Johnson v. State Farm Mut. Auto. Ins. Co. , 510 S.W.3d 276 ( 2017 )

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ARKANSAS COURT OF APPEALS
DIVISION II
No. CV-16-326
Opinion Delivered: January 18, 2017
TYLER CARTER JOHNSON
APPELLANT APPEAL FROM THE CRAIGHEAD
COUNTY CIRCUIT COURT,
V. WESTERN DISTRICT
[NO. 16CV-15-584]
STATE FARM MUTUAL
AUTOMOBILE INSURANCE HONORABLE JOHN N. FOGLEMAN,
COMPANY JUDGE
APPELLEE
AFFIRMED
WAYMOND M. BROWN, Judge
Appellant appeals from the circuit court’s order granting appellee’s motion to
dismiss. His sole argument on appeal is that the circuit court erred in granting appellee’s
motion to dismiss after finding a policy provision valid when that provision’s requirement
is not part of the statutorily-mandated coverage. We affirm.
I. Facts
On May 27, 2014, appellee issued a policy of automobile insurance to appellant’s
grandmother, Sue Johnson. Appellant lived with his grandmother and therefore was
covered by her policy with appellee.1 On November 27, 2014, appellant was a passenger
in an uninsured vehicle that was involved in an accident. Appellant did not immediately
seek treatment, though he did eventually seek treatment.
1
Appellee stipulated below that appellant was an “insured.”
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On March 20, 2015, appellant made a claim for medical benefits under the
medical-payments coverage of the policy. Appellee responded on March 26, 2015,
advising appellant that it could not determine whether the treatment initiated with Curtis
Chiropractic “almost 4 months [after the accident] is reasonable, necessary and solely
related to the accident.” Accordingly, it advised appellant that the “terms of the policy
require participation in an exam by physicians chosen and paid by us as often as we
reasonably may require” and that “[r]efusing our request impairs our ability to determine
what benefits are payable[,]” so it could not consider benefits under the medical-payments
coverage without appellant’s recorded statement about the accident and an independent
medical examination (IME).2 In a letter dated March 30, 2015, appellant advised appellee
that he would be submitting medical bills to be reimbursed.
In a letter dated April 8, 2015, appellee stated of appellant’s actions that:
It is questionable whether there has been compliance with the provision of the
policy requiring the assistance and cooperation of the insured, by reason of
allegations or evidence of
 insured’s refusal to give pertinent information to the company
 insured’s refusal to assist in investigation
 insured’s refusal to cooperate in giving and securing evidence[.]
Appellant was notified by letter dated May 5, 2015, that an IME had been scheduled for
him on May 19, 2015. Appellant objected to the IME by letter dated May 11, 2015,
asserting that such an examination “is not required under Arkansas’ med pay statute.” He
also enclosed a medical authorization to obtain records from his service providers.
2
Appellant gave a recorded statement on April 16, 2015.
2
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Appellee responded in a letter dated May 12, 2015, and advised that the “[s]tatute is silent
on the issue of [IMEs], thus not allowing or disallowing them.” It further stated that
appellant’s refusal to attend the exam or to delay its scheduling would impair appellee’s
ability to determine what benefits were payable and that appellant’s failure to cooperate
may cause appellee to deny his medical-payments claim. Appellant did not attend the
scheduled IME; therefore, appellee notified him by letter on May 20, 2015, that it was
unable to consider any outstanding or future benefits from appellant related to the
November 27, 2014 accident.
On August 18, 2015, appellant forwarded medical bills totaling $1,542.00 to
appellee for payment. The medical bills were for a visit to NEA Baptist Clinic on
December 14, 2014;3 and visits to Curtis Chiropractic & Wellness Center between March
23, 2015, and May 12, 2015.4
Appellant filed a complaint against appellee on September 15, 2015, for breach of
contract.5 The policy was not attached to the complaint. Appellee filed a combined
motion to dismiss and answer to appellant’s complaint on October 15, 2015. Therein,
appellee sought dismissal of appellant’s complaint as “premature” because he had failed to
perform conditions precedent to filing the lawsuit; specifically, appellant had failed to
submit to an IME. Appellee also pled affirmatively that appellant had failed to comply
3
This visit occurred one month and thirteen days after the accident.
