Smith v. Travelers Ins. Co.

• Decision Date: 10 August 1976
• Citation: 363 N.E.2d 750,4 O.O.3d 292,50 Ohio App.2d 349
• Parties: , 4 O.O.3d 292 SMITH et al., Appellees, v TRAVELERS INSURANCE CO., Appellant. *
• Court: Ohio Court of Appeals

Page 349

50 Ohio App.2d 349

363 N.E.2d 750, 4 O.O.3d 292

SMITH et al., Appellees, v TRAVELERS INSURANCE CO., Appellant. ^*

Court of Appeals of Ohio, Tenth District, Franklin County.

Aug. 10, 1976.

Syllabus by the Court

An injured party who settles a personal injury claim in its entirety with a tortfeasor and the wrongdoer's insurer after executing a subrogation agreement with his own insurance company waives any claim against his insurance company for medical expenses incurred as a result of the injury.

Philip Q. Zauderer, Columbus, for appellees.

McNamara & McNamara, John L. Miller and William H. Woods, Columbus, for appellant.

HOLMES, Judge.

This matter involves the appeal of a judgment for the plaintiffs in an action brought against the defendant insurer because the insurance company had refused to pay a medical expense claim submitted by the plaintiffs. The basis of the refusal to pay the claim was that the plaintiff insured had violated the subrogation provisions of the insurance policy, and had also violated the terms of the subrogation agreement entered into in accordance with such subrogation policy provision.

The basic facts upon which this appeal rests are that on August 27, 1970, plaintiff-appellee Irene Smith was involved in an automobile accident with a vehicle operated by one George Board. At the time of the accident the plaintiff's vehicle was insured by appellant Travelers Insurance Company, and the vehicle operated by Mr. Board was insured by Globe-American Insurance Company. As a result of such accident, Mrs. Smith sustained certain injuries, was given medical treatment, and incurred medical expenses in the approximate sum of $1,452.

Within one year from the date of the accident, Mrs. Smith submitted to defendant Travelers Insurance Company proof of medical expenses incurred. Such proof of medical expenses was pursuant to the requirements of the insurance policy, which specific provision is as follows:

'Coverage C-Medical Payments

'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 the named insured and each relative who sustains bodily injury, caused by accident, (a) while occupying the owned automobile * * *.'

The provision of coverage C, medical payments, within the policy is subject to the following conditions set forth in such policy:

'30. Subrogation.

Parts I, II, III, and V

'In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and, with respect to Part II, all the rights of recovery therefor which the injured person or any one receiving such payment may have against any person or organization. The insured, or with respect to Part II such person, shall execute and deliver instruments and papers, do whatever else is necessary to secure such rights and shall do nothing after loss to prejudice such rights.'

Further, on or about June 1, 1971, pursuant to the subrogation condition of the policy, Mrs. Smith executed a subrogation agreement, which provided as follows:

'The Company is subrogated to the right of recovery of the undersigned, to the extent of the payment made against any person or organization. The undersigned has not done, nor will he do, anything to prejudice such rights.

'This agreement does not apply to any policy issued in any state where such provision would be invalid as a matter of law, or to any policy which does not specifically set out the right of subrogation of the Company in the conditions of the policy.'

Mrs. Smith made claims against George Board for her damages, including medical expenses, resulting from the automobile accident, and in July 1971, Globe-American, the insurer for Mr. Board, paid Mrs. Smith the sum of $4,500 in settlement of her claim for personal injuries and medical expenses, and Globe-American obtained from Mrs. Smith a release of Globe-American and Mr. Board from any liability arising from the accident on August 27, 1970.

Travelers, after becoming aware of the settlement with Globe-American, refused to pay Mrs. Smith for the medical expenses claimed, on the basis that Mrs. Smith had prejudiced Travelers' right of subrogation as against the tort-feasor. The trial court found in favor of the plaintiffs in the amount of $1,000 plus costs, and the defendant Travelers Insurance Company filed this appeal, assigning the following error:

'Defendant, Travelers Insurance Company, for its statement of the assignment of error, states that the trial court incorrectly held that plaintiffs are entitled to recover expenses for medical services after plaintiffs have settled and released the tortfeasor so as to prevent subrogation by plaintiffs' insurer under the Medical Payment Subrogation Clause of the policy.'

The trial court in its decision recognized that there were two basic lines of authority in Ohio on the issue presented here, as to whether there could be subrogation of the right to recover medical expenses, which has generally been thought of as being part of personal injury expenses, in the same manner that Ohio courts have permitted the subrogation for property damage. The trial court, after reviewing the comparative analysis of the law as set forth in Hartford Accident & Indemnity Co. v. Elliott (1972), 32 Ohio App.2d 281, 290 N.E.2d 919, Hamilton County Court of Appeals and Nationwide Mut. Ins. Co. v. Dejane (1974), 42 Ohio App.2d 11, 326 N.E.2d 701, Mahoning County Court of Appeals, accepted the holding in the latter to the effect that medical...