Moring v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 10 December 1982 |
| Citation | 426 So.2d 810 |
| Parties | Karen S. MORING v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY. 81-150. |
| Court | Alabama Supreme Court |
Joseph M. Matranga, Mobile, for appellant.
Fred W. Killion, Jr. and Patricia K. Olney of Reams, Wood, Vollmer, Philips, Killion & Brooks, Mobile, for appellee.
This is a case of first impression in Alabama. It involves the subrogation rights of an insurer against its own insured. For the reasons we will state, we reverse.
The facts are not in dispute. On 21 August 1977, plaintiff Karen S. Moring was injured in a single vehicle accident in Mobile County. The vehicle in which she was a passenger was being driven by Lawrence D. Phillips. Moring incurred in excess of $13,000 in medical expenses as a result of the injuries she suffered.
At the time she was injured, Moring's father, Herbert Moring, had in full force and effect four policies of insurance issued by defendant State Farm Mutual Automobile Insurance Company. The four policies carried medical payment benefits in the aggregate amount of $8,000. State Farm also provided liability and medical payments coverage to Lawrence Phillips, under a policy insuring his father Anthony Phillips and his family. The liability limits were $25,000 per person while medical benefits limits were in the amount of $5,000 per person.
A settlement of $25,000 was reached between the Morings and the Phillipses, with the approval of State Farm, in satisfaction of all claims by Moring against Phillips, which was concluded by entry of a consent judgment.
Following this settlement, Moring made demand for payment of her $13,000 plus medical expenses under the coverage provided by both the Moring and Phillips policies. State Farm contends that Moring did not present a proper claim for medical benefits in accordance with the provisions of the policies and that it did not receive proper medical bills or information concerning her medical expenses. Moring contends, however, that a claim was submitted by letter to Pete Cobb, an employee at State Farm's claims office. Moring also says that State Farm had knowledge of the medical expenses because of its preparation of its defense of her suit against Phillips.
State Farm eventually agreed to pay Moring the medical benefits on condition that Moring execute the documents as provided for in the policies that would protect State Farm's subrogation rights. Moring refused to execute those documents when she learned that State Farm would be entitled to be reimbursed the medical benefits paid her out of $25,000 because of the consent judgment. She then filed this suit to recover her medical expenses under the medical benefits coverage provisions of the policies.
The case was tried to the court without a jury and judgment was entered in favor of State Farm. This appeal followed.
All the policies were identical except for the limits of coverage and each contained the following pertinent provisions:
State Farm's position, adopted by the trial court, is that Moring breached the insurance contracts by refusing to execute the documents recognizing State Farm's right to be reimbursed, to the extent of medical payments paid her, from the $25,000 settlement with Phillips; consequently, State Farm says, Moring is precluded from recovering under the medical payments provisions of the policies. State Farm also argues that this case does not deal with subrogation rights, but rather reimbursement rights. However, the record shows that State Farm relied upon its subrogation rights when seeking to recover medical payments benefits made to Moring. An affidavit of Warren C. Harris, the claims superintendent of the Mobile office of State Farm, was incorporated into the record. It contained the following statement:
"...
State Farm's right to be reimbursed for the medical benefits paid Moring is derived from State Farm's subrogation interests as stated in the policy. Therefore, State Farm is entitled to reimbursement only if it has a valid subrogation interest.
Moring takes the position that State Farm possessed no right of subrogation against the tort-feasor, Phillips, because Phillips was also insured by State Farm. Therefore, because State Farm's refusal to pay was based upon Moring's failure to execute the subrogation agreement, Moring argues that she should recover because State Farm had no right of subrogation...
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