Bolin v. Allstate Indemnity Company

Filing 28

ORDER granting 14 Defendant's Motion for Partial Summary Judgment; denying 19 Plaintiff's Motion for Partial Summary Judgment. Signed by Judge Richard F. Cebull on 10/18/2010. (EMA)

Bolin v. Allstate Indemnity Company

Doc. 28

IN THE UNITED STATES DISTRICT COURT FO R THE DISTRICT OF MONTANA B U T T E DIVISION

J E N N IFE R BOLIN, individually and on b e ha lf of all others similarly situated,

) ) ) P la intiffs , ) ) vs . ) ) A LLS T A T E INDEMNITY COMPANY, ) a nd all parent, affiliate and subsidiary ) c o mp a nie s thereof, ) ) D e fe nd a nt. ) ___________________________________ )

C a us e No. CV 09-83-BU-RFC

O R D ER

T his is a class action suit brought by named Plaintiffs Jennifer Bolin and o the rs similarly situated against Defendant Allstate Indemnity Company (" D e fe nd a nt" ). Presently before the Court are the Parties' Cross-Motions for Partial S umma ry Judgment. The Motions are fully briefed and the Court is prepared to ma k e a ruling at this time.
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Dockets.Justia.com

Defendant's motion seeks partial summary judgment on Plaintiffs' claims that D e fe nd a nt Allstate is required to compensate Plaintiff Bolin, and all class members, fo r attorneys' fees and costs as alleged uncompensated damages under medical p a yme nts coverage, uninsured motorist coverage, or underinsured motorist c o ve ra ge . 1 P la intiffs move for partial summary judgment on their claims that Defendant's " p ro gra mma tic claims adjustment" practice of taking credit for other personal, p o rta b le first party insurance benefits when adjusting its insured's claims constitutes d e facto subrogation. BACKGROUND T his case was initiated in Montana's Eighteenth Judicial District Court, G a lla tin County, on October 13, 2009. Defendant removed the case to this Court on N o ve mb e r 13, 2009. On March 29, 2010, upon the Defendant's Motion, this Court d is mis s e d Plaintiffs' Class Complaint without prejudice. On April 7, 2010, P la intiffs filed an Amended Class Action Complaint and Jury Demand. In representing the putative class, Plaintiff Bolin alleges that on July 1, 2007, s he was injured in an automobile accident. Plaintiff suffered injuries with medical e xp e ns e s in excess of $15,000.
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AMENDED COMPLAINT ¶¶ 14-23. Page 2 of 18

Plaintiff Bolin was insured by Defendant Allstate with per person per a c c id e nt coverage of $50,000 underinsured motorist ("UIM") coverage and $5,000 M e d ic a l Payments Coverage ("MPC"). Upon Plaintiff's request, Allstate paid the me d ic a l payment limits arising from the accident, but refused payment at that time und e r the UIM coverage. The tortfeasor was insured by Farmers Insurance and had Bodily Injury (" B I" ) policy limits it he amount of $30,000 per person per accident. Farmers paid

P la intiff Bolin the $30,000 BI limits without a release of all claims for its insured. At the time of the accident Plaintiff Bolin was also insured by S e ntine l/H a rtfo rd Insurance Company ("Hartford") with stackable limits totaling $ 1 0 0 ,0 0 0 for UIM coverage and $10,000 MPC. Upon Plaintiff's request, Hartford p a id Bolin the $10,000 MPC limits for medical expenses incurred from the accident. However, they paid nothing under the UIM coverage policy. At the time of the a c c id e nt, Plaintiff was paying premiums to Hartford for UIM and MPC coverage. In total, Plaintiff Bolin received $45,000 for her related injuries arising from the July 1, 2007 automobile accident. In addition, as a result of the accident, P la intiff alleges that she incurred $14,499 attorney fees in recovering her losses

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arising from the July 1, 2007 accident.2 She further alleges that she continues to s uffe r accident-related pain and limitations in her activities of daily living.3 O n March 29, 2010, this Court issued an Order granting Defendant's Motion to Dismiss the Original Complaint without prejudice. In granting the Order, this C o urt rejected Plaintiff Bolin's claim that "because she has not been reimbursed for he r attorney fees and costs from the tortfeasor, she has not been made whole." 4 H o w e ve r, in that same Order, the Court did allow Plaintiffs to renew their claims if P la intiff Bolin could allege recoverable damages, other than attorney fees and cost, tha t were in excess of the payments she had already received.5 Plaintiff has since file d an Amended Class Action Complaint alleging that she continues to suffer a c c id e nt-re la te d pain and limitations in her activities of daily living. S T A N D A R D OF REVIEW P urs ua nt to Fed.R.Civ.P. 12(b)(6), the court cannot grant the motion to dismiss " `unless it appears beyond doubt that plaintiff can prove no set of facts in

