U.S. v. Allstate Ins. Co.

• Citation: 69 Haw. 290,740 P.2d 550
• Decision Date: 30 July 1987
• Docket Number: No. 11441,11441
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
• Court: Supreme Court of Hawai'i

Page 550

740 P.2d 550

69 Haw. 290

UNITED STATES of America, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.

No. 11441.

Supreme Court of Hawai'i.

July 30, 1987.

Syllabus by the Court

1. This court has read the no-fault insurance law, Hawaii Revised Statutes (HRS) chapter 294, consistently with the legislative will that every insured person suffering loss from accidental harm arising out of the operation of a motor vehicle has a right to benefits under the law.

2. The United States may recover from a serviceman's no-fault insurance carrier the costs of medical care furnished in a government hospital to a serviceman who was injured in a motor vehicle accident and required such care. A denial of no-fault benefits under these circumstances cannot be squared with the comprehensive statutory scheme designed to provide a speedy, adequate, and equitable reparation for those injured or otherwise victimized by motor vehicle accidents.

Mark J. Bennett, Asst. U.S. Atty., Honolulu, Hawaii, for plaintiff-appellant.

Richard C. Sutton, Jr. (G. Richard Morry with him on the brief, Rush, Moore, Craven, Kim & Stricklin, of counsel), Honolulu, Hawaii, for defendant-appellee.

Before LUM, C.J., and NAKAMURA, PADGETT, HAYASHI and WAKATSUKI, JJ.

NAKAMURA, Justice.

We are asked to answer "a question of Hawaii state law determinative of a cause of action pending before the United States Court of Appeals for the Ninth Circuit on which there is no clear controlling precedent in the Hawaii judicial decisions." ¹ The question propounded by the federal appellate court for our response is whether the United States may recover from a serviceman's no-fault insurance carrier the costs of medical care furnished in a government hospital to the serviceman who was injured in a motor vehicle accident. ² After reviewing the facts outlined in the certification, the pertinent provisions of the Hawaii Motor Vehicle Accident Reparations Act, Hawaii Revised Statutes (HRS) chapter 294, and the practices related to the reimbursement of health care providers by insurers covered thereunder, we frame our response in affirmative terms.

I.

Thomas L. Strathman, an enlisted member of the United States Navy and the owner of a motorcycle insured under a no-fault insurance policy written by Allstate Insurance Company, sustained injuries on August 21, 1982 while riding his motorcycle. He was injured when the two-wheeled vehicle skidded out of control and fell on him. Strathman sustained multiple lacerations and abrasions requiring treatment in a hospital as a result of the "solo motor vehicle accident." ³

The injured cyclist was hospitalized initially at Castle Memorial Hospital, a civilian medical facility. He was transferred after receiving emergency treatment to Tripler Army Medical Center. The United States subsequently reimbursed Castle Memorial for Strathman's emergency medical care, but did not seek reimbursement from Strathman for the medical care he received at Castle or Tripler. ⁴

The government, however, made a claim against Allstate, his no-fault insurance carrier, "for the total cost of the medical care and treatment provided at the expense of the [United States] to ... Strathman which amounted to a sum of $2,604.10." Allstate tendered the United States a check for $168.10, the amount the government paid Castle Memorial, but refused to pay the balance of the claim. The government rejected the tendered draft and reiterated its demand for $2,604.10.

When Allstate again ignored the demand for full payment, the government filed a Complaint for Money Damages in the United States District Court for the District of Hawaii. The complaint averred the government was entitled to recover from Allstate "the reasonable value of the medical care and treatment [the United States] provided to Thomas L. Strathman, an amount equal to $2,604.10," under the provisions of Hawaii's no-fault law, HRS chapter 294, as "an intended third-party beneficiary of ... Strathman's insurance contract with [Allstate]," and because Allstate otherwise would be unjustly enriched at the government's expense.

Allstate denied the allegations of the complaint, and both parties moved thereafter for summary judgment. The district court granted Allstate's plea for judgment. United States v. Allstate Insurance Co., 606 F.Supp. at 588. Relying on the language of HRS § 294-3(a), ⁵ the court ruled the United States was not a "person, insured under this chapter" and did not suffer "accidental harm." United States v. Allstate Insurance Co., 606 F.Supp. at 590-91. Citing our decision in Jones v. Don L. Gordon Corp., 60 Haw. 12, 586 P.2d 1024 (1978), to support its ruling, the court held the government could not recover as a third-party beneficiary under Strathman's Basic No-Fault Endorsement policy ⁶ because Strathman had not "intended to benefit the United States." United States v. Allstate Insurance Co., 606 F.Supp. at 591.

