United Services Auto. Ass'n v. Perry, Civ. A. No. SA-94-CA-365.

• Decision Date: 17 May 1995
• Docket Number: Civ. A. No. SA-94-CA-365.
• Citation: 886 F. Supp. 596
• Parties: UNITED SERVICES AUTOMOBILE ASSOCIATION, Plaintiff, v. William J. PERRY, Secretary of United States Department of Defense and the United States of America, Defendants.
• Court: U.S. District Court — Western District of Texas

886 F. Supp. 596

UNITED SERVICES AUTOMOBILE ASSOCIATION, Plaintiff, v. William J. PERRY, Secretary of United States Department of Defense and the United States of America, Defendants.

Civ. A. No. SA-94-CA-365.

United States District Court, W.D. Texas, San Antonio Division.

May 17, 1995.

Barry A. Chasnoff, Stephan Bruce Rogers, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, TX, for plaintiff United Services Auto. Ass'n.

Colette J. Winston, Trial Atty., Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, DC, for defendant William J. Perry, Secretary of U.S. Dept. of Defense.

John F. Paniszczyn, U.S. Attys. Office, San Antonio, TX, Colette J. Winston, Trial Atty., Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, DC, for defendant U.S.

ORDER

BIERY, District Judge.

This is a case of first impression in which the Court is requested to interpret the meaning and intent of Congress' 1990 amendment of 10 U.S.C. § 1095 as it applies to a first-party automobile insurer's obligation to reimburse the United States for medical care the government renders military-related insureds injured in automobile accidents. An historical and well-reasoned overview of pre-1990 10 U.S.C. § 1095 may be found in United States v. United Servs. Auto. Ass'n, 5 F.3d 204 (7th Cir.1993). For the reasons stated below, the Court grants the summary judgment motion of the United Services Automobile Association ("USAA").

BACKGROUND

The undisputed facts establish that twelve people who are either active and retired military service personnel or military dependents were injured in separate, unrelated automobile accidents. All twelve were covered by automobile insurance policies issued by USAA. As part of the coverage under its "Easy Reading Auto Policy," USAA was obligated to cover its insureds for medical expenses incurred in automobile accidents. All twelve of the insureds were injured in auto accidents and treated after November 1990. In addition to their automobile insurance coverage with USAA, the twelve insureds were also entitled to medical care in a military hospital by virtue of their military status. Each individual, therefore, could choose to seek treatment for injuries in a non-military facility for which USAA would cover the costs, or each could choose treatment in a government medical facility. As a result of their injuries, each of the twelve insureds sought treatment at Army medical facilities in Georgia, Missouri, California and Alabama and Air Force facilities in Arkansas, Illinois and Ohio.

Because the insureds received free medical care at the military medical centers, USAA incurred no obligation to reimburse the insureds for their costs. The United States, however, brought claims against USAA for reimbursement of the costs of the medical care the federal government had rendered to the insureds pursuant to 10 U.S.C. § 1095. USAA filed suit and moved for summary judgment contending it is not a "third-party payer" as defined by the statute and is, therefore, not statutorily liable to the United States. USAA additionally argues the statute does not allow Department of Defense ("DOD") definitions of "no-fault insurance" and "insurance, medical service, or health plan" because they are contrary to § 1095. The United States also moved for summary judgment, arguing that USAA is a "third-party payer" under section 1095 and thus statutorily liable for the costs of the medical care. Moreover, the United States contends the DOD definitions are allowed under the statute.

10 U.S.C. § 1095

Section 1095 states in pertinent part:

In the case of a person who is a covered beneficiary, the United States shall have the right to collect from a third-party payer the reasonable cost of health care services incurred by the United States on behalf of such person through a facility of the uniformed services to the extent that the person would be eligible to receive reimbursement or indemnification from the third-party payer if the person were to incur such costs on the person's own behalf.

