Linn v. North Idaho Dist. Medical Service Bureau, Inc., 12861

• Decision Date: 17 December 1981
• Docket Number: No. 12861,12861
• Citation: 102 Idaho 679,638 P.2d 876
• Parties: Clifford E. LINN, Plaintiff-Appellant, v. NORTH IDAHO DISTRICT MEDICAL SERVICE BUREAU, INC., an Idaho Corporation, Defendant-Respondent, and Oregon Physicians Service, a corporation, and Washington Physicians Service, a corporation, Defendants.
• Court: Idaho Supreme Court

Page 876

638 P.2d 876

102 Idaho 679

Clifford E. LINN, Plaintiff-Appellant, v. NORTH IDAHO DISTRICT MEDICAL SERVICE BUREAU, INC., an Idaho Corporation, Defendant-Respondent, and Oregon Physicians Service, a corporation, and Washington Physicians Service, a corporation, Defendants.

No. 12861.

Supreme Court of Idaho.

Dec. 17, 1981.

Charles H. Kimball, Coeur d'Alene, for plaintiff-appellant.

Reed Clements, Lewiston, for defendant-respondent.

ON REHEARING

BISTLINE, Justice.

I.

If John Linn, as he, his wife and two children entered their car for a drive on August 30, 1974, then entertained any premonition of impending disaster, he should have found some comfort in the fact that he had in effect not one, but two insurance policies which might take care of medical and hospital expenses incurred in treating all members of the family. One of these policies, commonly known as a comprehensive automobile policy, Linn had purchased from Farmers Insurance Company. That policy, in addition to other coverages, would pay for all medical and hospital expenses incurred, within one year, as a result of injuries suffered by him and his dependents in any accident involving his own automobile. (This coverage also extended to nonfamily passengers.) The other policy, a health and welfare group plan, otherwise known as THE NELSON TRUST, which policy itself Linn had never seen, was obtained for him by the company for which he worked and the union to which he belonged. All that Linn had received was a pamphlet purporting to synopsize the coverage The pamphlet, under Limitations and Exclusions, listed 16 items, of which, significant to a breadwinner family man who or whose family members might experience an off-work accident, were on-the-job injuries, cosmetic surgery not required to restore body function, the cost of blood or blood plasma, appliances, braces, crutches, etc., and service benefits recoverable under Part A or Part B of Title XVIII of the 1965 Social Security Act. Specifically, the rather comprehensive list of uncovered items set forth nothing under LIMITATIONS AND EXCLUSIONS regarding Linn's being covered by other accident insurance.

of THE NELSON TRUST policy. By the pamphlet he was informed in Part I that medical-surgical-hospital benefits would be serviced by Blue Shield, which in Idaho would be by North Idaho District Medical Service Bureau (herein referred to simply as Medical Service Bureau, or MSB). Significant to what the head of a family of four would want to know, the pamphlet told him that MSB would pay up to $50.00 each for ambulance services, would pay for 180 days of his hospital confinement, 70 days of hospital confinement each for his wife and two children, 30 days of special nurses for himself, but nothing in that way for the wife and children. The pamphlet also informed him what surgery costs MSB would pay, including those of an anesthesiologist and diagnostic x-ray and laboratory services.

Under a topical heading entitled DEFINITIONS, pp. 17-18 of the pamphlet, seven definitions were headnoted and explained, to-wit:

"Blue Shield Plans"

"Case"

"Organ Transplant Procedures"

"Medical Emergency"

"Member Physician"

"Hospital"

"Third Party Responsibility."

The "definition" of Third Party Responsibility provided only:

"If you or your dependent is injured and another party is at fault, the other party or his insurance company should pay your doctor and hospital bills. If you cannot recover enough to take care of your bills, you may apply the benefits of this contract toward the unpaid charges. The benefits of this contract for expenses resulting from accidental injury involving a private passenger motor vehicle shall be reduced to the extent such expenses are payable without regard to liability under any automobile insurance policy issued in the state of Oregon."

Linn, of course, did not live in Oregon, and the stipulated record with which we deal does not reveal what view he took of the foregoing "definition" of "Third Party Responsibility," assuming that he felt any need to read the paragraph-it not being set forth under LIMITATIONS AND EXCLUSIONS-where any attorney, insurance commissioner, or insurance salesman would agree that it should be. Linn, of course, was none of the above, but rather a worker in the lumber industry.

