Metropolitan Life Insurance v. Bodge

MONTEMURO, Judge:

This is an appeal from a summary judgment entered in favor of the appellee, the Metropolitan Life Insurance Company. As we must, we have examined the record before us in a light most favorable to the appellant, Catherine Bodge. Finding that there is no genuine issue of material fact and that Metropolitan is entitled to judgment as a matter of law, we affirm the order of the trial court.

Appellant’s daughter, Catherine Theresa Bodge, (“Terri Bodge”), was involved in an automobile accident in 1980 which rendered her incompetent. On May 8, 1980, the Orphans’ Court of Montgomery County entered a final decree appointing the appellant Guardian of the Person and the Estate of her daughter. At the time of the accident, Terri was an employee of the Krylon Division of Borden, Inc., and was an insured under a Group Health Insurance Policy issued by Metropolitan to Borden, Inc. Premiums for this health insurance were paid, in whole or in part, through deductions from Terri Bodge’s salary.¹ At the time of the accident, Terri Bodge was also an insured under a No-fault automobile policy issued by Concord Mutual Insurance Company to the appellant.² Terri Bodge was an “insured” under the express terms of the Concord No-fault policy because she resided in her mother’s home. The appellant submitted Terri Bodge’s medical bills and related expenses to Metropolitan which paid in excess of $100,000.00 to health care providers. Appellant subsequently submitted the same medical bills to the Pennsylvania Assigned Claims Plan (“PACP”), which was processing claims against Concord following Concord’s insolvency. In December of 1981, PACP issued a check in the amount of $105,892.44, representing payment for claims associated with Terri’s medical care. The proceeds of this check have been placed in an escrow account pending the resolution of this litigation.

Metropolitan commenced this declaratory judgment action, claiming that it was entitled to recover the PACP monies because of a coordination of benefits provision contained in the group insurance policy issued to Borden, Inc. The trial court agreed, finding the coordination of benefits provision in Metropolitan’s Group Health Insurance Policy to be valid and enforceable:

COORDINATION OF BENEFITS UNDER THE GROUP POLICY WITH OTHER BENEFITS

(1) “Plan” means any plan providing benefits or services for or by reason of medical care or treatment, which benefits or services are provided by (i) any group, blanket, or franchise insurance plan, or other plan covering individuals or members as a group, (ii) any group hospital service prepayment plan, group medical service prepayment plan, group practice, or other group prepayment coverage, (iii) any coverage under Governmental programs, or any coverage required or provided by any statute, including any Motor Vehicle No fault Coverage required by statute.

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(3) If the Employee or a Dependent is covered by any other Plan of insurance or any other prepayment Plan, or is covered under any other type of benefit or service Plan, the benefits otherwise payable under the Group Policy as summarized in this certificate including the preceding paragraph are subject to reduction so that for Allowable Expenses incurred in any Claim Determination Period the benefits payable thereunder together with the benefits available under such other Plan of Plans will not exceed the total amount of such Allowable Expenses.

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(8) If any overpayment is made under the Group Policy because of failure to report other coverage or otherwise, the Insurance Company shall have the right to recover such overpayment____

R.R. at 88a. Appellant contends that the trial court erred in finding this coordination of benefits clause enforceable for a number of reasons. First, appellant argues that Section 111(a)(4) of the No-fault Act renders the provision invalid:

(4) In no event shall any entity providing benefits other than no-fault benefits to an individual as described in section 203 of this Act, have any right of subrogation with respect to said benefits.

40 P.S. § 1009.111(a)(4). We find that the eminent President Judge William W. Vogel correctly construed the meaning and import of Section 111(a)(4):

In Section 111(a), the legislature prohibited subrogation by no-fault insurers, subject to certain limited exceptions, as a necessary piece of the overall no-fault insurance package. Section 111(a)(4), which applies to “any entity providing benefits,” extended this prohibition of subrogation rights under the former fault-based system to other providers of accident and health benefits.

