Jou v. Schmidt, No. 27652 (Haw. App. 6/4/2008), 27652.

• Decision Date: 04 June 2008
• Docket Number: No. 27652.,27652.
• Parties: EMERSON M.F. JOU, M.D., Provider-Appellant, v. J.P. SCHMIDT, Insurance Commissioner, Department of Commerce and Consumer Affairs, State of Hawaii, Appellee-Appellee, and USAA CASUALTY INSURANCE COMPANY, Respondent-Appellee.
• Court: Hawaii Court of Appeals

Page 1

EMERSON M.F. JOU, M.D., Provider-Appellant, v. J.P. SCHMIDT, Insurance Commissioner, Department of Commerce and Consumer Affairs, State of Hawaii, Appellee-Appellee, and USAA CASUALTY INSURANCE COMPANY, Respondent-Appellee.

No. 27652.

Intermediate Court of Appeals of Hawaii.

June 4, 2008.

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT, (CIVIL NO. 05-1-0615).

On the briefs:

Stephen M. Shaw, for Provider-Appellant.

Mark J. Bennett, Attorney General, State of Hawai`i David A. Webber, Deborah Day Emerson, Deputy Attorneys General for Appellee-Appellee.

Randall Y.S. Chung, James H. Monma, (Matsui Chung), for Respondent-Appellee.

SUMMARY DISPOSITION ORDER

WATANABE, Presiding J. FUJISE and LEONARD, JJ.

In this secondary appeal, Plaintiff-Appellant Emerson M.F. Jou, M.D. (Jou) appeals from the Judgment filed in the Circuit Court of the First Circuit (Circuit Court) on November 8, 2005.¹ In a November 8, 2005 Decision and Order, the Circuit Court ruled in favor of Deputy Insurance Commissioner Gordon Ito (Commissioner Ito), for the Department of Commerce and Consumer Affairs of the State of Hawai`i (DCCA), and USAA Casualty Insurance Company (USAA). The Circuit Court affirmed Commissioner Ito's Final Order filed March 10, 2005, that adopted the August 15, 2002 Hearing Officer's Findings of Fact, Conclusions of Law and Recommended Order. Jou filed a timely notice of appeal on December 6, 2005.

After a careful review of the record and the arguments and supporting authorities presented by the parties, we resolve Jou's points of error as follows:

Jou argues that the DCCA and the Circuit Court erred in finding that USAA was not required to issue a formal notice of denial of benefits pursuant to MRS § 431:10C-304(3)(B) after it made both reduced and partial payments on Jou's claims. We agree. See Jou v. Schmidt, No. 27369, 2008 WL 1875163, 9-10 (Hawai`i App., April 29, 2008) (Jou I).

We nevertheless reject Jou's argument that he was entitled to payment from USAA after the applicable policy limits were exhausted.² An insurer's obligation to pay no-fault personal injury protection benefits is outlined under HRS § 431:10C-304(1) (Supp. 1998), which provides in part:

For purposes of this section, the term "personal injury protection insurer" includes personal injury protection self-insurers. Every personal injury protection insurer shall provide personal injury protection benefits for accidental harm as follows:

(1) Except as otherwise provided in section 431:10C-305(d)³, in the case of injury arising out of a motor vehicle accident, the insurer shall pay, without regard to fault, to the provider of services on behalf of the following persons who sustain accidental harm as a result of the operation, maintenance, or use of the vehicle, an amount equal to the personal injury protection benefits as defined in section 431:10C-103.5(a) payable for expenses to that person as a result of the injury:

(A) Any person, including the owner, operator, occupant, or user of the insured motor vehicle;

(B) Any pedestrian (including a bicyclist); or

(C) Any user or operator of a moped as defined in section 249-1; provided that this paragraph shall not apply in the case of injury to or death of any operator or passenger of a motorcycle or motor scooter as defined in section 286-2 arising out of a motor vehicle accident, unless expressly provided for in the motor vehicle policy[.]

(Emphasis added.)

It is well-recognized that an insurer retains the right to limit its liability by the terms of its policy. In Salviejo V. State Farm Fire and Casualty Co., 87 Hawai`i 430, 434-35, 958 P.2d 552, 556-57 (App. 1998), this court held:

Our jurisdiction follows the principle that liability insurers have the same rights as individuals to limit their liability, and to impose whatever conditions they please on their obligation, provided they are not in contravention of statutory inhibitions or public policy.

Id. at 434-35, 958 P.2d at 556-57 (citation and internal quotation marks omitted); see also Crawley v. State Farm Mut. Auto. Ins. Co., 90 Hawaii 478, 484, 979 P.2d 74, 80 (App. 1999) ("the terms of the [insurance] policy should be interpreted according to their plain, ordinary, and accepted sense in common speech unless it appears from the policy that a different meaning is intended") (citations omitted); Foote v. Royal Ins. Co. of Am., 88 Hawai`i 122, 125, 962 P.2d 1004, 1007 (App. 1998) ("so long as the policy is clear and unambiguous, and not in contravention of statutory inhibitions or public policy, the insurance policy should be enforced on its terms") (citation omitted). Thus, as New York courts have also held, where "an insurer has paid the full monetary limits set forth in the policy, its duties under the contract of insurance cease." Hosp. for Joint Diseases v. State Farm Mut. Auto. Ins. Co., 8 A.D.3d 533, 534, 779 N.Y.S.2d 534, 535 (2004).

For these reasons, on the facts presented in this case, we hold that an insurer is not required, under HRS 431:10C-304 (1), to pay benefits once the full amount of the policy limits have been reached. Based on the plain language of HRS § 341:10304(1), USAA's obligation to pay no-fault/PIP benefits to its insureds is clearly limited...