Winter v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 01 July 2014
• Docket Number: No. DA 13–0548.,DA 13–0548.
• Citation: 328 P.3d 665,375 Mont. 351
• Parties: Jeffrey G. WINTER, Plaintiff and Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellee.
• Court: Montana Supreme Court

375 Mont. 351

328 P.3d 665

Jeffrey G. WINTER, Plaintiff and Appellant,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellee.

No. DA 13–0548.

Supreme Court of Montana.

Submitted on Briefs May 21, 2014.

Decided July 1, 2014.

For Appellant: Roland B. Durocher; Hartelius, Durocher & Winter, PC; Great Falls, Montana.

For Appellee: Robert F. James, Cathy J. Lewis; Ugrin, Alexander, Zadick & Higgins, PC; Great Falls, Montana.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 Jeffrey Winter (Winter) appeals the order of the Eighth Judicial District Court, Cascade County, denying his motion for summary judgment and granting summary judgment to State Farm Automobile Insurance (State Farm). The District Court determined that State Farm was not required to pay Winter's medical expenses pursuant to his automobile medical payments (med pay) coverage that were previously paid by Winter's health insurer. We reverse, and address the following issues on appeal:

¶ 2 1. Did the District Court err by granting summary judgment to State Farm after concluding that Winter had not “incurred” any medical expenses?

¶ 3 2. If the District Court erred by not granting summary judgment to Winter, is Winter entitled to costs, interest, and attorney fees?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 On October 20, 2011, Winter injured his left knee when he stepped into his truck while working on it. His injury required medical care, including surgery, resulting in total medical expenses of $7,929.83. At the time of the injury, Winter was insured by an automobile insurance policy issued by State Farm. The truck was a specifically named insured vehicle for this policy. The State Farm policy provided med pay coverage up to $15,000. Winter also had health insurance coverage through Blue Cross and Blue Shield (BCBS) under a separately purchased policy. Winter's premium for the BCBS insurance was $8,808 for the year.

¶ 5 Winter's medical bills were originally submitted to his BCBS health insurance, which paid nearly all the expenses. On February 15, 2012, Winter notified State Farm of his claim for benefits pursuant to his med pay coverage. State Farm paid only the $25.02 that was unpaid at that time, refusing to pay further benefits on the ground that no expenses were left unpaid. Winter filed suit against State Farm, alleging breach of the insurance contract for its failure to pay the entirety of his medical expenses, and alleging unfair trade practices.

¶ 6 The State Farm policy for the coverage at issue states that State Farm will pay:

medical expenses incurred because of bodily injury that is sustained by an insured and caused by a motor vehicle accident.

(Emphasis in original to indicate defined terms.) The policy also includes nonduplication and exclusion provisions. The nonduplication provisions explain that State Farm will not pay any medical expenses under med pay coverage that have already been paid:

1. as damages under Liability Coverage, Uninsured Motor Vehicle Coverage, or Underinsured Motor Vehicle Coverage of any policy issued by the State Farm Companies to you or any resident relative; or

2. by or on behalf of a party who is legally liable for the insured's bodily injury.

(Emphasis in original.) The fourteen exclusion provisions are all directed toward what activities will preclude coverage except one which provides:

THERE IS NO COVERAGE FOR AN INSURED:

...

2. TO THE EXTENT ANY WORKERS' COMPENSATION LAW OR BENEFITS OR ANY SIMILAR LAW APPLIES TO THAT INSURED'S BODILY INJURY.

(Caps and emphasis in original.) Finally, the policy includes provisions applicable to when “Other Medical Payments Coverage or Similar Vehicle Insurance Applies.” This section dictates that:

1. An insured shall not recover for the same medical expenses or funeral expenses under both this coverage and other medical payments coverage or similar vehicle insurance.¹

2. The Medical Payments Coverage provided by this policy applies as primary coverage for an insured who sustains bodily injury while occupying your car or a trailer attached to it.

If medical payments coverage or other similar vehicle insurance provided by one or more sources other than this policy also applies as primary coverage, then we will pay the proportion of medical expenses and funeral expenses payable as primary that our applicable limit bears to the sum of our applicable limit and the limits of all other medical payments coverage or similar vehicle insurance that apply as primary.

(Emphasis in original.)