The government appealed the adverse ruling to the United States Court of Appeals for the Ninth Circuit. A panel of the court, after reviewing the briefs submitted by the parties and hearing argument, concluded the appeal "raise[d] a question of Hawaii no-fault law that the Hawaii Supreme Court has not addressed." The panel thus summarized the relevant facts and framed the following query for our consideration: "Can the United States recover from an insured person's insurance company pursuant to [Hawaii's no-fault insurance law] the medical care costs provided the insured person ... as a result of a motor vehicle accident covered by the insurance policy?" See supra note 2.

II.

Here, the United States argues as it did earlier, asserting "the Hawaii no-fault laws provide a statutory basis for recovery," it is "entitled to recover as a third-party beneficiary of the insurance contract," and Allstate "has received a windfall and [has] been unjustly enriched and is, therefore, ... liable ... for the costs of [the] health care provided." Finding the purposes and language of our motor vehicle accident reparations law provide a basis for recovery, we conclude the United States may recover the costs of the medical care received by the injured serviceman. ⁷

A.

The Hawaii Motor Vehicle Accident Reparations Act, HRS chapter 294, "an essentially restructured automobile insurance reparations system," Conf.Comm.Rep. No. 13, in 1973 House Journal, at 1219, "bottomed on the compulsory coverage of all motor vehicles and operators under no-fault insurance policies and the partial abolition of tort liability," was enacted in 1973. ⁸ Barcena v. Hawaiian Insurance & Guaranty Co., 67 Haw. 97, 102, 678 P.2d 1082, 1086 (1984); see also Conf.Comm.Rep. No. 4, in 1973 Senate Journal, at 635; Stand.Comm.Rep. No. 402, in 1973 Senate Journal, at 817; Conf.Comm.Rep. No. 13, in 1973 House Journal, at 1219; Joint Stand.Comm.Rep. No. 187, in 1973 House Journal, at 836. The legislature intended thereby "to create a system of reparations for accidental harm and loss arising from motor vehicle accidents, to compensate these damages without regard to fault, and to limit tort liability for these accidents." HRS § 294-1(a). Participation in this "system of no-fault insurance" is mandatory because the legislature found the statutory scheme would "only be truly effective ... if all drivers participated at least to the extent required by law." Id. § 294-1(b) (emphasis added). The legislature further provided that, "[i]f the accident causing accidental harm occurs in the State, every person, insured under [HRS chapter 294] suffering loss from accidental harm arising out of the operation, maintenance or use of a motor vehicle has a right to no-fault benefits." Id. § 294-3(a).

Thus, "[i]f [an] injured person has purchased the 'no-fault policy' required of all motor vehicle owners and operators, the insurer is obliged to compensate him for damages to the extent they fall within 'no-fault benefits' as defined by HRS § 294-2(10)." ⁹ Barcena v. Hawaiian Insurance & Guaranty Co., 67 Haw. at 102, 678 P.2d at 1086. And, we have read the provisions of HRS chapter 294 consistently with "[t]he legislative will ... that 'every [insured] person ... suffering loss from accidental harm arising out of the operation ... of a motor vehicle has a right to no-fault benefits.' HRS § 294-3." Id. at 104, 678 P.2d at 1087 (emphasis added).

B.

The United States asserts a claim to "no-fault benefits" on grounds that it was a "person, insured" who sustained a "loss from accidental harm." Allstate counters that Strathman, rather than the government, was the "person, insured" who suffered the "loss from accidental harm."

"On superficial examination, the [language of HRS § 294-3] appears to preclude the payment of the claimed 'no-fault benefits.' " Barcena v. Hawaiian Insurance & Guaranty Co., 67 Haw. at 103, 678 P.2d at 1086. The term "person, insured," though not separately defined in the statute, ^{10 10} may be read to include only "those persons identified by name in the policy; a spouse or other relative residing in the same household with the named insured; operators, occupants, or users of the insured vehicle; and pedestrians, bicyclists or moped operators injured by the insured vehicle." United States v. Allstate Insurance Co., 606 F.Supp. at 590. Moreover, the term "accidental harm" has been defined to encompass "bodily injury, death, sickness, or disease caused by a motor vehicle accident to a person." HRS § 294-2(1).

"Still, the unavailability of benefits for [the United States] cannot be reconciled with Chapter 294's declared purpose to create a no-fault system of reparations, its limitation of tort liability, and its establishment of right to 'no-fault benefits' for loss from accidental harm arising out of the operation of a motor vehicle." Barcena v. Hawaiian Insurance & Guaranty Co., 67 Haw. at 103, 678 P.2d at 1086. A denial of benefits cannot be squared with the comprehensive scheme...