So, it would be speculative to the utmost to surmise what Linn thought of this paragraph, if he did indeed read it. The only reasonable reading is, however, that Linn was advised that if he or his dependents were injured by a third party at fault, the third party or his insurance company should pay Linn's doctor and hospital bills. That they should do so is at the least a moral truism with which no one should argue, but many are the Linns who know that negligent automobile drivers who injure innocent people-notwithstanding that they "should" pay the damages caused-do not have the resources with which to do so, and which lack of resources includes a lack of liability insurance.

Be that as it may, Clifford Linn should have entertained no concern that he would ever have to resort to pursuing a negligent third party in order to recover any expenses for doctor and hospital bills. After all, in the event that he and his dependents did get injured while traveling in their automobile, he had not just one-but two-insurance contracts which hopefully would not leave him exposed to paying out his own Mr. Linn wisely purchased from Farmers a policy which gave him some small promise of compensation if he and his dependents received painful or crippling injuries at the hands of an uninsured negligent third party motorist. ¹ For a premium he received a coverage under the Farmers policy which, in the event the foregoing did happen, promised to pay him up to a maximum of $10,000 damages for any general damages inflicted on him by the negligence of a third party uninsured motorist in any one accident. It promised to pay a like amount to any injured dependents, but not more than $20,000 for any one accident.

funds with only the possibility that he might gain reimbursement from any negligent third party, who might or might not be (1) found at fault, (2) insolvent, and (3) uninsured.

II. THE STATE OF THE LAW AT THE TIME LINN ACQUIRED THE TWO POLICIES

If Linn had entertained any question as to the extent to which he could rely upon his two policies, the one with THE NELSON TRUST (as evidenced to him only by its pamphlet), and the other with Farmers, any informed attorney ² would have advised him that, other than a company becoming insolvent, the only limitations of real consequence on his right to have his doctor and hospital bills paid by either or both was the one year time limit of the Farmers policy, and, of significance, the 180 day (for Linn) and 70 day (for his dependents) hospital payment maximum in the NELSON TRUST.

In a unanimous opinion authored by Justice Knudson, Smith v. Idaho Hospital Service, Inc., 89 Idaho 499, 406 P.2d 696 (1965), this Court relied upon and quoted from a statement in an annotation at 81 A.L.R.2d 927, 936-37 (1962):

" '(S)ince hospital and medical care service plans are ordinarily organized so as to make such services available at a reasonable cost to persons who might otherwise be unable to bear the financial burden of illness, contracts issued by such plans typically provide that coverage will not be extended when the subscriber's or member's medical expenses are payable from some source other than the subscriber's own resources.' " Id. at 504, 406 P.2d at 699 (emphasis added).

Key to Linn's situation, of course, are those words emphasized above: "payable from some source other than the subscriber's own resources." A person's own insurance policy is, of course, one of his own resources. The insured has paid for it; it is his.

The Court in 1965 understood, as the annotation states, that hospital and medical care plans ordinarily have the salutary purpose of making certain that there will be such coverage, and also that it will not be extended to the medical payments payable from some other source (other than the resources of the subscriber or member). The Court in Smith specifically set forth the annotation's further statement that hospital and medical plans commonly contained " 'provisions limiting or excluding coverage where the injury or illness and attendant medical expense are covered by workmen's compensation ...." Id. (Emphasis added.)

Here, of course, any person examining the pamphlet of THE NELSON TRUST would see under LIMITATIONS AND EXCLUSIONS, that the only situations in which medical and hospital services might possibly not be covered by reason of being paid from another source would be those in which the service was a benefit recoverable under provisions of the 1965 Social Security Act. Nothing in this provision in the least Three years after the Smith decision, in Medical-Dental Service, Inc. v. Boroo, 92 Idaho 328, 442 P.2d 738 (1968), the Idaho Supreme Court held that the group service plan was not liable "when such exclusion is clearly presented ...." Id. at 331, 442 P.2d at 741. Linn's Nelson Trust pamphlet, however, unlike the foregoing language, contained no indication of any exclusion or limitation relating to any privately purchased policy providing medical and hospital expense coverage. ³

intimated that Linn was excluded from or limited in receiving payment of medical and hospital expenses to the extent that he could also receive such payments from his Farmers policy, truly a resource of his own.

III. THE ACCIDENT OF AUGUST 30, 1974, AND PROCEEDINGS IN DISTRICT COURT

As misfortune would have it, the Linn vehicle was hit by another motorist, and all of the Linns were hospitalized for their injuries, of which the most serious were to Mrs. Linn and the daughter, as reflected in their doctor and hospital bills submitted to MSB of $4,875.25 and $3,557.77, respectively. Linn himself submitted total bills of only $450.85, and the...