Indiana Ins. Guar. Ass'n v. Blickensderfer

• Decision Date: 13 November 2002
• Docket Number: No. 20A05-0110-CV-448.,20A05-0110-CV-448.
• Citation: 778 N.E.2d 439
• Parties: INDIANA INSURANCE GUARANTY ASSOCIATION, Appellant-Defendant, v. Janelle BLICKENSDERFER, D.O., and Alan H. Bierlein, M.D., Appellees-Plaintiffs.
• Court: Indiana Appellate Court

778 N.E.2d 439

INDIANA INSURANCE GUARANTY ASSOCIATION, Appellant-Defendant, v. Janelle BLICKENSDERFER, D.O., and Alan H. Bierlein, M.D., Appellees-Plaintiffs.

No. 20A05-0110-CV-448.

Court of Appeals of Indiana.

November 13, 2002.

Andrew W. Hull, Angela D. Hiott, Hoover Hull Baker & Heath, LLP, Indianapolis, IN, Attorneys for Appellant.

Edward A. Chapleau, South Bend, IN, Attorney for Appellee, Janelle Blickensderfer, D.O.

Dane L. Tubergen, Mark W. Baeverstad, Hunt Suedhoff Kalamaros, LLP, Fort Wayne, IN, Attorneys for Appellee, Alan H. Bierlein, M.D.

OPINION

BARNES, Judge.

Case Summary

The Indiana Insurance Guaranty Association ("IIGA") appeals the judgment entered in favor of Drs. Janelle Blickensderfer and Alan Bierlein (collectively "doctors"). This case involves a question of first impression regarding the application of the Indiana Insurance Guaranty Law of 1971 ("the Act"), found at Indiana Code Section 27-6-8-1 et seq. We affirm.

Issues

We restate the issues presented by IIGA as follows:

I. whether the trial court erroneously held that proceeds from health insurance policies do not reduce IIGA's obligation to pay under Indiana Code Section 27-6-8-11(a);¹ and

II. whether the trial court erred in its determination that IIGA owes a continuing duty to defend the doctors under Indiana Code Section 27-6-8-7(a)(ii) of the Act.

Facts

IIGA is a statutorily-created entity that operates under the Act to "provide a mechanism for the payment of claims under certain insurance policies" when certain insurers become insolvent. Ind.Code § 27-6-8-2. Blickensderfer and Bierlein are physicians practicing in Indiana. Each purchased malpractice insurance with limits of $100,000 per occurrence from P-I-E Mutual Insurance Company, which subsequently became insolvent. Each physician was sued for malpractice in unrelated cases, and they sought indemnification and defense from IIGA because of the insolvency of their malpractice carrier. The health insurance provider for each of the claimants paid over $100,000 for expenses resulting from the injuries alleged to have been caused by the malpractice. IIGA refused to defend or indemnify the doctors from the claims asserted against them on the basis of the non-duplication of recovery provisions of Indiana Code Section 27-6-8-11.

The doctors each sought declaratory judgment against IIGA to establish its coverage duties and liabilities, which suits were consolidated. In June 2000, the doctors filed a motion for summary judgment, to which IIGA responded and filed a cross-motion for summary judgment. The trial court denied the motions and tried the matter on July 5, 2001. The trial court entered judgment against IIGA and held that the health insurance benefits paid to the claimants did not reduce the indemnification obligations of IIGA and that IIGA was required to defend the doctors in the medical malpractice claims. The trial court determined in relevant part:

10. [IIGA] reviewed the ... claims and concluded that, because the health insurance providers ... paid [the claimants] more than $100,000.00 in health insurance benefits, the non-duplication of recovery provision ... exhausted the liability insurance limits of [IIGA]. In reliance upon this non-duplication of recovery provision, [IIGA] refused to provide a defense or indemnify [the doctors]....

13. ... State courts which have interpreted insurance guaranty law have held that non-duplication of recovery provisions, such as the one found at Indiana Code § 27-6-8-11, do not apply to health insurance benefits.... The non-duplication of recovery provision does not apply to health insurance benefits paid to a claimant because health insurance benefits are forms of insurance expressly excepted by the Model Guarantee [sic] Act. [Alabama Insurance Guaranty Assoc., 514 So.2d 1000, 1002 (Ala.1987).] Similarly, Indiana Code § 27-6-8-3 provides that "This chapter applies to all kinds of direct insurance except life, annuity, health, or disability insurance."

