Starrett v. Oklahoma Farmers Union Mut. Ins. Co.

• Decision Date: 30 March 1993
• Docket Number: No. 74101,74101
• Parties: Mose Garlin STARRETT and Viola Starrett, individually and as husband and wife, Appellees, v. OKLAHOMA FARMERS UNION MUTUAL INSURANCE COMPANY, an Oklahoma corporation, Appellant.
• Court: Oklahoma Supreme Court

Page 397

849 P.2d 397

1993 OK 30

Mose Garlin STARRETT and Viola Starrett, individually and as husband and wife, Appellees, v. OKLAHOMA FARMERS UNION MUTUAL INSURANCE COMPANY, an Oklahoma

corporation, Appellant.

No. 74101.

Supreme Court of Oklahoma.

March 30, 1993.

Certiorari to the Court of Appeals, Division 1. Appeal from the District Court of Oklahoma County, Jack R. Parr, Trial Judge.

Certiorari to review opinion of Court of Appeals affirming the trial court's denial of appellant's summary judgment motion and granting of appellees' summary judgment motion. The trial court held that the insured Starretts who had received payment for medical expenses under workers' compensation law were also entitled to collect medical payments from their automobile liability insurer even though the insurance policy excluded coverage when medical expenses were paid by workers' compensation.

Certiorari Previously Granted. Court of Appeals Opinion Vacated. Judgment of the District Court Reversed and the Case Remanded with Directions to Enter Judgment in Favor of Appellant/Defendant.

Bruce V. Winston, Kenneth A. Brokaw, Stewart & Elder, Oklahoma City, for appellant.

Thomas J. Steece, Simank & Steece, Oklahoma City, for appellees.

SIMMS, Justice.

Defendant, Oklahoma Farmers Union Mutual Insurance Company (Insurer), appeals from the district court's summary judgment granted in favor of the plaintiffs, Mose Garlin Starrett and Viola Starrett. The Court of Appeals affirmed the trial court's judgment.

Certiorari was granted to consider the first impression question of whether an insured under an automobile liability insurance policy may recover medical expenses both from the carrier of the automobile insurance and from the insured's employer under a workers' compensation claim when the insurance policy of the former expressly excludes medical expenses coverage where the expenses have been paid under workers' compensation law.

We find that the exclusion does not violate Oklahoma statutes or public policy and is enforceable in this case. The opinion of the Court of Appeals is vacated, and the judgment of the district court is reversed.

Insurer issued an automobile insurance policy to the Starretts which provided for Insurer to pay for all reasonable medical expenses incurred within one year from the date of an automobile accident. The policy further provided:

"Exclusions: This policy does not apply under Part II:

(g) to that amount of any expense for medical services which is paid or payable to or for the injured person under any workmen's compensation or disability benefits law, or any similar law."

Mr. Starrett sustained injuries when the automobile he was driving was forced off the road by an unidentified person. At the time of the accident, Mr. Starrett was in the course and scope of his employment and was occupying an automobile owned or leased by his employer. Mr. Starrett filed a workers' compensation claim against his employer and entered into a Joint Petition settlement on that claim. Furthermore, all of his medical expenses were paid by his employer pursuant to the Workers' Compensation Act.

Because the alleged tortfeasor in the accident was unidentified, the Starretts made claim under their automobile insurance policy for uninsured motorist benefits as well as medical expenses. Insurer settled with the Starretts on the uninsured motorist claim but refused to pay for medical expenses on the grounds that they were excluded under the quoted policy provision. The Starretts then brought an action for the medical expenses and for Insurer's alleged bad faith refusal to pay. There being no substantial controversy as to any material fact, both parties filed motions for summary judgment, and the trial court ruled in the Starretts' favor.

Although this Court has never addressed the precise question before us, some Oklahoma decisional law exists which is instructive. In Wilson v. Prudential Ins. Co. of Am., 528 P.2d 1135 (Okla.Ct.App.1974) (Wilson I ), the plaintiff was covered by a group policy of insurance issued by the defendant insurance company which provided hospitalization and medical benefits. The plaintiff was injured while in the scope and course of her employment and was denied workers' compensation benefits on the grounds that plaintiff's type of work was not covered by the Workmen's Compensation Act. When she requested reimbursement for medical expenses under the group insurance policy, the defendant insurance company denied her claim based upon the following provision in the policy which excludes:

"Charges incurred in connection with (a) injury arising out of, or in the course of, any employment for wage or profit or (b) disease covered, with respect to such employment, by any workmen's compensation law, occupational disease law or similar legislation." 528 P.2d at 1137. (Emphasis in original).

The plaintiff brought suit against the insurer, and the trial court sustained the defendant's demurrer. The Court of Appeals held that the exclusion was enforceable to exclude medical expense payments because the medical expense charges were incurred in connection with an injury arising out of plaintiff's employment. The provision concerning disease covered by workers' compensation law did not apply in that case.

In a case coincidentally bearing the same name, this Court gave precedential value to the portion of the Wilson I opinion relating to the exclusion provision. Wilson v. Prudential Ins. Co. of Am., 645 P.2d 521 (Okla.1982) (Wilson II ). Wilson II involved a plaintiff who was not covered by workers' compensation but was covered as a dependent by her husband's group health insurance which contained the same exclusion as the Prudential policy in Wilson I. The plaintiff was injured in the course of her employment and made claim upon her husband's health insurance policy. Prudential denied the claim on the basis of the exclusion provision, and the plaintiff filed an action against the insurance company. The district court sustained the insurer's demurrer. On appeal, this Court affirmed the district court's judgment and approved the Court of Appeals' treatment of the issue in Wilson I.

Thus, the parties to a health insurance policy may contract to exclude coverage or reimbursement of medical expenses incurred as a result of an injury arising out of or in the course of employment or as the result of a disease which is covered by the Workers' Compensation Act to the extent the Workers' Compensation Act reimbursed plaintiff for his medical expenses.

Insurer argues that this rule of law should apply to exclusion provisions in automobile liability insurance policies as well. The Starretts assert that other decisions by this Court hold otherwise. They point to Chambers v. Walker, 653 P.2d 931 (Okla.1982), in which this Court determined that an uninsured motorist coverage provision allowing a reduction or set-off of amounts paid or payable under workers' compensation law was void because it was in derogation of the legislative purpose underlying the uninsured motorist statute, 36 O.S.1981, § 3636. If given effect, the provision would violate § 3636 by reducing "the amount of coverage available under the uninsured motorist provisions to less than the amount required by statute." 653 P.2d at 935.

Our holding in Chambers was grounded upon the legislative purpose of § 3636 and statutory mandate therein for all automobile liability insurance carriers to offer uninsured motorist coverage. No such mandate exists for medical payment provisions. Frank v. Allstate Ins. Co., 727 P.2d 577, 580 (Okla.1986). In Frank, the insured wished to stack the med-pay provisions from automobile liability insurance policies on two automobiles under the same theory that allows uninsured motorist coverage to be stacked. See Keel v. MFA Ins. Co., 553 P.2d 153 (Okla.1976). In concluding that med-pay coverage may not be stacked, the majority of the Court stated:

"There exist no statutory or other public-policy requirements which would provide a...