New Hampshire Insurance Company v. McNab, No. 4:2010cv02496 - Document 39 (N.D. Cal. 2011)
Court Description: ORDER by Judge Claudia Wilken ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S 32 MOTION FOR PARTIAL SUMMARY JUDGMENT AND DEFENDANT'S 34 CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT. (ndr, COURT STAFF) (Filed on 3/18/2011)
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New Hampshire Insurance Company v. McNab Doc. 39 1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 NEW HAMPSHIRE INSURANCE COMPANY, 5 6 7 8 No. C 10-02496 CW Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DEFENDANT'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT (Docket Nos. 32 & 34) v. BILL MCNAB, Defendant. 9 United States District Court For the Northern District of California 10 ________________________________/ 11 12 The pending motions present disputes as to legally 13 permissible offsets to certain insurance coverage. 14 Counterclaim Defendant New Hampshire Insurance Company (NHIC) 15 moves for partial summary judgment. 16 Counterclaim Plaintiff McNab opposes the motion, and has filed a 17 cross-motion for partial summary judgment. 18 considered all of the parties' submissions, the Court grants in 19 part and denies in part the parties' motions for summary judgment. 20 BACKGROUND 21 Docket No. 32. Plaintiff and Defendant and Docket No. 34. Having McNab was injured during the course and scope of his 22 employment with Holt Transportation when, on July 28, 2006, 23 another vehicle collided with the truck he was operating on a 24 California highway. 25 injuries to his face, back and extremities. 26 Transportation a commercial vehicle policy (NHIC policy) that, 27 among other things, covered its employees for injuries caused by 28 an underinsured motorist (UIM), sustained during the course and As a result of the accident, McNab suffered NHIC issued Holt Dockets.Justia.com 1 scope of their employment with Holt Transportation. 2 coverage under this UIM policy is $1,000,000. 3 The maximum Due to McNab's injuries suffered while on the job, he was awarded workers' compensation benefits from the State Compensation 5 Insurance Fund (State Fund), including payment of past and future 6 medical expenses and disability income payments. 7 workers' compensation policy provides an $8,000 job training 8 voucher. 9 fault driver's liability insurer. 10 United States District Court For the Northern District of California 4 that settlement to the State Fund. 11 began receiving federal social security disability payments. 12 continues to receive social security payments, and expects to 13 receive them on an ongoing basis. In addition, the McNab also obtained a $100,000 settlement from the atMcNab reimbursed $33,145.85 of After the accident, McNab 14 LEGAL STANDARD 15 He Summary judgment is properly granted when no genuine and 16 disputed issues of material fact remain, and when, viewing the 17 evidence most favorably to the non-moving party, the movant is 18 clearly entitled to prevail as a matter of law. 19 56. 20 Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1289 (9th Cir. 21 1987). 22 the party against whom summary judgment is sought. 23 Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); 24 Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 25 (9th Cir. 1991). 26 Fed. R. Civ. P. Celotex Corp v. Catrett, 477 U.S. 317, 322-23 (1986); The court must draw all reasonable inferences in favor of Matsushita Material facts which would preclude entry of summary judgment 27 are those which, under applicable substantive law, may affect the 28 outcome of the case. The substantive law will identify which 2 1 facts are material. 2 242, 248 (1986). Anderson v. Liberty Lobby, Inc., 477 U.S. 3 4 5 DISCUSSION I. Social Security Payments NHIC argues that a provision of its policy allows it to 6 offset social security payments from its UIM coverage. 7 provision states, 8 9 United States District Court For the Northern District of California 10 That We [NHIC] will not pay for any element of "loss" if a person is entitled to receive payment for the same element of "loss" under any workers' compensation, disability benefits or similar law. 11 NHIC Policy, California Uninsured Motorist Coverage, Part D, ¶ 3.1 12 McNab responds that this provision violates California law to the 13 extent that it permits offsets for social security payments. 14 Court agrees. 15 The California law sets forth the reductions allowable for 16 underinsured and uninsured motorist coverage. 