4
These visits began four months and nine days after the accident.
5
Appellant never expressly stated his cause of action, but he alleged that appellee
failed to pay medical payments pursuant to the policy.
3
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with the provisions of the policy to allow appellee to consider reimbursement of claimed
medical expenses.
Appellant responded to appellee’s motion to dismiss on October 29, 2015, asserting
that
Arkansas Code Annotated § 23-89-205 explains that an insurer may exclude the
medical payment benefits to an insured when the insured’s conduct contributed to
the injury he or she sustained by causing injury to himself intentionally or causing
injury while in the commission of a felony or while seeking to elude lawful
apprehension or arrest by a law enforcement official. The legislature set forth only these
specific exclusions.6
Appellant argued that appellee’s policy “provides an additional requirement that the
insured must be examined as reasonably often as State Farm may require by physicians
chosen and paid by State Farm. This policy was not entered into by plaintiff, but rather by
Sue Johnson, plaintiff’s grandmother. Thus, plaintiff did not contract this additional term of the
policy with defendant.”7 He therefore argued that appellee’s policy provision created a
requirement not found in the statute, that was contrary to legislative intent, and which did
not apply to him.
Appellee replied to appellant’s response on November 5, 2015, and noted therein
that the policy agreement provided that an insured had a duty to cooperate with appellee
and that a person making a claim under medical-payments coverage must be examined as
reasonably often as appellee may require by physicians chosen and paid by appellee; that
appellee requested an examination of appellant on May 19, 2015, which appellant failed to
6
(Emphasis added.)
7
(Emphasis added.)
4
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appear for; and that it subsequently notified appellant that it was unable to consider
payment of any outstanding or future claims based on appellant’s refusal to submit to an
IME. Appellee asserted that though appellant was contending that he did not enter into
the contract and did not bargain for the IME provision, appellant had the same obligations
to cooperate with the terms of the policy as if he were a named insured.
On December 15, 2015, appellee filed a motion for summary judgment in which it
stated that it was “convert[ing] its Motion to Dismiss into a Motion for Summary
Judgment.”8 In its separate brief in support, filed contemporaneously, appellee restated its
arguments from its motion to dismiss, namely that appellant’s complaint should be
dismissed as premature where appellant had failed to cooperate with appellee’s
investigation. Appellee attached a copy of the policy to its brief in support of its motion
for summary judgment. This was the only copy before the circuit court. It further asserted
that appellant should not be allowed to seek benefits under its policy of insurance while at
the same time arguing that he should not be bound by the provisions of the policy.
Appellant responded on December 23, 2015, by restating his previous argument
that the IME requirement was an additional requirement imposed by appellee in its policy,
which was contrary to legislative intent, and that his documentation of his medical bills,
which he submitted to appellee, was sufficient and “reasonable proof of the amount of
medical expenses[.]” He also reasserted that he did not enter into the contract and did not
8
Appellee’s motion to dismiss and reply to appellant’s response to its motion to
dismiss were incorporated therein by reference as if fully set forth word for word.
5
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contract for the additional requirement of the policy, with the implication appearing to be
that the provision should not apply to him.9
A hearing was held on the matter on January 16, 2016, at the conclusion of which,
the circuit court granted appellee’s motion to dismiss. On January 19, 2016, the circuit
court entered an order dismissing the matter without prejudice “as premature due to
[appellant’s] failure to cooperate with [appellee’s] investigation of [appellant’s] claims
pursuant to the terms of the policy.” This timely appeal followed.
