State Farm Mut. Auto. Ins. Co. v. Rose

STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY v. David W. ROSE, Jr.

CA 95-37                                           ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division II
               Opinion delivered February 28, 1996


1.   Insurance -- set-off denied for disability payments made by
     appellant -- motion for set-off properly denied. -- Where the
     jury heard testimony from the appellee and his wife about the
     disabling effects of his injuries as well as the likelihood
     that he would continue to suffer from them, as well as
     evidence that appellant had paid disability benefits to
     appellee, the jury also knew that appellee had already
     received $25,000 from the tortfeasor's insurer, and the jury
     was instructed to assess appellee's damages "over and above"
     that amount, appellant's motion for a set-off for the
     disability payments was properly denied.

2.   Insurance -- denial of appellant's motion for a set-off for
     medical expenses paid to appellee in error -- trial court's
     decision reversed. -- Where the jury did not know that all or
     any part of appellee's medical expenses had already been paid
     by appellant under the medical payments provision of his auto
     policy, and only a part of this amount had been subrogated
     from the money received from the tortfeasor's insurer, the
     trial court's allowing appellee to recover a verdict that
     included the cost of those medical expenses that had already
     been paid by appellant left him with a double recovery
     contrary to the equitable principle of subrogation; this
     result was contrary to the express and unambiguous language of
     appellee's UIM coverage which stated that medical payments
     under the medical payments provision of appellee's basic
     policy would not be paid again as damages under the UIM
     coverage; the trial court's decision denying appellant's
     motion for set-off for the medical expenses paid to appellee
     was reversed.

3.   Insurance -- admittance of evidence of medical bills while
     denying evidence of medical payments portrays a "false and
     misleading" financial condition. -- For a court to admit
     evidence of medical bills incurred while denying evidence of
     medical payments is to portray a "false and misleading"
     financial condition; if this evidence is not admitted during
     the trial, in the alternative, set-off should be allowed post-
     trial.  


     Appeal from Garland Circuit Court; Walter G. Wright, Judge;
affirmed in part; reversed in part.
     Huckabay, Munson, Rowlett & Tilley, P.A., by:  Jim Tilley and
Julia L. Busfield, for appellant.
     David Goldman, P.A., for appellee.

     Wendell L. Griffen, Judge.*ADVREPCA7*
                           DIVISION II





                                   CA 95-37

                                                February 28, 1996


STATE FARM MUTUAL AUTOMOBILE       AN APPEAL FROM GARLAND
INSURANCE COMPANY                  CIRCUIT COURT
                   APPELLANT       NO. CIV93-840


V.                                 HON. DAVID B. SWITZER, JUDGE


DAVID W. ROSE, JR.
                   APPELLEE        AFFIRMED IN PART;
                                   REVERSED IN PART



                   Wendell L. Griffen, Judge.


     State Farm Insurance Company has appealed the judgment of the
Circuit Court of Garland County denying its post-trial motion for
a set-off against a $45,000 jury verdict rendered in favor of David
Rose, State Farm's insured under a policy providing underinsured
motorist ("UIM") coverage.  Rose was injured when a driver insured
by another insurance company side-swiped his vehicle on July 19,
1991.  The insurer for the tortfeasor paid $25,000, the limits
under its liability coverage, and Rose then sued State Farm under
his UIM coverage claiming damages totalling $95,000.  That lawsuit,
the basis of this appeal, was tried to a jury that was allowed to
hear evidence concerning disability benefits paid to Rose under the
disability provision of his policy. However, the trial court
refused to allow State Farm to introduce evidence that it had paid
$13,133 under the medical payments provision of the policy, despite
allowing Rose to introduce evidence of medical expenses he
incurred.  After the jury returned the verdict for $45,000, State
Farm moved for a set-off for the disability and medical payments. 
The trial court denied the motion for both.
     On appeal, State Farm argues that the effect of the trial
courtþs ruling is to permit Rose to obtain a double recovery
contrary to the holding in Shelter Mutual Ins. Co. v. Bough, 310
Ark. 21, 834 S.W.2d 637 (1992).  State Farm also argues that the
trial courtþs decision is contrary to the unambiguous language of
its UIM policy with Rose. The UIM provision includes this language:
        Medical expenses paid or payable under the medical
     payments coverage will not be paid for again as damages
     under this coverage.  This does not reduce the limits of
     liability of this coverage.

Rose argues, however, that because the jury considered the amount
of his damages and returned a general verdict, it would be
speculative to presume that any part of the verdict went to the
amount that he claimed for medical expenses.  
     We agree with the trial courtþs decision denying set-off for
the disability payments made to Rose by State Farm under its
disability provision.  The jury heard testimony from Rose and his
wife about the disabling effects of his injuries as well as the
likelihood that he would continue to suffer from them.  Most
importantly, the jury received evidence that State Farm had paid
disability benefits to Rose.  Therefore, the jury could have taken
that proof into account in reaching its verdict.  The jury also
knew that Rose had already received $25,000 from the tortfeasorþs
insurer, and the jury was instructed to assess Rose's damages "over
and above" that amount.   Therefore, State Farmþs motion for a
set-off for the disability payments was properly denied.
     However, we reverse the trial courtþs decision denying State
Farmþs motion for a set-off for the medical expenses paid to Rose. 
It is true that the UIM coverage extended to damages for the bodily
injuries that Rose sustained.  Yet, the jury did not know -- and
had no reason to infer from the proof at trial -- that all or any
part of Roseþs medical expenses had already been paid by State Farm
under the medical payments provision of his auto policy. Part of
the money received from the tortfeasorþs insurer went to subrogate
State Farm, but that left $5,401.42 for which it was not
subrogated.  To allow Rose to recover a verdict that included the
cost of those medical expenses that had already been paid by State
Farm would leave Rose with a double recovery contrary to the
equitable principle of subrogation as demonstrated by the Bough
holding. Id., 310 Ark. at 28, 834 S.W.2d  at 641 (1992). 
Furthermore, this result would be contrary to the express and
unambiguous language of Roseþs UIM coverage which informed him that
medical payments under the medical payments provision of his basic
policy would not be paid again as damages under the UIM coverage.
     At bottom, this case presents a variant of the collateral
source rule. The collateral source rule is designed to prevent
prejudice by a jury due to the mere presence of collateral sources
of support like insurance coverage. Amos v. Stroud, 252 Ark. 1100,
482 S.W.2d 592 (1972). Where, as here, the insurer is a party to
the action, the presence of insurance is no longer an issue and the
theoretical basis of the rule loses much of its force. The
"collateral source" in this case is simply a second provision of
the same insurance policy. In such a case, the jury should be
permitted to see a more complete financial picture.  For the court
to admit evidence of medical bills incurred while denying evidence
of medical payments is to portray a "false and misleading"
financial condition.  See Younts v. Baldor Elec. Co., 310 Ark. 86,
832 S.W.2d 832 (1992). If this evidence is not admitted during the
trial, in the alternative, set-off should be allowed post-trial. 
     Therefore, we affirm that part of the judgment denying State
Farmþs motion for set-off for the disability payments. We reverse
the part that denied the motion for set-off regarding the medical
payments, and remand the case to the trial court with instructions
that judgment be entered consistent with this opinion.
     Affirmed in part; reversed in part.
     Cooper and Stroud, JJ., agree.