United States v. Allstate Ins. Co., C-84-0860.
| Decision Date | 16 April 1985 |
| Docket Number | No. C-84-0860.,C-84-0860. |
| Citation | 606 F. Supp. 588 |
| Parties | UNITED STATES of America, Plaintiff, v. ALLSTATE INSURANCE CO., Defendant. |
| Court | U.S. District Court — District of Hawaii |
Asst. U.S. Atty. Peter Axelrod, Honolulu, Hawaii, for plaintiff.
Richard Sutton, Jr., Honolulu, Hawaii, for defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
AS SCHEDULED, the parties' cross-motions for summary judgment came on for oral argument in Honolulu, Hawaii on February 19, 1985. Assistant United States Attorney Peter Axelrod appeared on behalf of the government; the defendant was represented by Richard Sutton.
Based upon the record and the oral presentations of counsel, and for the reasons discussed below, the court rules as follows: the government's motion for summary judgment is DENIED; defendant Allstate Insurance Company's motion for summary judgment is GRANTED.
On August 21, 1982 Thomas L. Stratham was injured when he lost control of his motorcycle while riding at Bellows Air Force Station, Hawaii. No other persons or vehicles were involved in the accident. Stratham, a member of the United States Navy, was initially treated at a nearby civilian hospital but was then transferred to Tripler Army Medical Center, Hawaii, where he was hospitalized for six days. As required by law, the United States paid for Stratham's treatment at the civilian facility ($168.10) and did not charge him for the costs ($2,436.00) of the medical services provided at the military hospital.1
In February 1983, the United States submitted a claim in the amount of $2,604.10 (civilian and military medical expenses) to defendant Allstate Insurance Company (Allstate), the insurer of Stratham's motor-cycle. Allstate responded by tendering a check in the amount of $168.10 as reimbursement for the civilian treatment only, and refused to pay for the services rendered at the army facility. The government declined the partial payment, and in August 1984 initiated this action to recover the total amount expended for Stratham's treatment. Allstate denies that it is obligated to pay the military treatment portion of the claim.
While this case does involve an issue of first impression under Hawaii law2 there is nothing novel about the United States' claim for reimbursement for expenses incurred in the treatment of injured service personnel. Note, The Medical Care Recovery Act in No-Fault Automobile Insurance Jurisdiction: Extensions of the Federal Right of Reimbursement Against No-Fault Insurers, 21 B.C.L.Rev. 623, 631 n. 49 (1980) ().
The principal tool utilized by the government to collect those claims is the Federal Medical Care Recovery Act (FMCRA). 42 U.S.C. §§ 2651-2653 (1976). Simply stated, that act creates an independent right in the United States to recoup any sums spent for the medical care of an injured serviceman from a third-party tortfeasor.3 As an alternative to its federal statutory right, the government also relies on a non-federal basis for recovery, asserting a right under a state statute or under contract law. Specifically, the United States claims rights as an "insured" or as an intended third-party beneficiary of the insurance contract between the servicemember and the insurance company.4 Inasmuch as the FMCRA is not applicable to the facts of this case,5 the plaintiff has focused entirely on the language of Hawaii's no-fault law and Stratham's insurance policy. Consequently, the government's claim for reimbursement must turn on an interpretation of the no-fault statute and the Allstate policy.
The government offers two primary arguments in support of its claim to reimbursement. First, it argues that it is entitled to benefits from Stratham's policy by the language of Hawaii's no-fault insurance law. The plaintiff's second argument is that the United States should be reimbursed as an intended third-party beneficiary of that insurance policy. Each of these contentions will be addressed separately.
In 1973 the Hawaii legislature enacted its first comprehensive no-fault insurance law. The stated purpose of that law is "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 those accidents." Hawaii Rev.Stat. § 294-1. The effect of that law is to create a two-tiered system for recovery of personal injury losses from vehicle accidents. For such losses less than or equal to $15,000, an injured person's exclusive remedy is an insurance claim — tort liability is abolished. For losses in excess of $15,000 an injured person is free to seek damages in tort or payment under his insurance policy. Because the government's claim here is $2,604.10, the provisions of the no-fault law control.
