Morin v. Massachusetts Blue Cross, Inc.

• Decision Date: 06 June 1974
• Citation: 311 N.E.2d 914,365 Mass. 379
• Parties: Marie B. MORIN v. MASSACHUSETTS BLUE CROSS, INC., et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 914

311 N.E.2d 914

365 Mass. 379

Marie B. MORIN v. MASSACHUSETTS BLUE CROSS, INC., et al.

Supreme Judicial Court of Massachusetts, Worcester.

Argued March 6, 1974.

Decided June 6, 1974.

Gerald E. Shugrue, Whitinsville, for plaintiff.

Jffrey Swope, Boston, for defendants.

Robert H. Quinn, Atty. Gen., James P. Kiernan, Asst. Atty. Gen., and John G. Ryan, Hingham, for the Commissioner of Insurance, amicus curiae, submitted a brief.

Before REARDON, QUIRICO, BRAUCHER and KAPLAN, JJ.

KAPLAN, Justice.

1. The case. The plaintiff Marie B. Morin was injured on November 7, 1970, while riding as a passenger in a car owned and operated by Michael J. Reidy. As the plaintiff was a subscriber to a group coverage 'Master Medical Certificate' of the defendants Massachusetts Blue Cross, Inc., and Massachusetts Blue Shield, Inc., hospitalization charges of $3,236.05 and doctors' fees of $294 incurred by her in consequence of the injuries were paid by Blue Cross-Blue Shield pursuant to and within the limits of the terms of the certificate.

At the time of the accident, Reidy held a 'Massachusetts Combination Motor Vehicle Policy' sold to him by the defendant Fireman's Fund American Insurance Companies. Reidy had elected optional coverage D--'Automobile Medical Payments'--which in 'Division 2' obligated the insurer, without regard to fault, to pay all reasonable expenses incurred within one year of the accident for necessary medical and other like services to any person who sustained injury, sickness, or disease caused by accident while in the insured vehicle, if it was being used by the named insured (Reidy) or with his permission. Of the 'limits' of $500--$5,000 offered for medical payments coverage, Reidy had elected the '$2,000 each person' limit.

The plaintiff made demand on Fireman's for $2,000. But Blue Cross-Blue Shield notified Fireman's that they claimed this sum on the basis of the 'subrogation' provision of the master medical certificate, to be discussed later in this opinion.

The expenses for which payment was made by Blue Cross-Blue Shield were incurred within one year of the accident, and were, to the full limit of $2,000, of the kind falling under the terms of coverage D, division 2. Fireman's was thus in the position of a stakeholder faced with conflicting claims. Therefore it drew its check for $2,000 payable jointly to the plaintiff and Blue Cross-Blue Shield, and has remained indifferent.

In the present suit, the plaintiff sought a determination of the rights of the parties with appropriate consequential relief. On a case stated setting out the foregoing facts, a judge of the Superior Court, holding that the subrogation provision applied, entered a final decree directing the plaintiff to indorse Fireman's check to the order of Blue Cross-Blue Shield. ¹

The plaintiff appeals. As the appeal raises an important practical question within the field of administration of the Commonwealth's Division of Insurance, the court, without objection by the parties, invited the Commissioner of Insurance to assist it as an amicus. The Commissioner accepted the invitation and has prepared a brief and submitted it through the office of the Attorney General, and Blue Cross-Blue Shield have replied.

2. The contracts. The master medical certificate expresses in its 'definitions' and statement of 'benefits,' 'benefit limitations,' 'benefit conditions,' and 'extent of and duration of benefits,' a variety of medical services and supplies, and limitations upon them, that Blue Cross-Blue Shield undertake to provide to members in case of injury or illness. Later in the contract appears the subrogation provision:

'VII. SUBROGATION To the extent that benefits for services, supplies, or both are provided hereunder, Blue Cross and Blue Shield shall be subrogated and succeed to any right of recovery of the Member or Subscriber because of such services or supplies against any person or organization, except insurers on policies of health insurance covering the Member or Subscriber. The Member and the Subscriber shall pay over to Blue Cross and Blue Shield all amounts recovered by suit, settlement, or otherwise from any third person or his insurer to the extent of the benefits provided hereunder. The Subscriber and Member shall take such action, furnish such information and assistance, and execute such instruments as Blue Cross and Blue Shield may require to facilitate enforcement of their rights hereunder, and shall take no action prejudicing the rights and interests of Blue Cross and Blue Shield hereunder.'