10 U.S.C. § 1095(a)(1). Prior to the 1990 amendment, "third-party payer" was defined as "an entity that provides an insurance, medical service, or health plan by contract or agreement." Automobile insurers were not third-party payers as defined in the original § 1095. United States v. United Servs. Auto. Ass'n, 5 F.3d 204, 209 (7th Cir.1993). Effective November 5, 1990, however, § 1095 was amended to define third-party payer as "an entity that provides an insurance, medical service, or health plan by contract or agreement, including an automobile liability insurance or no fault insurance carrier." 10 U.S.C. § 1095(h)(1) (1995) (emphasis added). The issue before the Court is whether the amended definition of third-party payer includes an automobile insurer who has provided voluntary first-party coverage for a military-related insured's medical expenses for injuries sustained in an auto accident which is neither mandated by state law nor designed to replace tort liability (this insurance is sometimes referred to as "Medpay coverage"). The United States argues USAA is a third-party payer as defined in § 1095 because it is an "automobile liability insurance or no fault insurance carrier." USAA contends its coverage cannot be considered "automobile liability insurance" or "no fault insurance" coverage. Under USAA's interpretation of the amended statute, "three key characteristics" distinguish its insurance from automobile liability insurance and no fault insurance:

1. USAA's coverage is "first-party" insurance, meaning that the insured obtains benefits directly from USAA. Automobile liability insurance is "third-party" coverage obligating the insurance company to pay for damages incurred by a person injured by the insured;

2. USAA's coverage is not no fault insurance because it is not designed to replace tort liability; and

3. USAA's coverage is voluntary add-on insurance, meaning that USAA is not mandated by statute to provide the insurance. No fault insurance is, by definition, mandated by statute.

STANDARD OF REVIEW

This case is presented to the Court on cross-motions for summary judgment on stipulated facts. As such, it is a proper case for the exercise of summary judgment under Rule 56 of the Federal Rules of Civil Procedure. FED.R.CIV.P. 56(a), (b); Schlytter v. Baker, 580 F.2d 848, 849 (5th Cir.1978); United States v. 1957 Oldsmobile 4-Door Sedan, 173 F.Supp. 956, 957 (S.D.Tex.1959). When the parties proceed on the same material facts, a court will grant summary judgment only when the moving party is entitled to judgment as a matter of law. FED. R.CIV.P. 56(c); Bricklayers Int'l Union, Local 15 v. Stuart Plastering Co., 512 F.2d 1017, 1023 (5th Cir.1975); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). When faced with cross-motions, the Court must consider each party's motion separately, and each movant has the burden of presenting evidence to support its motion. Barhold v. Rodriguez, 863 F.2d 233, 236 (2d Cir.1988).

Turning to relevant substantive law, this Court must follow principles of statutory construction to determine the proper meaning of § 1095. The overriding goal of these principles is to identify and effectuate the intent of Congress. If the statutory language is clear as to its intended meaning, the Court's inquiry generally is at an end. If, however, the language is sufficiently vague to preclude definitive adjudication on this basis, the Court must use "traditional tools of statutory construction," including examination of the statute's history and purpose, and application of established rules of construction. INS v. Cardoza-Fonseca, 480 U.S. 421, 446-47, 107 S.Ct. 1207, 1221, 94 L.Ed.2d 434 (1987); see also NLRB v. United Food & Commercial Workers Union, Local 23, 484 U.S. 112, 123, 108 S.Ct. 413, 420, 98 L.Ed.2d 429 (1987). If an ambiguity remains despite the application of these tools, the courts normally defer to an "expert administrator's statutory exposition" of the statute which is reasonable and otherwise permissible "in light of the legislature's revealed design." NationsBank v. Variable Annuity Life Ins. Co., ___ U.S. ___, ___-___, 115 S.Ct. 810, 813-14, 130 L.Ed.2d 740 (1995) (quoting in part Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984)). The Court will evaluate the parties' competing interpretations of the amended § 1095 under these principles.

United States v. United Servs. Auto. Ass'n, 5 F.3d 204 (7th Cir.1993), involving identical parties and the interpretation of the pre-1990 statute, is instructive. The government filed a complaint against USAA seeking reimbursement for medical care the United States rendered three military retirees or dependents after each was injured in an automobile accident. Id. at 205. The district court found USAA was a "third-party payer" pursuant to the pre-1990 version of 10 U.S.C. § 1095. Specifically, the district court determined, based on the clear language of the statute, USAA was an "an entity the provides an insurance, medical service or health plan by contract or agreement." Id. at 206. The Seventh Circuit Court of Appeals disagreed:

It is uncertain whether an automobile insurance policy provision, which covers medical costs resulting from automobile accidents, is "an insurance, medical service, or health plan" under § 1095. Such a provision could be characterized as "medical service" or "health plan" because the policy does cover medical expenses under certain circumstances. However, Congress' use of the term "insurance" as an adjective rather than a noun, and the use of the terms "medical" and "health" in juxtaposition with "plan" could also indicate that the statute was intended to reach issuers of health care insurance.

Id. at 206-07. The Court, after reviewing the plain language of the statute, the...