When the words of a statute are clear and free from all ambiguity, the letter of the statute is not to be disregarded under the pretext of preserving its spirit. 1 Pa.C.S.A. § 1921(b). Words and phrases in a statute are to be construed according to their plain and common usage. Old [sic] Fellows Home of Pennsylvania v. Commonwealth Department of Public Welfare, 56 Pa.Commonwealth Ct. 115 [424 A.2d 961] (1981).

Subrogation commonly refers to the right of an insurer to step into the shoes of a party whom they have rightfully compensated and sue any party which the compensated party could have sued. In a fault-based insurance system, subrogation is necessary to ensure the party at fault bears the cost of his negligence.

However, in this instance, the right to reimbursement that Metropolitan seeks to enforce refers only to the right to recover directly from its promisee any monies overpaid, under the Health Policy “for failure to report other coverage or otherwise ” (Emphasis added). Metropolitan, which is not a no-fault carrier, does not seek to recover by stepping into the shoes of its insured nor by determining the ultimate question of fault, but rather by merely enforcing an agreement it has with its insured. Therefore, we determine the right to reimbursement that Metropolitan seeks to have determined in this action to be wholly different than the right to subrogation prohibited by Section 111(a)(4). Accordingly, we determine [that] Section 111(a)(4) does not render the reimbursement provision of the Health Policy unenforceable in this instance.

Op. of Trial Court, January 31, 1985, at 11-13 (footnotes omitted).

The trial court was also correct in its construction of 31 Pa.Code § 89.97(c).³ The court, quite correctly, noted that no provision of the No-fault Act, or its accompanying regulations, expressly prohibits the coordination of benefits between a group health insurance policy and an individual No-fault automobile policy. Id. at 15. Moreover, as the trial court recognized, the existence of 31 Pa.Code § 89.-97(c), although applying specifically to coordination of benefits between group policies, at the least evinces no general disfavor for coordination of benefits clauses on the part of the Insurance Commissioner.⁴

We find that the coordination of benefits clause included in Terri Bodge’s Group Health Insurance Policy is a clause which the law will recognize and enforce. This clause is a prominent part of the group health insurance policy, highlighted with the following underlined and capitalized title: “COORDINATION OF BENEFITS UNDER THE GROUP POLICY WITH OTHER BENEFITS.” The clause sets forth the details of the coordination of benefits provision in clear terms and there is no question that, pursuant to those express terms, Metropolitan is entitled to recover the monies paid by the PACP. Our holding in this case is not in conflict with previous decisions by this Court in which we have determined that where an individual has private collateral benefits in addition to coverage under the No-fault Act, the No-fault Act does not prevent that individual from realizing a double recovery. See Brower v. Nationwide Mutual Insurance Company, 361 Pa.Super. 385, 522 A.2d 635 (1987), alloc. denied, 518 Pa. 634, 542 A.2d 1364 (1988); Steppling v. Pennsylvania Manufacturers’ Association Insurance Co., 328 Pa.Super. 419, 477 A.2d 515 (1984). These cases involved the interpretation and application of Section 203(a) of the No-fault Act:

§ 1009.203. Collateral benefits.

(a) If benefits other than no-fault benefits are provided to an individual through a program, group, contract or other arrangement for which some other person pays in whole or in part that would inure to the benefit of a victim or the survivor of a deceased victim injured as a result of an accident in the absence of no-fault benefits, then any reduction or savings in the direct or indirect cost to such person of such benefits resulting from the existence of no-fault benefits shall be returned to such individual or utilized for his benefit.

40 P.S. § 1009.203(a). Although Section 203(a) does not prevent a double recovery, it also does not mandate double recovery as a general rule. Section 203(a) was enacted for a specific purpose: to prevent a person who has paid premiums on behalf of another from having a viable claim to direct or indirect cost savings which may result from the existence of No-fault benefits. Indeed, in the present case, if Borden Inc., paid a portion of Terri Bodge’s health insurance premiums and realized a cost savings from the existence of No-fault benefits, then these cost savings must be returned to Terri Bodge or used for her benefit. In any event, whether Borden Inc., complied with Section 203(a), assuming it is applicable, is not an issue presently before us. Terri Bodge’s “Section 203(a)” claim is merely a claim which appellant may be able to pursue on behalf of her daughter in the future.

