Leingang v. Pierce County Medical Bureau, Inc.

• Decision Date: 27 February 1997
• Docket Number: No. 62222-1,62222-1
• Citation: 131 Wn.2d 133,930 P.2d 288
• Court: Washington Supreme Court
• Parties: Dennis LEINGANG, a Single Man, Respondent, v. PIERCE COUNTY MEDICAL BUREAU, INC., a Washington Corporation, Appellant.

Page 133

131 Wn.2d 133

930 P.2d 288

Dennis LEINGANG, a Single Man, Respondent, v. PIERCE COUNTY MEDICAL BUREAU, INC., a Washington Corporation, Appellant.

No. 62222-1.

Supreme Court of Washington En Banc.

Argued May 15, 1996.

Decided Jan. 23, 1997.

Reconsideration Denied Feb. 27, 1997.

Burgess, Fitzer, Leighton & Phillips, P.S., Timothy R. Gosselin, Tacoma, for appellant

Leggett & Kram, James F. Leggett, Tacoma, for respondent.

GUY, Justice.

In this case, a health care service contractor appeals a trial court's grant of summary judgment in favor of one of its insureds on a Consumer Protection Act cause of action. We find that there is no evidence of an unfair or deceptive act on the part of the health care contractor and reverse the order of summary judgment. We grant summary judgment to the health care service contractor on

                the Consumer Protection Act cause of action.  The health care service contractor also appeals the trial court's award of attorney fees for the declaratory judgment portion of the insured's action which involved a dispute about coverage under an exclusion in the medical insurance contract.  We affirm the trial court's award of attorney fees under the rule announced in Olympic S.S. Co. v. Centennial Ins. Co., 117 Wash.2d 37, 811 P.2d 673 (1991) (Olympic Steamship ).   We order the award of reasonable attorney fees for the portion of the action in this court which concerned the award of attorney fees in the declaratory judgment action.  We affirm the trial court's order of summary judgment in favor of the health care service contractor on the cause of action for intentional interference with a contract
                

FACTS

In May 1989, Dennis Leingang was injured in an automobile accident. At the time of the accident, Mr. Leingang had medical insurance under a health care service contract which his employer had with Pierce County Medical Bureau, Inc. (PCM). PCM is a "health care service contractor" licensed under RCW 48.44. At the time of the accident, Mr. Leingang also had automobile insurance, including uninsured and underinsured motorist (UIM) coverage, with Farmers Insurance Company. The driver of the other vehicle involved in the accident was underinsured.

The "Exclusions" portion of the PCM medical insurance contract contained the following language:

No benefits will be provided any subscriber ... for any of the following ...

....

Benefits to the extent benefits are payable under the terms of any automobile medical, automobile no-fault, underinsured or uninsured motorist or similar contract of insurance, when such contract or insurance is issued to ... the subscriber....

Clerk's Papers at 102-03. ¹

In July 1989, Mr. Leingang's attorney wrote to PCM demanding payment of the medical bills incurred due to the accident. PCM responded that it was sending Mr. Leingang a copy of their standard subrogation agreement for his signature and would begin making payment on the medical bills on receipt of that agreement. PCM sent with that letter a subrogation agreement which stated in part:

The benefits of this contract will be available to a subscriber ... who is injured by another party. If [PCM] provides benefits under this contract for the treatment of the injury, [PCM] shall (a) be subrogated to the rights of the subscriber ... (b) have the right to collect damages from the other party, and (c) have a security interest in any damage recoveries from the other party.

... If a settlement is made or a judgment is recovered that is equal to or greater than the amount of the other party's "reachable assets," [PCM's] subrogation right shall be limited to the excess of the amount necessary to fully compensate the subscriber....²

Clerk's Papers at 22. At the bottom of that subrogation agreement, PCM also stated:

Quoted below is the contract wording of an exclusion covering all types of automobile insurance.

Benefits to the extent benefits are payable under the terms We are calling your attention to this exclusion for in the event we agree to subrogate and any benefits are payable under automobile insurance, we expect full reimbursement to the extent of that payment or benefit received.

of any automobile medical, automobile no-fault, underinsured or uninsured motorist or similar contract of insurance, when such contract or insurance is issued to or on behalf of the subscriber or dependent.

Clerk's Papers at 22.

Mr. Leingang refused to sign the agreement. In spite of Mr. Leingang's refusal to sign, PCM paid Mr. Leingang's medical bills. However, PCM did continue to maintain that it had a right to be reimbursed if the UIM carrier subsequently paid Mr. Leingang because there was no coverage to the extent of UIM payment.