II. Standard of Review
Appellee argues on appeal that the circuit court erroneously granted its motion to
dismiss, instead of its motion for summary judgment, and that the correct standard of
review for this court is the standard of review for the grant of a motion for summary
judgment. This court notes that appellee said below that both motions were “really the
same thing” and that the “only purpose” it had in filing the motion for summary
judgment was to attach the insurance policy. It is well settled that when a circuit court
considers matters outside the pleadings, the appellate court will treat a motion to dismiss as
one for summary judgment.10 Because the actual policy was not attached to appellee’s
motion to dismiss and was not attached to any other document prior to and until
appellee’s motion for summary judgment, it is clear to this court that the circuit court
9
Appellant never expressly stated in any of his pleadings that the provisions of the
policy do not or should not apply to him, only that he was not a party to the contract and
did not contract for the additional term.
Rowe v. Hobbs, 2012 Ark. 244, at 5, 410 S.W.3d 40, 43 (citing Koch v. Adams,
10
2010 Ark. 131, 361 S.W.3d 817).
6
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considered matters outside the pleadings in making its ruling. We therefore treat the
court’s order as granting a motion for summary judgment.
On appeal, we determine if summary judgment was appropriate based on whether
the evidentiary items presented by the moving party in support of the motion leave a
material question of fact unanswered.11 The burden of sustaining a motion for summary
judgment is always the responsibility of the moving party.12 Once the moving party has
established prima facie entitlement to summary judgment by affidavits, depositions, or
other supporting documents, the opposing party must meet proof with proof and
demonstrate the existence of a material issue of fact. 13 We view the evidence in the light
most favorable to the party against whom the motion was filed, resolving all doubts and
inferences against the moving party.14
III. Statute
Arkansas Code Annotated section 23-89-202 states that “[e]very automobile
liability insurance policy covering any private passenger motor vehicle issued or delivered
in this state shall provide minimum medical and hospital benefits . . . under policy
provisions . . . to the named insured and members of his or her family residing in the same
11
Madden v. Mercedes-Benz USA, Inc., 2016 Ark. App. 45, at 4, 481 S.W.3d 455,
458.
12
Id. (citing New Maumelle Harbor v. Rochelle, 338 Ark. 43, 991 S.W.2d 552 (1999)).
13
Id.
Cent. Oklahoma Pipeline, Inc. v. Hawk Field Servs., LLC, 2012 Ark. 157, at 8, 400
14
S.W.3d 701, 707 (citing Harrisburg Sch. Dist. No. 6 v. Neal, 2011 Ark. 233, 381 S.W.3d
811).
7
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household injured in a motor vehicle accident.”15 Those benefits are to include “[a]ll
reasonable and necessary expenses for medical, hospital, nursing . . . incurred within
twenty-four (24) months after the automobile accident, up to an aggregate of five
thousand dollars ($5,000) per person[.]”16 Arkansas Code Annotated section 23-29-208
states that “[b]enefits for any period are overdue if not paid within thirty (30) days after the
insurer received reasonable proof of the amount of all benefits accruing during that
period.”17 Appellee’s policy with appellant’s grandmother provides the above-referenced
provisions, which are required to be offered by statute.18
Appellant argues that appellee’s medical-payment-coverage provisions constitute an
additional exclusion to the policy beyond that intended by the legislature. Arkansas Code
Annotated section 23-89-205 states that “[a]n insurer may exclude benefits to any insured,
or to his or her personal representative, under a policy required by § 23-89-202, when the
insured’s conduct contributed to the injury he or she sustained in any of the following
ways: (1) Causing injury to himself or herself intentionally; or (2) Causing injury while in
the commission of a felony or while seeking to elude lawful apprehension or arrest by a
law enforcement official.”19 Referring to a predecessor section of an Arkansas statute that
15
Ark. Code Ann. § 23-89-202 (Repl. 2014).
16
Ark. Code Ann. § 23-89-202(1).
17
Ark. Code Ann. § 23-89-208(b) (Repl. 2014) (emphasis added).
