Providence Health Plan v. Allen

• Decision Date: 28 August 2019
• Docket Number: A160124
• Citation: 299 Or.App. 128,449 P.3d 504
• Parties: PROVIDENCE HEALTH PLAN, as claims administrator for the Oregon Employees Benefit Board, Plaintiff-Appellant, v. Joe Lewis ALLEN, Defendant-Respondent.
• Court: Oregon Court of Appeals

299 Or.App. 128

449 P.3d 504

PROVIDENCE HEALTH PLAN, as claims administrator for the Oregon Employees Benefit Board, Plaintiff-Appellant,

v.Joe Lewis ALLEN, Defendant-Respondent.

A160124

Court of Appeals of Oregon.

Argued and submitted February 28, 2017.

August 28, 2019

Sharon A. Rudnick, Sharon A. Rudnick, Eugene, argued the cause for appellant. Also on the briefs were Arden J. Olson and Harrang Long Gary Rudnick P.C.

Thomas H. Anderson, McMinnville, argued the cause for respondent. Also on the brief was Thomas H. Anderson, P.C.

Before Ortega, Presiding Judge, and Lagesen, Judge, and Powers, Judge.^*

ORTEGA, P. J.

Plaintiff, Providence Health Plan (Providence), sought subrogation from defendant, a participant in one of the Oregon Public Employees Benefits Board’s (PEBB’s) self-insured health plans (the plan), for medical benefits paid on defendant’s behalf after defendant was involved in a car accident. Defendant asserted that reimbursement was governed by statute rather than by the terms of the plan. The trial court agreed with defendant, finding that PEBB and Providence are insurers required to follow the requirements of the reimbursement statutes and granting summary judgment to defendant. On appeal, Providence challenges that ruling and the denial of its own motion for summary judgment, arguing that neither PEBB nor Providence is an insurer and that neither is subject to the reimbursement statutes. Because we conclude that Providence is deemed an insurer and required to follow the requirements of the reimbursement statutes, we affirm.

The following facts are undisputed.¹ In May 2012, defendant was injured in a motor vehicle accident due to the negligence of another driver. At the time of the accident, defendant was a participant in the plan. PEBB contracted with Providence to act as the plan’s third-party administrator. As third-party administrator, Providence processed claims, provided customer service to participants, and developed and managed panels of providers in the plan’s network. In accordance with the plan, Providence paid $56,536.36 in medical expenses related to defendant’s injuries.

A provision of the plan, the third-party liability and subrogation provision, required defendant to reimburse PEBB from any judgment, settlement, or other monetary recovery for amounts paid for medical expenses related to injuries inflicted by a third party. Providence, as third-party administrator, was authorized to enforce the plan by initiating litigation in its name to obtain that reimbursement on PEBB’s behalf. Under the plan, PEBB was also entitled to offset future benefits otherwise payable under the plan to the extent of the benefits advanced but not repaid from a third-party settlement or judgment. The plan also provided that, after a participant received proceeds of a settlement from a third party, the participant would be responsible for payment of all medical expenses for continuing treatment from the injury that the plan would otherwise be required to pay, until all proceeds from the settlement or recovery were exhausted.

The other driver had an auto liability insurance policy with Nationwide Insurance with a policy limit of $50,000. In at least five letters to Nationwide, Providence sought direct interinsurer reimbursement for the medical expenses it paid on defendant’s behalf, asserting its reimbursement rights under ORS 742.534.² After Nationwide informed Providence that it was paying policy limits directly to defendant, but before defendant settled with Nationwide, Providence asserted its subrogation rights against defendant under ORS 742.538.³ Defendant recovered a $100,000 settlement, $50,000 from Nationwide and $50,000 from his own underinsured motorist (UIM) coverage.

Providence, on PEBB’s behalf, filed this action against defendant for breach of contract under the plan’s third-party liability and subrogation provision, alleging that defendant is required under the plan to reimburse PEBB from his settlement money for amounts that the plan paid for defendant’s medical expenses. Providence also denied defendant’s additional claims for payment of medical expenses for continuing treatment for his injuries. Defendant responded, in an affirmative defense, that PEBB’s right to reimbursement was governed exclusively by the terms of ORS 742.534 to 742.538 (the reimbursement statutes) rather than by the plan’s subrogation provision and that Providence’s failure to comply with those statutes barred its breach of contract claim. Defendant also counter-claimed for a judgment against Providence in the amount of the medical claims that Providence had denied. The parties filed cross-motions for partial summary judgment on the issue of whether Providence’s breach of contract claim was barred by the reimbursement statutes.

