410_C214
INSURED
ALLEGES AMBIGUOUS MED PAY PROVISION
|
Personal Automobile |
Medical Payments |
|
Ambiguity |
Uninsured Motorists |
Lauren Hervey purchased an
automobile insurance policy from Mercury Casualty Company. The policy included
a medical expense endorsement that contained, among other things, the following
language:
“This endorsement forms part of the policy shown below, all
other terms and conditions of this policy remain unchanged.... MEDICAL EXPENSE-NO EXCESS, NO REIMBURSEMENT. Condition 3 of
Part II and Exclusion (J), Part II, are hereby deleted from the policy.” The
policy declarations page specified $5,000 medical expense coverage, and the box
titled “No Excess, No Reimbursement” was checked.
The provision deleted by the medical expense endorsement in
Part II [“EXPENSES FOR MEDICAL SERVICES-CONDITIONS”], condition 3 of the
policy, provided in part: “Reimbursement Agreement-Offset Provisions: If
payment is made under this coverage [Expenses for Medical Services], to or on
behalf of any person, such person agrees to reimburse the company to the extent
of such payment from the proceeds of (a): any settlement or judgment that may
result from the exercise of any rights of recovery of such person against any
party that such person claims is responsible for bodily injury to the person
for which payment under medical expense coverage has been made. (b) any payment
received or to be received by or on behalf of an injured person under the
provisions of any (1) automobile or premises insurance affording benefits for
medical expenses, (2) individual blanket or group accident, disability or
hospitalization insurance, (3) medical, surgical, hospital or funeral service,
benefits or reimbursement plan, (4) workers' compensation or disability
benefits law or any similar law.”
The medical expense endorsement also deleted Exclusion (j)
of Part II, which excluded from coverage “expenses payable under this part, if
the expenses are paid, payable or eligible for payment under the terms and
conditions of any (1) automobile or premises insurance affording benefits for
medical expenses, (2) individual, blanket, or group accident, disability or
hospitalization insurance, (3) medical or surgical reimbursement plan, (4)
non-profit association or corporation plan providing hospital, surgical,
medical or similar benefits to participants, enrollees or members. No payment
shall be made under this part until claim for the expenses incurred shall have
been first submitted to the benefit providers listed in (1) thru (4) above, and
such providers have paid their limit of payment or furnished their applicable
limit of service and the insured furnishes a written statement from the
provider(s) as proof. No payment shall be made under this part for medical
expenses incurred which the insured is not required to pay.”
Hervey was involved in an automobile
accident caused by an uninsured driver. Hervey filed
a claim under her policy’s medical expense coverage, and Mercury paid the
medical expenses she incurred as a result of the injuries she received in the
accident. Thereafter, Hervey claimed amounts under
the uninsured motorist section of her policy for the injuries she suffered as a
result of the same accident. Mercury agreed to settle the uninsured motorist
claim but said it would offset against any amount payable for uninsured
motorist coverage the amount it had paid Hervey under
the medical expense coverage.
Hervey filed suit against Mercury,
alleging breach of contract and a violation of the California Unfair
Competition Law and seeking declaratory relief.
The trial court entered judgment in favor of Mercury, and Hervey appealed.
On appeal, Hervey contended that
the “NO REIMBURSEMENT” in large print on the medical expense endorsement, along
with the checked box for “No Reimbursement” next to the medical expense
coverage on the declarations page, conveyed that Mercury would not seek
reimbursement or offsets of medical expense payments as a result of payments
from any source. She added that the retention of the right of reimbursement for
uninsured motorist obligations was buried in the policy so that it was not
“conspicuous,” “plain and clear” as required by a previous court decision.
The higher court disagreed with Hervey’s
interpretation, noting: “An insured would not normally expect that he or she
would receive from the insurer two payments covering the same injury. Under the
medical expense provisions of the policy, the insured here could receive from a
third party a payment for his or her injury without having to credit or pay
back the insurer for medical payments for the same injury. But it would seem
anomalous to expect the insurer itself to pay twice for the same injury, once
under the medical expense coverage of the policy and again under the uninsured
motorist coverage of the policy. We conclude that the condition is conspicuous,
plain, and clear and thus enforceable.”
Hervey vs. Mercury Casualty Co.-185
Cal.App.4th 954, 110 Cal.Rptr.3d 890-Cal.App. 2 Dist.- June 17, 2010