18
Arkansas Code Annotated section 23-89-203(a) permits an insured to reject one
or more of the coverages listed in Arkansas Code Annotated section 23-89-202, including
medical and hospital benefits.
19
Ark. Code Ann. § 23-89-205(1) & (2) (Repl. 2014).
8
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is virtually identical to what is now Arkansas Code Annotated section 23-89-202, our
supreme court has stated “[w]e do not read into this section any legislative intention to
prohibit other exclusions from coverage.”20
Looking to the language of appellee’s policy with appellant’s grandmother, the
following appears under the section headed “Insured’s Duties”:
A person making a claim under:
a. Medical Payments Coverage . . . must:
(2) be examined as reasonably often as we may require by physicians chosen and
paid by us. . . .
(3) provide written authorization for us to obtain:
(a) medical bills;
(b) medical records;
(c) age, salary, and employment information; and
(d) any other information we deem necessary to substantiate the claim.21
It is settled Arkansas law that an insurer may contract with its insured upon
whatever terms the parties may agree, so long as those terms are not contrary to statute or
public policy.22 Our law regarding the construction of insurance contracts is well settled.23
20
Aetna Ins. Co. v. Smith, 263 Ark. 849, 853, 568 S.W.2d 11, 13 (1978).
21
(Emphasis in original.)
22
Shelter Mut. Ins. Co. v. Goodner, 2015 Ark. 460, at 5, 477 S.W.3d 512, 515
(citing Pardon v. S. Farm Bureau Cas. Ins. Co., 315 Ark. 537, 868 S.W.2d 468 (1994)
(citing Aetna Ins. Co. v. Smith, 263 Ark. 849, 568 S.W.2d 11 (1978))).
9
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The language in an insurance policy is to be construed in its plain, ordinary, and popular
sense.24 Different clauses of an insurance contract must be read together and the contract
construed so that all of its parts harmonize.25
Insurance terms must be expressed in clear and unambiguous language. 26 If the
language of the policy is unambiguous, we will give effect to the plain language of the
policy without resorting to the rules of construction.27 On the other hand, if the language
is ambiguous, we will construe the policy liberally in favor of the insured and strictly
against the insurer.28 Language is ambiguous if there is doubt or uncertainty as to its
meaning and it is fairly susceptible to more than one reasonable interpretation.29 Whether
the language of the policy is ambiguous is a question of law to be resolved by the court. 30
The terms of an insurance contract are not to be rewritten under the rule of strict
23
Farmers Ins. Exch. v. Bradford, 2015 Ark. App. 253, at 4, 460 S.W.3d 810, 813
(citing McGrew v. Farm Bureau Mut. Ins. Co., 371 Ark. 567, 268 S.W.3d 890 (2007); Elam
v. First Unum Life Ins. Co., 346 Ark. 291, 57 S.W.3d 165 (2001)).
24
Id. (citing Norris v. State Farm Fire & Cas. Co., 341 Ark. 360, 16 S.W.3d 242
(2000)).
25
Id. (citing Philadelphia Indem. Ins. Co. v. Austin, 2011 Ark. 283, 383 S.W.3d 815).
26
Corn v. Farmers Ins. Co., 2013 Ark. 444, at 9, 430 S.W.3d 655, 660 (citing
Castaneda v. Progressive Classic Ins. Co., 357 Ark. 345, 351, 166 S.W.3d 556, 560 (2004)).
27
Id. (citing Castaneda, 166 S.W.3d at 560).
28
Id., at 9, 430 S.W.3d at 660–61 (citing Castaneda, 357 Ark. at 351, 166 S.W.3d
at 560–61).
29
Id. at 9, 430 S.W.3d at 661 (citing Castaneda, 357 Ark. at 351, 166 S.W.3d at
561).
30
Id.