PLAINTIFFS' COMBINED STATEMENT OF GENUINE ISSUES AND STATEMENT S OF UNDISPUTED FACTS, ¶ 13.
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2

Id., ¶ 13. See Doc.# 11, pp 3-4. Id. Page 4 of 18

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support of his claim which would entitle him to relief.' " Sun Sav. and Loan Ass'n v. D ie rd o rff, 825 F.2d 187, 191 (9th Cir.1987) (quoting Conley v. Gibson, 355 U.S. 4 1 , 45-46 (1957)). W ith respect to the summary judgment motion, summary judgment is a p p ro p ria te only when there is no genuine issue as to any material fact and the mo ving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The mo ving party has the initial burden of "identifying for the court those portions of the ma te ria ls on file in the case that it believes demonstrate the absence of any genuine is s ue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the mo ving party meets its burden, then the opposing party may not defeat a motion for s umma ry judgment in the absence of any significant probative evidence tending to s up p o rt its legal theory. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 2 7 0 , 282 (9th Cir.1979). In a motion for summary judgment, the court must view the fa c ts in the light most favorable to the non-moving party. State Farm Fire and Cas. C o . v. Martin, 872 F.2d 319, 320 (9th Cir.1989). D ISC U SSIO N 1. D e fe nd a nt' s Motion for Partial Summary Judgment D e fe nd a nt seeks partial summary judgment on the claim that it is required to c o mp e ns a te Plaintiff Bolin, and all members of the class she purports to represent,
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for attorney's fees and costs as alleged uncompensated damages under MPC, UIM a nd UM coverage. In support, Defendant cites to this Court's prior Order of March 29, 2010, w he re in this Court held that attorney's fees are not an element of damages that are re c o ve ra b le in tort law. 6 P la intiff' s sole response to Defendant's Motion is that she has sufficiently a lle ge d in her Amended Class Action Complaint that she has incurred damages in e xc e s s of the underlying BI limits of $30,000. As such, Plaintiff asks this Court to d e ny the Defendant's partial summary judgment motion. H o w e ve r, Defendant concedes that Plaintiff has alleged damages in excess of $ 3 0 ,0 0 0 . Rather, Defendant asks that this Court enforce its prior March 29, 2010 ruling that attorney's fees are not an element of damages recoverable in tort law. Having reviewed the Parties' arguments, this Court concludes that Plaintiffs ha ve raised no genuine issue of fact that would required this Court to reconsider its p rio r ruling of March 29, 2010. Defendant's Motion for Partial Summary Judgment o n this issue is GRANTED. 2. P la intiffs ' Motion for Summary Judgment Plaintiffs bring their present suit alleging that Defendant's "programmatic
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Doc. #11, pp. 3-4. Page 6 of 18

claims adjustment" practice of taking credit for other personal, portable first-party ins ura nc e benefits when adjusting its insured's claims violates Montana's "made w ho le " doctrine and constitutes de facto subrogation. In response, Defendant contends that it is not attempting to avoid paying any und e rins ure d motorist coverage benefits. Rather, under the "duplicate payments" p ro vis io n of its MPC and UIM policy with insured, it has the right to reduce the d a ma ge s recoverable by other payments that Plaintiff has already received. Fro m the Court's review, Plaintiff does not want the Defendant to consider H a rtfo rd ' s $10,000 medical payment coverage in its calculations of damages re c o ve ra b le as underinsured motorist benefits. Rather, Plaintiff would have this C o urt ignore Hartford's payment so that she may receive that same amount through he r underinsured motorist policy with Defendant. A. C r e d its , duplicate payments and offsets