Hawaii's no-fault law states that "every person, insured under this chapter ... suffering loss from accidental harm from a motor vehicle ... has a right to no-fault benefits." Hawaii Rev.Stat. § 294-3(a). Those benefits include, inter alia, "all appropriate and reasonable expenses necessarily incurred for medical, hospital, surgical, professional nursing, dental, optometric, ambulance, prosthetic services, products and accommodations furnished ...." Hawaii Rev.Stat. § 294-2(10)(A). The fact that Stratham "incurred" no expenses for the medical care furnished is not, as the defendant argues, determinative of whether the government is entitled to benefits. Clearly, the government "incurred" an expense in the form of services rendered. United States v. California State Automobile Association, 530 F.2d 850, 851 n. 1 (9th Cir.1976). The critical question here is whether the United States is a "person, insured under this chapter ... suffering loss from accidental harm." Hawaii Rev. Stat. § 294-3(a).
Allstate argues that the plaintiff is not a "person, insured" and has not suffered any "accidental harm." This court agrees. Although there is no statutory definition of "persons, insured under this chapter," a reading of the statute as a whole leads this court to conclude that only the following persons are "insured": 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. The United States does not fall within any of those categories.
Additional support for the court's conclusion that the United States' claim is not covered by the no-fault law is the statutory definition of "accidental harm." Section 294-2(1) defines "accidental harm" as "bodily injury, death, sickness, or disease caused by a motor vehicle accident to a person." Obviously, the United States cannot, and does not, argue that it has suffered such harm. Rather, the United States argues that it has suffered a "loss" (the cost of the medical services) as the result of the "accidental harm" suffered by Stratham. Hawaii Rev.Stat. § 294-3. While that argument is not without some appeal, it has, however, been rejected by the Supreme Court of Hawaii. In Wong v. Hawaiian Insurance Companies, 64 Haw. 189, 637 P.2d 1144 (1981) the court stated "`loss from accidental harm' referred to in HRS § 294-3(a) means a loss which is sustained by the person injured." Stratham— not the United States—is the "person injured." It is his "loss" (zero in this case) which is compensable under the statute— not the loss of the United States. Accordingly, the plaintiff is not entitled to reimbursement under the language of Hawaii's no-fault law.
The next question to be resolved is whether the United States is entitled to benefits as a third party beneficiary of Stratham's policy. The threshold question, not addressed by the parties, is whether Hawaii or federal law should be applied. Since the United States invoked this court's jurisdiction under 28 U.S.C. § 1345, this suit is not controlled by Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) and application of Hawaii law is not mandated. United States v. State of California, 655 F.2d 914, 916-917 (9th Cir.1980). Nevertheless, as there are no appropriate federal rules governing the interpretation of insurance contracts, the court must look to the substantive law of Hawaii. United States v. Nationwide Mutual Insurance Co., 499 F.2d 1355, 1356-57 (9th Cir.1974).
Hawaii courts have adopted the law of third-party contract beneficiaries as set forth in Section 302 of the Restatement (Second) of Contracts (1981). See Harris v. Waikane Corp., 484 F.Supp. 372 (D.Hawaii 1980); Jones v. Don L. Gordon Corp., 60 Hawaii 12, 586 P.2d 1024 (1978). Section 302, applied to this action, states in pertinent part:
Unless otherwise agreed between promisor Allstate and promisee Stratham, a beneficiary United States of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and ... the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
The issue then is whether Stratham intended to benefit the United States.
To demonstrate Stratham's intent the government has relied solely on the language of the insurance policy. The government does not contend that the...
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U.S. v. Allstate Ins. Co.
...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 ......