10
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construction against the company issuing it so as to bind the insurer to a risk which is
plainly excluded and for which it was not paid.31
Contrary to appellant’s argument, it is clear from a plain reading of the language of
the policy’s “Insured’s Duties” section that the section is not an exclusion, but an outline
of the requirements by which an insured must abide when making a claim. Said section
provides that appellee may request an IME if necessary to substantiate an insured’s claim.
As previously discussed, such a request is not prohibited by statute. We cannot find that it
was unreasonable for appellee to request an IME for the purpose of determining if the
injuries for which appellant was treated were caused by the November 27, 2014 accident.
In Roy v. Farmers & Merchants, our supreme court stated that “‘reasonable proof of benefits
means more than proof of a charge or loss.”32 While appellant provided medical bills
showing that he had been treated for injuries and the amount thereof, the appellee had a
right to question whether such evidence constitutes “reasonable proof” that the injuries
for which he was treated were caused by the November 27, 2014 accident.
Given that appellant waited just under one month to seek initial medical treatment
and then waited an additional three months before seeking treatment from a chiropractor,
and because appellant failed to undergo the IME—a term of the contract when filing a
medical claim—we cannot find that the circuit court abused its discretion in finding that
appellant’s lawsuit is premature.
31
Id.
32
307 Ark. 213, 216, 819 S.W.2d 2, 3 (1991).
11
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We must also address a related argument that appellant makes in his brief before
this court:
As indicated previously, State Farm’s policy provides an additional requirement that
the insured must be examined as reasonably often as State Farm may require by
physicians chosen and paid by State Farm. This policy was not entered into by
Tyler, but rather by his grandparents who he was residing with. Thus, Tyler did
not contract this additional requirement of the policy with State Farm.
In making this additional argument relating to the alleged impropriety of appellee’s IME
provision, appellant implies that he should not have to abide by the provision when he
states that he did not enter into the contract with appellee and was not a party to the
contract.
The policy under which appellant brings his claim defines “insured” as “you and
resident relatives[.]” An insured and an insurer—when the latter has accepted the terms
and conditions of a policy with the latter—have “a contract between them, and, being in
violation of no principle of law, nor in contravention of the policy of the law, must be
enforced according to its terms and meaning; and the courts have the right neither to
make contracts for parties nor to vary their contracts to meet and fulfill some notion of
abstract justice, and still less of moral obligation.”33 In Modern Woodmen of America v.
Seargeant, our supreme court stated that “[t]he parties made their own contract, which is
free from ambiguity, and necessarily must be enforced according to its terms. The
beneficiaries must stand in the shoes of the insured, and will be bound by the terms of the
33
Inter-State Bus. Men’s Acc. Ass’n v. Nichols, 143 Ark. 369, 364, 220 S.W. 477, 478
(1920) (quoting Standard Life & Acc. Ins. Co. v. Ward, 65 Ark. 295, at 298, 45 S.W. 1065,
1066; citing Maryland Casualty Co. v. Chew, 92 Ark. 276, at 283, 122 S.W. 642; Amer.
Nat’l. Ins. Co. v. Otis, 122 Ark. 219, 183 S.W. 183 (1916)).
12
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policy issued[.]”34 Appellant cannot seek damages under the contract—his grandmother’s
policy through which he is an unnamed insured—and argue that certain terms of the
contract should not apply to him because he did not enter into the contract personally.
Affirmed.
GLOVER and WHITEAKER, JJ., agree.
Henry Law Firm, PLC, by: Megan Henry, for appellant.
Snellgrove, Langley, Culpepper, Williams & Mullally, by: J. Chad Owens, for appellee.
34
Modern Woodmen of Am. v. Seargeant, 188 Ark. 1098, 1102, 69 S.W.2d 397, 399
(1934) (quoting Craig v. Golden Rule Life Ins. Co., 184 Ark. 48, 41 S.W.(2d) 769, 771
(1931); Mutual Life Ins. Co. v. Hynson, 171 Ark. 218, 283 S.W. 357 (1926)).
13