2d 1354 (1976) (which set out the rationale for allowing the insured to stack two automobile policies).

In Van Hoozer, we quoted the following from Van Tassel v. Horace Mann Mutual Ins. Co., 296 Minn. 181, 187, 207 N.W.2d 348 (1973):

" 'But if the question must be resolved on the basis of who gets a windfall, it seems more just that the insured who has paid a premium should get all he paid for rather than that the insurer should escape liability for that for which it collected a premium.' " 219 Kan. at 610, 549 P.2d 1354.

Having advanced the quote from Van Tassel as an expression of policy favoring the insured, House denies that he would receive a windfall if the policy and statute were to be interpreted in his favor. Under the American Family policy, in the case at bar, he would not receive more than 85% of the shortfall between his pre-accident income and his workers compensation lost wages benefits.

"The fundamental rule of statutory construction is that the intent of the legislature governs. [Citation omitted.] When construing a statute, a court should give words in common usage their natural and ordinary meaning. [Citation omitted.]" Hill v. Hill, 13 Kan.App.2d 107, 108, 763 P.2d 640 (1988).

K.S.A. 40-3110(a) clearly states that PIP benefits are primary; however, benefits payable under the Workers Compensation Act "shall be credited against" PIP benefits.

The question for resolution is whether the workers compensation credit shall be applied against the total wage loss (pre-accident monthly income) or against the maximum PIP amount payable under the policy.

Both parties cite Egy v. United States Fidelity & Guaranty Co., 8 Kan.App.2d 144, 651 P.2d 954 (1982), aff'd 233 Kan. 234, 661 P.2d 1239 (1983). Egy was injured in an automobile accident. He claimed both workers compensation benefits from his employer's insurance carrier and PIP benefits from his personal automobile insurance carrier. Both insurers refused to pay because it was unclear whether Egy was in the course of employment at...