Having determined that the coordination of benefits provision in Metropolitan’s Group Health Insurance policy is enforceable as a matter of law, and given the undisputed facts of record, we affirm the entry of summary judgment in favor of Metropolitan. We recognize that the appellant has raised several other claims of trial court error, however, all of these claims are meritless. Appellant’s claims with reference to Pa.R.C.P. 2054 are waived for the purposes of appeal as they were not presented to the trial court. Appellant has argued that because she and her No-fault insurance carrier were not parties to the health insurance policy issued by Metropolitan, the coordination of benefits provision does not apply to the monies paid by reason of the No-fault insurance policy. The simple answer to this contention is that monies paid by virtue of the Concord insurance policy were not in response to a claim filed by the appellant individually, but were monies paid because of a claim filed on behalf of Terri Bodge, an insured under the Concord policy. The trial court correctly noted the following:

The Court takes notice of the December 3, 1980 proof of claim form attached as part of Exhibit 1 to Mrs. Bodge’s Complaint of March 30,1983 in the case of Bodge v. Pennsylvania Assigned Claims Plan, No. 83-04649. The proof of claim form, forwarded to the Commonwealth of Pennsylvania Insurance Department, Liquidation Division under the heading “Concord Mutual Insurance Company (Dissolved),” indicates the named insured is “Catherine Bodge” and the claimant is “Catherine Theresa Bodge (Daughter).” The following appears on the line for the claimant’s signature: “Catherine Bodge, Guardian for Catherine T. Bodge (Claimant).” This is consistent with our conclusion that the claim against Concord and PACP is one of Terri’s estate.

Op. of Trial Court, January 31, 1985, at 22 n. 11.

Additionally, appellant argues that the trial court erred in awarding the specific sum of $105,102.91 to Metropolitan. The exhibits admitted at trial and the testimony of the parties clearly supports the trial court’s determination that Metropolitan paid, and now may recover, a total sum of $105,102.91 for Terri Bodge’s health care. The fact that Metropolitan may have paid some health care providers after it was aware of other potential insurance coverage is not relevant. Metropolitan had a contractual obligation to pay claims made by Terri Bodge and, in the event that other insurance did cover the same costs, Metropolitan had a contractual right to recover any overpayments it had made on behalf of Terri Bodge. Finally, appellant’s contention that the trial court erred in not admitting a “Joint Stipulation of Facts” prepared on behalf of the appellant must fail. The stipulation was neither agreed to nor signed by Metropolitan.

Order affirmed.

McEWEN, J., files a dissenting opinion.

1 . We are unable to determine, from the record before us, whether Borden, Inc., paid any portion of the Metropolitan health insurance premiums.

2 . Appellant’s No-fault automobile insurance policy was issued in compliance with the now repealed No-fault Motor Vehicle Insurance Act, Act of July 19, 1974, P.L. 489, No. 176, § 203, 40 P.S. §§ 1009.101 et seq., repealed by the Act of February 12, 1984, P.L. 26, No. 11, § 8(a), effective October 1, 1983.

3 . Section 89.97(c) of the Pennsylvania Code provides:

(c) Coordination with other plans. Nonduplication or coordination of benefits provisions for group medical expense insurance coverages may provide for nonduplication or coordination with any plan or State or Federal program providing benefits or services for or by reason of medical or dental care and treatment which benefits or services are provided by group insurance or any other arrangement of coverage of persons in a group whether on an insured or uninsured basis. All policies with such provisions shall stipulate clearly how such provisions will be administered.

31 Pa.Code § 89.97(c).

4 . In the present case, we do not hold that the Insurance Commissioner has sanctioned coordination of benefits between group policies and individual policies. It is quite clear from the language of 31 Pa.Code § 89.97(c) that this code section does not permit coordination of benefits between group and individual policies and, indeed, it does not involve individual insurance policies at all.- The most that can be said of 31 Pa.Code § 89.97(c), with respect to the instant case, is that it evinces no disfavor for coordination of benefits clauses in general on the part of the Insurance Commissioner. The trial court so held.