Scarbrow v. State Farm Mutual Automobile Insurance

Present: All the Justices
SHARLET S. SCARBROW
OPINION BY JUSTICE CYNTHIA D. KINSER
v. Record No. 972435 September 18, 1998
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
John C. Morrison, Jr., Judge
Sharlet S. Scarbrow (Scarbrow) filed suit against State Farm
Mutual Automobile Insurance Company (State Farm) after State Farm
refused to pay medical expenses incurred by Scarbrow as a result
of a work-related automobile accident. The circuit court held
that a provision in State Farm’s automobile insurance policy
excluding coverage for medical expenses that are payable under a
workers’ compensation statute is valid and enforceable. Because
we have previously held that such an exclusion does not conflict
with Code § 38.2-2201, we will affirm the judgment of the circuit
court.
I.
On December 15, 1994, Scarbrow was involved in an automobile
accident while operating her employer’s truck. Scarbrow sustained
physical injuries as a result of the accident and incurred medical
expenses. The employer’s workers’ compensation insurance carrier
paid Scarbrow’s medical expenses arising out of the accident.
At the time of the accident, Scarbrow was also insured under
a Family Automobile Policy (the Policy) issued by State Farm. An
endorsement in the Policy affords coverage to Scarbrow for medical
expenses incurred by her for injuries sustained in an automobile
accident. 1 The endorsement, however, contains an exclusion (the
Exclusion) for medical expenses payable under any workers’
compensation law. The Exclusion specifically states:
This insurance does not apply:
* * *
(b) to bodily injury sustained by any person to the extent
that benefits therefore are in whole or in part payable
under any workmen’s compensation law, employer’s
disability benefits law or any other similar law.
Following the accident, Scarbrow submitted a claim to State Farm
under the medical expense benefits endorsement for a portion of
the medical bills that she incurred as a result of the automobile
accident. State Farm refused to pay Scarbrow on the basis of the
Exclusion. Consequently, on November 12, 1996, Scarbrow filed a
notice of motion for judgment against State Farm in the General
District Court for the City of Norfolk. After removal of the case
1
The medical expense benefits endorsement states that State
Farm:
[W]ill pay, in accordance with Section[] 38.2-2201
. . . of the Code of Virginia, to or on behalf of each injured
person, medical expense benefits as a result of bodily injury
caused by accident and arising out of the ownership,
maintenance or use of a motor vehicle as a motor vehicle.
2
to the circuit court, State Farm filed a motion for summary
judgment. In its motion, State Farm asserted that the Exclusion
bars Scarbrow from recovering under the Policy’s medical expense
benefits endorsement since her medical bills were paid by workers’
compensation insurance.
After hearing argument, the circuit court granted State
Farm’s motion in an order dated August 20, 1997. Relying on our
decisions in Baker v. State Farm Mut. Auto. Ins. Co., 242 Va. 74,
405 S.E.2d 624 (1991), and Cotchan v. State Farm Fire & Cas. Co.,
250 Va. 232, 462 S.E.2d 78 (1995), the court concluded that State
Farm was entitled to enforce the Exclusion in its Policy and found
“no reason to diverge” from this Court’s controlling precedent.
Scarbrow appeals.
II.
Code § 38.2-2201 provides, in pertinent part, that:
A. Upon request of an insured, each insurer licensed in
this Commonwealth issuing or delivering any policy or
contract of bodily injury or property damage liability
insurance covering liability arising from the ownership,
maintenance or use of any motor vehicle shall provide on
payment of the premium, as a minimum coverage . . . to the
named insured . . . the following health care and disability
benefits for each accident:
1. All reasonable and necessary expenses for medical,
chiropractic, hospital, dental, surgical, ambulance,
prosthetic and rehabilitation services, and funeral expenses,
resulting from the accident and incurred within three years
after the date of the accident, up to $2,000 per person
. . . .
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Scarbrow contends that this section does not authorize an insurer
to limit or exclude coverage once an insured has elected to
purchase medical expense benefits. Thus, according to Scarbrow,
State Farm cannot enforce the Exclusion because it is inconsistent
with Code § 38.2-2201 and, therefore, void as against public
policy. We disagree.
This Court has sanctioned an insurer’s use of reasonable
policy provisions that exclude specific risks from coverage.
State Farm Mut. Auto. Ins. Co. v. Gandy, 238 Va. 257, 261, 383
S.E.2d 717, 719 (1989). If an insurer uses exclusionary language
that is clear and unambiguous and that does not conflict with
statutory provisions, then the exclusion will be enforced. Id.Our decision in Baker dictates the outcome of this case
because Baker involved the same issue and coverage exclusion
presently before us. In Baker, we addressed the question whether
Code § 38.2-2201 permits an insurer to exclude coverage for
medical expense benefits in the absence of express statutory
authorization. The policy provision at issue in Baker, identical
to the Exclusion in the instant case, precluded payment of medical
expenses when those expenses were payable under a workers’
compensation statute. We found the exclusion in Baker to be a
“clear and unambiguous provision [that] reasonably excludes
medical payments coverage where those benefits are payable under a
workers’ compensation statute,” and that no conflict or
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inconsistency existed between Code § 38.2-2201 and the policy
exclusion. 242 Va. at 76, 405 S.E.2d at 625; see also Cotchan,
250 Va. at 236, 462 S.E.2d at 80-81. Thus, for the reasons
enunciated in Baker, we conclude that the Exclusion is a
reasonable policy provision containing clear and unambiguous
language and that it is not inconsistent with Code § 38.2-2201.
Therefore, State Farm may enforce the Exclusion against Scarbrow.
Scarbrow concedes that the instant case and Baker are
indistinguishable. 2 Nevertheless, Scarbrow urges this Court to
reverse its prior decision and find the Exclusion inconsistent
with Code § 38.2-2201 and, therefore, void. However, we perceive
no reason to depart from our holding in Baker. See Selected Risks
Ins. Co. v. Dean, 233 Va. 260, 265, 355 S.E.2d 579, 581 (1987)
(stating that “when a court of last resort has established a
precedent, after full deliberation upon the issue by the court,
the precedent will not be treated lightly or ignored”).
Accordingly, we will affirm the judgment of the circuit
court.
Affirmed.
2
This case and Baker do differ in that Scarbrow asserted a
claim against a third party tortfeasor for the injuries that she
sustained in the automobile accident. However, this distinction
does not affect our decision.
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