In its motion, Providence argued that PEBB is not an "authorized health insurer" as that term is used in the reimbursement statutes. Because PEBB is a self-insured labor-management board governed by the provisions of ORS 243.061 to 243.350, Providence asserted that neither the reimbursement statutes nor the Insurance Code apply to PEBB. Providence also argued that, as third-party administrator for the plan, Providence is not acting on its own behalf as an insurer and, thus, is not subject to the reimbursement statutes. Defendant argued, in his motion, that Providence is deemed an insurer, whether it acts as a health insurer, health care service contractor, or a third-party administrator; that its claims for subrogation and breach of contract are controlled exclusively by the reimbursement statutes; and that, under those statutes, Providence is not entitled to reimbursement.

The trial court agreed with defendant and granted summary judgment in his favor, reasoning that PEBB and, by association, Providence are considered insurers for the purpose of the reimbursement statutes and, accordingly, are subject to the requirements of those statutes. The court explained:

"[B]oth [parties] agree that if PEBB is deemed an ‘authorized health insurer’ then plaintiff was required to follow the reimbursement requirements of ORS 742.534 et. seq., which they concede they did not. And both parties agree that if Providence was acting in its capacity as a ‘health care service contractor’ plaintiff was again required to follow the same statute.

"Plaintiff argues that PEBB is exempt from the insurance code, but can offer no reason why it fails to qualify for exemption status under ORS 731.036 [listing persons exempt from the insurance code]. Plaintiff argues that PEBB is a managed self-insurance program and therefore is not an ‘insurer’ for the purposes of ORS 742.534. But plaintiff concedes that if any other insurance provider were providing the same insurance benefits as PEBB they would be defined as an insurer. Accordingly, I find that PEBB, and by association, Providence are ‘insurer’s’ [sic ] for the purpose of ORS 742.534.

"As insurers, they are authorized by statute to provide coverage benefits and are subject to the reimbursement requirements of ORS 742.534 et. seq. Providence expressly acknowledged that they, and PEBB, were subject to this statutory scheme in six separate letters to the third party insurers in this case. Accordingly, Defendant’s Motion for Partial Summary Judgment is granted, and Plaintiff’s Motion for Partial Summary Judgment is denied."

(Underscoring in original; footnotes omitted.) The trial court also noted:

"This is consistent with the Supreme Court’s analysis of what constitutes an ‘insurer’ under the insurance code in Haynes v. Tri-County Metro. , 337 Or. 659 (2004) (holding that even an exempt public self-insurer is deemed to be an insurer under specific provisions of the insurance code if their coverage plans are identical to contemplated plans under the code)."

Defendant filed a second motion for partial summary judgment on the issue of whether Providence was required to pay defendant’s claims for ongoing medical expenses that Providence had denied under the plan. The trial court granted defendant’s motion.

On appeal, Providence raises four assignments of error. In its first assignment of error, Providence challenges the trial court’s decision granting defendant’s motion for partial summary judgment on defendant’s second affirmative defense, and in its second assignment of error, Providence challenges the trial court’s decision denying Providence’s corresponding motion for partial summary judgment. We address only those first two assignments of error.⁴ Generally, when reviewing the trial court’s decision on cross-motions for summary judgment, "we examine whether there are any disputed issues of material fact and whether either party was entitled to judgment as a matter of law." Vision Realty, Inc. v. Kohler , 214 Or. App. 220, 222, 164 P.3d 330 (2007). Where cross-motions for partial summary judgment were made, and a plaintiff assigns error to both the granting of defendant’s motion and denial of plaintiff’s motion, both motions are subject to review. Ellis v. Ferrellgas, L. P. , 211 Or. App. 648, 652, 156 P.3d 136 (2007).

The question before us, as framed by the parties’ cross-motions for partial summary judgment, is whether Providence’s claim for breach of contract was barred by the reimbursement statutes. We answer that question by applying the familiar methodology of statutory interpretation set out in PGE v. Bureau of Labor and Industries , 317 Or. 606, 611-12, 859 P.2d 1143 (1993), and State v. Gaines , 346 Or. 160, 171-72, 206 P.3d 1042 (2009). We consider the text of the reimbursement statutes in context, as well as the legislative history insofar as it is useful, to discern the intent of the legislature. Gaines , 346 Or. at 171-72, 206 P.3d 1042.

We begin with an overview of the reimbursement statutes. The reimbursement statutes, included in ORS chapter 742, explain how an insurer can seek reimbursement of personal injury protection (PIP) benefits or health benefits paid on...