Plaintiff Bolin, on behalf of the Class, contends that Defendant's act of taking c re d it for other personal, portable first-party insurance benefits when adjusting c o ns titute s de facto subrogation. However, this Court's review of Montana cases re fle c ts support, within the insurance context, for the use of credits, offsets and e xc lus io ns on duplicate payments. In Farmers Alliance Mut. Ins. Co. v. Miller, 869 F.2d 509, 513 (9 th Cir.
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1989), the Ninth Circuit Court looked at Montana's underinsured motorist law and no te d that underinsured motorist coverage "presupposes some liability insurance but a c ts as a gap-filler, ensuring that the insured recovers at least the amount he is ins ure d for, even if the tortfeasor's insurance coverage is deficient." Id. Recovery in excess of the gap between the victim's underinsured motorist coverage and the to rtfe a s o r's liability coverage would not be underinsured motorist recovery at all; it w o uld effectively be recovery under a judicially created collision policy. Id. A ltho ugh the Miller Court limited its reasoning to offsets that resulted from lia b ility insurance held by a tortfeasor, it nevertheless acknowledged the possible a p p lic a b ility of offsets from other sources. Id. In Liedle v. State Farm, 283 Mont. 129 (1997), the Montana Supreme Court up he ld a reduction, under the collateral source reduction statute, of medical pay ins ura nc e benefits received. In reaching that conclusion, the Montana Court noted tha t the statute did not "authorize collateral source payments to be deducted from the claimant's available underinsured motorist coverage, but authorized that such p a yme nts be entered into the calculation of the claimant's compensable injuries a n d losses." Id., 283 Mont. at 134. Further, the Liedle Court rejected plaintiff's a rgume nt that State Farm's offset was "the equivalent of allowing an insurance c o mp a ny to subrogate against its own insured . . ." Id., 283 Mont. at 133.
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In Olson v. Daughenbaugh, 307 Mont. 371 (2001), the Montana Supreme C o urt held that an employee that was injured while working for an uninsured e mp lo ye r could not receive benefits from the Uninsured Employers Fund and pursue a n independent cause of action against the employer. In finding in favor of the e mp lo ye r, the Court noted that plaintiff was seeking full compensation for his w o rk -re la te d injury twice--once from the UEF and again from the employer. Id., 3 0 7 Mont. at 375. The Court concluded that Montana law does not allow for double recovery or duplicate payments of workers' compensation benefits. C iting back to its ruling in Thayer v. Uninsured Employers' Fund, 2 9 7 Mont. 179 (1999), the Olson Court noted that its present rationale was c o ns is te nt with its previous decisions. The Olson Court noted that, in Thayer, " [W ]e held that the claimant was not entitled to recover from both the UEF and the unins ure d employer because the Uninsured Employers' Fund is merely a safety net w hic h stands in the place of the uninsured employer, and the setoff provisions are uniq ue ly necessary to assure some payment to as many uninsured employees as p o s s ib le ." Olson, 307 Mont. at 377. Consequently, a double recovery was not p e rmitte d . Id. A ltho ugh Thayer and Olson involved Workers' Compensation, on the issue of d o ub le recovery, this Court can rely on those holdings to conclude that double
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payments are not permitted. Here, Plaintiff asks this Court to ignore the $10,000 tha t she has actually received from Hartford in order to recover that same amount fro m Defendant. Further, in Newbury v. State Farm Fire & Cas. Ins. Co. of Bloomington , Ill, 3 4 3 Mont. 279 (2008), the Montana Court also considered the issue of the "other p a yme nts ." In Newbury, Plaintiff was struck by another vehicle during the course o f his employment. He subsequently filed a claim for and received worker's c o mp e ns a tio n medical benefits. Because his resulting medical expenses were in e xc e s s of the benefits paid by the Worker's Compensation, Newbury turned to his tw o automobile insurance policies with State Farm which allowed for $5,000 per p o lic y for medical expenses arising from bodily injury sustained "through being s truc k as a pedestrian by a motor vehicle." Id., 343 Mont. at ¶ 9. Newbury sought to obtain medical payment coverage from both policies in the amount of $10,000. State Farm paid the $1,175.80 in medical expenses not covered by worker's c o mp e ns a tio n and denied any further payment. In their denial, State Farm relied on a provision stating that there would be no coverage "to the extent Workers' C o mp e ns a tio n benefits are required to be payable." Id. Newbury brought suit a tta c k ing the validity of the provision, among others, on public policy grounds. Id., 3 4 3 Mont. at ¶ 12.
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In Newbury, the Montana Supreme Court concluded that the clause at issue d id not violate public policy. Specifically, they found that "[I]n Montana, parties to a n insurance contract may include provisions that exclude coverage without vio la ting public policy if the exclusion applies to optional, rather than mandatory c o ve ra ge ." Id., 343 Mont. at 288.7 The Newbury Court went on to state that p ro vis io ns regarding optional coverage in an insurance contract are "at the sole d is c re tio n of the parties to the contract" and not a violation of public policy. Id. Therefore, where an insured is injured in a vehicle, it is permissible for a policy to limit or even exclude coverage to the extent other primary insurance like that of the d rive r and/or tortfeasor is available and required to be payable. Id., 343 Mont. at ¶ 38. The Newbury Court rejected the plaintiff's request that it ignore the W o rk e r' s Compensation benefits he received and give him the full medical payment limits of his auto policy. Essentially, the Newbury Court recognized State Farm's right to credit what was already paid by the Workers' Compensation Fund in c o ns id e ring what it was liable for under its insured's medical payment policies. Like the plaintiff in Newbury, Bolin asks this Court to ignore payments she has