¶ 7 The parties filed cross motions for summary judgment. They agreed there were no material issues of disputed fact, and further stipulated to the amount of Winter's “medical expenses,” that Winter suffered a “bodily injury,” that Winter was “an insured,” and that his injury was due to “a motor vehicle accident.” State Farm also agreed that health insurance is not included among the exclusion, nonduplication, or “other insurance” provisions of the policy. State Farm's sole argument was that the term “incurred,” as used but not defined in the policy, only applied to expenses that the insured either personally paid or was liable to pay at the time he requested payment, and, therefore, Winter had not “incurred” any expenses for purposes of his med pay coverage other than the $25.02 which it had paid.

¶ 8 The District Court granted summary judgment in favor of State Farm, reasoning that “State Farm was not presented with a medical expense that had been incurred, in that Mr. Winters [sic] did not become liable or subject to any medical bills as a result of his injury and has, in fact, been made whole.” It further determined that Winter's “reasonable expectations” were met because a “reasonable insured would not expect coverage for a nonexisting debt,” citing Newbury v. State Farm Fire & Cas. Ins. Co., 2008 MT 156, 343 Mont. 279, 184 P.3d 1021.

STANDARD OF REVIEW

¶ 9 We review a district court's grant of summary judgment de novo, using the same M.R. Civ. P. 56 criteria applied by the district court. Harris v. State, 2013 MT 16, ¶ 11, 368 Mont. 276, 294 P.3d 382. A moving party is entitled to summary judgment when the party “demonstrates both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law.” Harris, ¶ 11. The parties in this case do not raise any genuine issues of material fact, and we determine there are none, leaving only the question of entitlement to judgment as a matter of law. The interpretation of an insurance contract is a question of law. Babcock v. Farmers Ins. Exch., 2000 MT 114, ¶ 5, 299 Mont. 407, 999 P.2d 347. Questions of law are reviewed to determine if the district court's conclusions are correct. Harris, ¶ 11.

DISCUSSION

¶ 10 1. Did the District Court err by granting summary judgment to State Farm after concluding that Winter had not “incurred” any medical expenses?

¶ 11 The parties' positions boil down the dispute in this case to the meaning of the term “incurred” as used in Winter's insurance contract with State Farm. The term is not defined by the policy. Winter argues that because there is no exclusion or nonduplication provision in the policy to preclude coverage for medical expenses when a separately purchased health insurance policy has already paid them, the plain language of the policy's med pay coverage requires that his expenses be paid. He disputes State Farm and the District Court's definition of the term “incurred,” arguing “[t]he fact that he incurred [the medical expenses] does not change simply because another source was also available to pay those bills on Mr. Winter's behalf.” He also argues that the definition of incurred offered by State Farm makes the exclusions and nonduplication provisions in the policy superfluous, because they specifically contemplate payment of the insured's expenses by an alternate source, such as workers' compensation, a separate vehicle insurance policy, or a liable third party.

¶ 12 State Farm acknowledges that no provision in the policy expressly prevents duplicate payments when health insurance has paid the expenses on the insured's behalf. However, State Farm argues that, in determining the correct meaning of incurred, “the word must be interpreted to give effect to the consistent, non-duplication of coverage objective reflected in the policy as a whole” and to “reflect the non-duplication intent of the [med pay coverage] benefits.” State Farm also argues that its definition is the only one that complies with our prior cases, and notes that, like the insured in Newbury, Winter has already been made whole for all of his medical expenses. State Farm contends that any further payment under the policy would result in a prohibited windfall to Winter, and it is not reasonable for him to expect to receive duplicate payments for the same expenses.

¶ 13 Although a general rule of interpretation is to “read the policy as a whole and, if possible, [ ] reconcile its various parts to give each one meaning and effect,” we must first consider the terms and words of the contract, which “are to be given their usual meaning and construed using common sense.” Newbury, ¶ 19. When the parties dispute the meaning of a term in the contract, “we determine whether the term is ambiguous by viewing the policy from the viewpoint of a consumer of average intelligence not trained in the law or insurance business.” Newbury, ¶ 19. It is not the Court's duty to impose an exclusion from coverage based on an inference taken from an undeclared purpose of the policy. To the contrary, “limiting language must be clear and unambiguous.” Christensen v. Mt. W. Farm Bureau Mut. Ins. Co., 2000 MT 378, ¶ 27, 303 Mont. 493, 22 P.3d 624. “It is the rule of construction in Montana that language of limitation or exclusion must be clear and unequivocal; otherwise, the policy will be strictly construed in favor of the insured.” Christensen, ¶ 27 (citations omitted).

¶ 14 Winter cites, and the...