Fireman's Massachusetts combination motor vehicle policy sets out in one instrument a number of coverages: the 'compulsory' coverage for bodily injury liability (statutory) and 'mandatory' coverage U for damages for bodily injury caused by uninsured automobiles, and 'optional' coverages as follows: B for bodily injury liability (nonstatutory); C for property damage liability; D for automobile medical payments; E for 'comprehensive' physical damage coverage (excluding collision); F for collision; G for fire, lightning, and transportation; H for theft (broad form); I for windstorm, hail, earthquake, or explosion; J for combined additional coverage; and K for towing and labor costs. Coverage D provides:

'Coverage D--Automobile Medical Payments--(This Coverage is Optional). The company will pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, X-ray and dental services, including prosthetic devices, and necessary ambulance, hospital professional nursing and funeral services:

'Division 1. To or for each insured who sustains bodily injury, sickness or disease, including death resulting therefrom, caused by accident, (a) while in or upon, or while entering into or alighting from a motor vehicle, provided that with respect to a motor vehicle not owned by or furnished for the regular use of any insured under division 1, this insurance shall apply only if the insured has, or reasonably believes he has, the permission of the owner to use the motor vehicle and the use is within the scope of such permission, or (b) through being struck by a motor vehicle;

'Division 2. To or for any other person who sustains bodily injury, sickness or disease, including death resulting therefrom, caused by accident, while in or upon, or while entering into or alighting from the motor vehicle, provided the motor vehicle is being used by the named insured or his spouse if a resident of the same household, or with the permission of either.'

The combination policy contains a 'subrogation' provision, but coverage D is expressly excepted from it.

3. Interpretation. Blue Cross-Blue Shield (appellees) do not press any contention that they are entitled to subrogation as a matter of general law without regard to the presence of a subrogation provision in their certificate. Such a contention would no doubt invite an inquiry as to whether the duty of the appellees to pay medical expenses of members is one of 'indemnity,' and an argument that if it is not, there can be no implicit right of subrogation. The question of the strength of that line of analysis we leave to another day. Cf. General Exch. Ins. Corp. v. Driscoll, 315 Mass. 360, 364, 52 N.E.2d 970 (1944); Travelers Ins. Co. v. Graye, 358 Mass. 238, 240, 263 N.E.2d 442 (1970); Kimball and Davis, The Extension of Insurance Subrogation, 60 Mich.L.Rev. 841 (1962). But rights of, or akin to, subrogation not available under general law may be reserved by agreement (and, we suppose, agreement may limit subrogation otherwise available under general law). Compare Michigan Hosp. Serv. v. Sharpe, 339 Mich. 357, 63 N.W.2d 638 (1954), with Michigan Medical Serv. v. Sharpe, 339 Mich. 574, 64 N.W.2d 713 (1954). See Hospital Serv. Corp. v. Pennsylvania Ins. Co., 101 R.I. 708, 717, 227 A.2d 105 (1967). The problem in the present case reduces to the meaning or scope of the subrogation provision as it bears on the facts of the case; the appellees advance no other theory of suit. ² On this question of interpretation, the parties are at odds. The Commissioner of Insurance independently concludes that subrogation does not extend to the plaintiff's (appellant's) right of recovery of medical payments through Fireman's policy. ³ We reach the same conclusion on the alternative grounds that the 'except' clause of the subrogation provision is reasonably indicative in excluding that right of recovery, or that the clause is unclear or ambiguous on the point and so ordinary canons apply favoring the insured over her insurer in the reading of the insurance contract (the appellees being treated as insurers for the purpose, see MacArthur v. Massachusetts Hosp. .serv. Inc., 343 Mass. 670, 672, 180 N.E.2d 449 (1962)).

Fixing on the first sentence of the subrogation provision, the appellees say that the appellant has the requisite 'right of recovery' against Fireman's under coverage D of Fireman's policy, and upon that right the subrogation provision of the Blue Cross-Blue Shield contract operates; the 'except' clause at the end of the sentence, they say, does not prevent that result because Fireman's policy is not one of 'health insurance.' The appellees suggest that whether Fireman's policy is a health insurance policy within the subrogation provision is to be decided by characterizing the policy as a whole, and they then direct us to G.L. c. 175, § 47, Sixth, with an invitation to choose whether the policy, as such, is one '(t)o insure . . . (b) any person against legal liability for loss or damage on account of the injury or death of any other person' and so forth, or is rather a policy '(d) to make insurance upon the health of individuals.' ⁴ They express confidence that, as between the two, we would choose the former category. There is argument, however, that the proffered choice is not an apposite one. Fireman's policy is actually related to c. 175, § 113C, which...