In Montana, medical payment and underinsured motorist coverage are optional coverage provisions. M.C.A. §§ 61-6-103(2), 301(1). However, uninsured motorist coverage is mandatory unless rejected by the insured. M.C.A. § 33-23-201. Page 11 of 18

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already received in order to trigger her policy's coverage. Most recently, this Court, in Gettle v. Prop. & Cas. Ins. Co. of Hartford, fo llo w e d the line of reasoning stated in Newbury and recognized that a provision tha t prioritized an insurer's obligation to pay med pay, UM and UIM coverage until o the r primary insurance has been collected up to the policy limits, was not de facto s ub ro ga tio n and thus did not violate Montana's public policy.8 In Gettle, this Court c o nc lud e that "excess coverage" provisions in a UIM policy which took into c o ns id e ra tio n other insurance payments in determining what an insurer owed its ins ure d was not a violation of public policy. Lo o k ing at Plaintiff Bolin's policy with Allstate, both her medical payments c o ve ra ge and underinsured motorist coverage expressly state that no "duplicate p a yme nts for the same elements of loss" would be paid under those coverages.9 A ltho ugh Defendant has paid the policy limits of Plaintiff's med pay coverage of $ 5 0 0 0 , it contends that it is not obligated to pay any amounts under Plaintiff's und e rins ure d motorist policy. In support of this, Defendant notes that its adjuster ha s found Plaintiff Bolin's total loss to be $42,000.

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CV 09-43-RFC (U.S.D.C. Mont., February 9, 2010, Doc. #17)

DEFENDANT'S STATEMENT OF GENUINE ISSUES IN OPPOSITION TO PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, Doc. #26, ¶5, Exhibits A & B. Page 12 of 18

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The Court notes that she has already received the $30,000 Bodily Injury limits from the tortfeasor, $10,000 Med Pay limits from Hartford Insurance and $ 5 ,0 0 0 Med Pay limits from Defendant Allstate. Based on this, Defendant contends tha t Plaintiff has been fully compensated for all recoverable damages. To the extent P la intiff seeks to recover any attorneys' fees, Defendant argues and this Court a gre e s that, under the American rule and by prior Order this Court, they are not an e le me nt of damages that are recoverable in tort law. A s evidenced by the aforementioned Montana cases, there has been a long his to ry of recognition in the insurance and Workers' Compensation arena, of c re d its , offsets and the exclusion of double recoveries and payments. Our present c a s e is no different. Moreover, Montana Courts have recognized that "parties to an ins ura nc e contract may include provisions that exclude coverage without violating p ub lic policy if the exclusion applies to optional, rather than mandatory coverage." Newbury, 343 Mont. at 288. The Newbury Court went on to state that provisions re ga rd ing optional coverage in an insurance contract are "at the sole discretion of the parties to the contract" and not a violation of public policy. Id. 1. D E FACTO SUBROGATION CLAUSES

P la intiff Bolin contends that Defendant Allstate's practice of taking credit for o the r personal, portable, first party insurance benefits when adjusting its insured's
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claims constitutes de facto subrogation and is contrary to Montana law. E xte ns ive discussion on the issue of subrogation and the "made whole" doctrine w a s made in this Court's opinion in the separate case of Gettle v. Prop. & Cas. Ins. C o . of Hartford.10 As such, a reiteration of the state of the law on subrogation shall no t be made here. Plaintiffs allege that Defendant's present action of taking credit for other M P C , UM and/or UIM coverage constitutes de facto subrogation and thus denying c o ve ra ge even though Plaintiffs have paid valuable consideration. The consequence o f Defendant taking credit for another insurance company's policy, according to P la intiffs , are that Defendant has effectively subrogated before Plaintiffs have been ma d e whole. In researching cases that discuss the concept of de facto subrogation as a c a us e of action, this Court was only able to find two cases: Thayer v. Uninsured E mp lo ye rs ' Fund, 297 Mont. 179 (1999) and Blue Cross and Blue Shield of M o nta na , Inc. v. Montana State Auditor, 352 Mont. 423 (2009). It does not go w itho ut notice that both cases come from the Montana State Supreme Court. In Thayer, Uninsured Employers' Fund's (UEF) was paying death benefits to

The Court notes that the same attorneys in the Gettle case represent the same respective Parties in this case. Page 14 of 18