14. ... In a situation like the one presented in this case, where a claimant receives health insurance benefits, which are expressly excepted, and files a medical malpractice claim against an insured health care provider, the claimant will not receive a windfall judgment or obtain double recovery. The purpose of guaranty law is best fulfilled by excluding health care benefits from the non-duplication of recovery provision of the statute. To ignore this exclusion would defeat the entire purpose of guaranty law in that insured health care providers would get no relief and would suffer extreme financial loss in the event their insurers became insolvent.

Appendix pp. 17-18. IIGA now appeals.

Analysis

At the outset, we note that we apply a de novo standard of review to this case because it involves a pure question of statutory interpretation; the facts are not in dispute. "A question of statutory interpretation is a matter of law to be determined by this court. We are not bound by a trial court's legal interpretation of a statute and need not give it deference. We independently determine the statute's meaning and apply it to the facts before us." Perry-Worth Concerned Citizens v. Board of Comm'rs of Boone Co., 723 N.E.2d 457, 459 (Ind.Ct.App.2000) (citations omitted), trans. denied.

I. Health Insurance Payments

Indiana adopted the Act, with modifications, from the Model Insurance Guaranty Act ("Model Act"). The Model Act has been adopted in one form or another in every state. The purpose of the Act is:

to provide a mechanism for the payment of claims under certain insurance policies to avoid excessive delay in payment and to avoid excessive financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, and to provide an association to assess the cost of this protection among insurers.

I.C. § 27-6-8-2.² The Act attempts to achieve its stated purpose of avoiding excessive financial loss to claimants and/or policyholders by creating an "association" of "member insurers." See I.C. §§ 27-6-8-4(2), 27-6-8-4(6) & 27-6-8-5.

The essence of IIGA's argument is that because the health insurance companies of the claimants allegedly injured by the malpractice of the doctors had already paid more than $100,000 each for medical expenses, IIGA was not responsible for any further coverage under the Act. Resolution of this case turns on the interpretation of Indiana Code Section 27-6-8-11, which provides:

(a) Any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer which is also a covered claim, shall be required to exhaust first the person's right under the policy. Any amount payable on a covered claim under this chapter shall be reduced by the amount of recovery under the insurance policy.

The express language of the statute and the rules of statutory construction apply. See ISTA v. Board of School Comm'rs of Indianapolis, 693 N.E.2d 972, 974 (Ind.Ct. App.1998). Where the language of the statute is clear and unambiguous, there is nothing to construe. However, where the language is susceptible to more than one reasonable construction, the statute must be construed to give effect to the legislature's intent. Civil Rights Comm'n v. County Line Park, Inc., 738 N.E.2d 1044, 1048 (Ind.2000). The statute is examined as a whole, and courts should avoid excessive reliance on a strict literal meaning or the selective reading of individual words. Id. The legislature is presumed to have intended the language used in the statute to be applied logically and not to bring about an unjust or absurd result. Id. Further, we are "compelled to ascertain and execute legislative intent in such a manner as to prevent absurdity and difficulty and prefer public convenience. In so doing, we are required to keep in mind the objects and purposes of the law as well as the effect and repercussions of such a construction." Koppin v. Strode, 761 N.E.2d 455, 461 (Ind.Ct.App.2002) (quoting Spears v. Brennan, 745 N.E.2d 862, 869-70 (Ind. Ct.App.2001) (citation omitted)).

IIGA argues that the operative words of the statute are: "`Any person having a claim against an insurer under any provision in an insurance policy ... shall be required to exhaust first the person's right under the policy.'" Appellant's Br. p. 13 (quoting Indiana Code Section 27-6-8-11(a)) (original emphasis). IIGA then argues that the benefits paid by the claimant's health insurance carriers are just such claims as identified by the first sentence of Section 27-6-8-11(a) and that under the second sentence of the section, any amounts that it may owe to the claimants should be reduced by the amount paid as health care benefits by the claimants' health insurance carriers. Because the claimants' health insurance carriers have paid in excess of $100,000 on each claim and because the maximum amount that IIGA would owe on each claim is $100,000, IIGA contends that it has no further obligation to the claimants or to the doctors.

The doctors respond by asserting that IIGA's interpretation of Section 27-6-8-11(a) would lead to an absurd result. Under IIGA's interpretation, the claimants must exhaust any claim they would have under any policy. The doctors posit that in a scenario where a claimant had a separate insurance claim pending for an unrelated loss such as automobile property damage, IIGA's interpretation would require the claimant to exhaust that claim and credit IIGA those unrelated insurance proceeds against any amounts payable by IIGA to the claimants. The doctors claim IIGA has pointed to no language of the statute that would permit a different outcome based on IIGA's interpretation.

IIGA maintains that under the so-called last antecedent rule, the phrase "which is also a covered claim" modifies "other than a policy of an insolvent insurer." Reply Br. p. 10. The doctors assert that...