After paying Mr. Leingang's medical bills, PCM's attorney wrote a letter to Farmers Insurance, Mr. Leingang's UIM carrier, and to Allstate Insurance, the insurance carrier for the other driver. That letter informed them that PCM was asserting a security interest and subrogation claim against any future settlement or judgment for reimbursement for the medical bills it had paid on behalf of Mr. Leingang.

Mr. Leingang filed an action against the alleged tortfeasors (the dealership that had sold him a defective car and the driver of the other car), their insurers, Farmers Insurance and PCM. In that action, Mr. Leingang sought declaratory relief against PCM, requesting a ruling that PCM was not entitled to be reimbursed for payment of the medical bills from any recovery under the UIM insurance. Mr. Leingang also alleged that PCM tortiously interfered with his contract with Farmers, that PCM's conduct had violated the Consumer Protection Act, RCW 19.86, and that he should recover his emotional distress damages from PCM.

After first disputing the claim, Farmers Insurance ultimately paid the $100,000 limits of the UIM policy into Mr. Leingang filed a motion for summary judgment asking the trial court to rule that PCM had no claim against the UIM proceeds and was not entitled to be reimbursed the amounts PCM had paid for his medical bills. PCM made a cross motion for summary judgment.

the registry of the court pending resolution of the issue whether the funds were due directly to Mr. Leingang or to PCM for reimbursement of the medical bills it had already paid.

The trial court granted summary judgment in favor of PCM. The trial court held that PCM's exclusion was enforceable. The trial court stated:

Pierce County Medical has drafted a clear and unambiguous provision which excludes benefits to their subscribers if the same benefits are payable under the terms of any automobile underinsured or uninsured motorist policy provision. There is nothing in statute or judicial decision that would indicate such a provision should not be enforced.

Clerk's Papers at 134. The trial court concluded PCM was entitled to judgment as a matter of law on its right to reimbursement of medical bills from the UIM proceeds even before Mr. Leingang had been fully compensated for all of his damages. The trial court explained that it was fair that PCM had paid the bills initially, but that if the UIM carrier did make payment, then the exclusion in the health care contract would allow reimbursement to PCM.

Mr. Leingang appealed this decision to the Court of Appeals. However, prior to oral argument in that court, this court accepted review of the consolidated cases of Brown v. Snohomish County Physicians Corp. and Hogsett v. Snohomish County Physicians Corp., 63 Wash.App. 788, 822 P.2d 336 (1992), which presented the same issue of the enforceability of a UIM exclusion in a health care contract. In the Brown and Hogsett cases, the trial courts and the Court of Appeals had all held that the exclusions in medical insurance contracts for benefits actually paid by UIM insurance were enforceable exclusions to coverage.

In Brown v. Snohomish County Physicians Corp., 120 Wash.2d 747, 845 P.2d 334 (1993), this court reversed the trial courts' and Court of Appeals' decisions. We held that a health care service contract provision denying coverage to the extent benefits are available to the beneficiary under an underinsured motorist policy violates public policy insofar as the provision denies coverage for medical expenses before the beneficiary is fully compensated for all general and special damages. We concluded that such a provision may be enforced, but only to the extent that it bars double recovery for medical expenses. Brown, 120 Wash.2d at 758, 845 P.2d 334. In Brown, this court weighed the public policy of full compensation for auto accident victims with the policy favoring low cost health care coverage and concluded that the strong public policy favoring full compensation of victims cannot be abrogated simply because the cost of health care service contracts may go up to some degree. Brown, 120 Wash.2d at 758, 845 P.2d 334. We therefore reversed Brown and Hogsett, 63 Wash.App. 788, 822 P.2d 336, and overruled Snohomish County Physicians Corp. v. Jungaro, 58 Wash.App. 579, 794 P.2d 76 (1990) to the extent it was inconsistent.

In light of this court's decision in Brown, PCM and Mr. Leingang stipulated that their case should be reversed by the Court of Appeals and remanded to the trial court. The Court of Appeals therefore reversed and remanded to the superior court with directions to disburse the funds on deposit there to Mr. Leingang and to resolve the remaining issues.

At the trial court, Mr. Leingang sought attorney fees incurred in the declaratory judgment action under the authority of Olympic Steamship, 117 Wash.2d 37, 811 [930 P.2d 293] P.2d 673. The trial court awarded Mr. Leingang his costs and attorney fees at the trial court and on appeal for the portion of the case which involved the declaratory judgment action.

Mr. Leingang then moved for partial summary judgment on the Consumer Protection Act cause of action. PCM filed a cross motion for summary judgment on the PCM sought direct review in this...