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the widow of an employee whose employer carried no Workers' Compensation ins ura nc e . The widow brought suit against the employer and the employer settled fo r $100,000. Upon notice of the settlement with the employer, UEF informed T ha ye r that she was no longer entitled to further benefits. UEF claimed a statutory right of setoff to the remaining balance due ($74,301) against the $100,000 s e ttle me nt from the employer. UEF did not seek recovery of any benefits paid prior to Thayer's settlement with her husband's employer. Id, 297 Mont. at 181. T ha ye r contended that UEF was not applying a statutory right of setoff. Rather, UEF was claiming a subrogation interest in the settlement she received from the employer. Id. According to Plaintiff, this allowed UEF to have a de facto s ub ro ga tio n interest before Plaintiff had been made whole. Id. Ultimately, the Montana Court concluded that its prior subrogation cases did no t apply to Thayer because the UEF was not an insurer and did not receive p re miums from the employer. Rather, it was a legislatively created source to minimiz e the hardships of an injured worker that is unable to get Workers' C o mp e ns a tio n benefits and was not intended to provide full payment. Id. Further, the Montana Court found that because the UEF was "merely a safety net" and s ta nd s in the place of the uninsured employer, it was reasonable to condition UEF's o b liga tio ns "on the extent to which the employer fails to provide compensation."
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Id., 297 Mont. at 185. In Blue Cross Blue Shield ("BCBS"), the Montana Supreme Court affirmed the Montana State Commissioner of Insurance's decision to disapprove Blue C ro s s ' s insurance forms that contained policy language wherein BCBS would not p a y health care benefits to its beneficiaries for: "services, supplies, and medications p ro vid e d to treat any injury to the extent the member receives, or would be entitled to receive where liability is reasonably clear, benefits under an automobile insurance p o lic y. . ." Id. 312 Mont at 425. In finding in favor of the State Commissioner, the M o nta na Court concluded that, in the health insurance context, a provision that a llo w e d Blue Cross Blue Shield to "avoid any payment of benefits to its insured if the insured is `entitled to receive' benefits from any other auto or premises liability p o lic y, whether or not the insured actually receives any of those benefits, and w he the r or not the insured has been made whole" was in violation of Mont. Code A nn. §§ 33-30-1101 & 33-30-1102 and unlawfully allowed BCBS to claim s ub ro ga tio n before its insured had been made whole. Id. 312 Mont. at 429. It is evident that the offending action and language that the BCBS Court's c o nc lus io n was focused on was the avoidance of payments of benefits when BCBS' ins ure d was "entitled to receive" benefits from another source and not whether B C B S ' s insured actually received benefits from another source. Id.
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Here, there is no evidence in the record that Allstate denied UIM coverage b a s e d Plaintiff Bolin being entitled to receive benefits from another auto or premises lia b ility policy. Consequently, this Court concludes Blue Cross Blue Shield to be ina p p lic a b le to our present case. M o re importantly, this Court notes that the discussions of de facto s ub ro ga tio n in both these cases were dicta. Neither cases' holdings explicitly re c o gniz e d nor created de facto subrogation as a new cause of action. This is in c o ntra s t to the cases cited by the Court that explicitly recognize the application of c re d its , offsets and exclusion of duplicate payments in the insurance and Workers' C o mp e ns a tio n arena. Fo r the foregoing reasons, this Court concludes that Defendant's "programmatic claims adjustment" practice of taking credit for other personal, p o rta b le first-party insurance benefits when adjusting its insured's claims is a re c o gniz e d legal practice. Further, as is the case here, parties to an insurance c o ntra c t may include provisions that exclude coverage without violating public p o lic y if the exclusion applies to optional, rather than mandatory, coverage. Following the reasoning of this Court in its Gettle case, as well as the Newbury Court's line of reasoning, this Court concludes that Defendant merely us e d its freedom to contract in to order preclude the double payments. Plaintiff
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neither argues nor does the record reflect that beyond taking the $10,000 credit from H a rtfo rd ' s med pay benefits, Defendant has refused to compensate any additional lo s s e s under Plaintiff's UIM policy. Plaintiff's Motion for Partial Summary J ud gme nt is DENIED. IT IS HEREBY ORDERED that: 1. D e fe nd a nt' s Motion for Partial Summary Judgment (Doc. #14 ) is G R AN TED ; 2. P la intiff' s Motion for Partial Summary Judgment (Doc. #19 ) is DENIED. DATED this 18th day of October, 2010

/s/ Richard F. Cebull RICHARD F. CEBULL U .S . DISTRICT JUDGE

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