17 Insurance Code § 11580.2(h) states in relevant part, 18 19 20 21 22 23 24 25 California Any loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced: (1) By the amount paid and the present value of all amounts payable to him or her, his or her executor, administrator, heirs, or legal representative under any workers' compensation law, exclusive of nonoccupational disability benefits. (2) By the amount the insured is entitled to recover from any other person insured under the underlying liability insurance policy of which the uninsured 26 1 27 28 The NHIC policy makes clear that its underinsured motorist coverage is included in its uninsured motorist coverage. NHIC Policy, Renewal Declaration, p. 5. 3 1 2 motorist endorsement or coverage is a part, including any amounts tendered to the insured as advance payment on behalf of the other person by the insurer providing the underlying liability insurance. 3 4 (emphasis added). The offsets allowed in § 11580.2(h) apply to 5 UIM coverage. 6 App. 3d 948, 955 (1990). 7 further provides for reductions in uninsured motorist coverage by 8 amounts paid by an auto insurance provider for medical expenses, 9 United States District Court For the Northern District of California 10 Rudd v. California Casualty Gen. Ins. Co., 219 Cal. California Insurance Code § 11580.2(e) and § 11580.2(p)(4) allows an offset from underinsured motorist coverage for an "amount paid to the insured by or for any person 11 or organization that may be held legally liable for the injury." 12 13 The California Court of Appeal has declined to enforce a policy 14 provision that set forth a reduction in uninsured motorist 15 payments that was not approved by the legislature. 16 Mutual Ins. Co. v. Harrison, 118 Cal. App. 3d 561, 564 (1981). 17 18 Preferred Risk NHIC's citation to California Insurance Code § 11580.2(a)(1) does not support an offset based on McNab's social security 19 payments. The provision authorizes an insured and insurer to 20 21 agree to limit uninsured motorist coverage for bodily injury to an 22 amount less than $30,000, as long as it is more than $15,000, the 23 minimum required by California Vehicle Code § 16056. 24 this provision does not mean that any and all agreements to reduce 25 coverage are enforceable. 26 27 However, Rather, the very cases NHIC cites make clear that agreements to reduce coverage must be in accordance with law. Darrah v. California State Automobile Association, 259 28 4 1 Cal. App. 2d 243, 246 (1968) ("[T]here can be no doubt of the 2 right of the insurance companies to limit, in accordance with 3 section 11580.2, the coverage of their policies, and when they 4 have done so the plain language of the limitations must be 5 respected.") (emphasis added); Lumberman's Mut. Cas. Co. v. Wyman, 6 64 Cal. App. 3d 252, 259 (176) ("There is no doubt that an 7 8 9 insurance company can limit the coverage of a policy issued by it as long as such limitation conforms to the law and is not contrary United States District Court For the Northern District of California 10 to public policy."). 11 the Social Security Administration is not liable for McNab's 12 injury. 13 Section 11580.2(p)(4) does not apply because The agency provides social security payments when an individual's disability precludes employment. See Cole v. 14 California Ins. Guar. Ass'n., 122 Cal. App. 4th 552, 560 (2004) 15 16 (denying, in an action against the California Insurance Guarantee 17 Association, offsets for social security payments against 18 uninsured motorist coverage because the social security benefit 19 stems from the insured's ongoing inability to be employed due to 20 disability, whereas her claim under the automobile insurance 21 policy was for bodily injury). 22 Nor are NHIC's public policy arguments persuasive. Even 23 24 though uninsured and underinsured motorist coverage is not 25 designed to make the insured whole, this does not render 26 enforceable reductions in uninsured and underinsured motorist 27 coverage that are precluded by legislation. 28 disallowance of an offset for McNab's social security payments 5 NHIC argues that 1 leaves him in a better position than if the tortfeasor had been 2 fully insured. 3 pursuant to such a liability policy would be reduced by social 4 security payments received by the beneficiary. 5 of the threat of double recovery is without merit because social 6 However, NHIC provides no authority that payments NHIC's invocation security disability insurance provides coverage if a disability 7 renders a person unable to work, while NHIC's UIM policy extends 8 9 coverage in event the insured suffers bodily injury as a result of United States District Court For the Northern District of California 10 an automobile accident with an underinsured motorist. 11 double recovery because the policies are directed at different 12 risks. 13 14 There is no The social security benefits McNab has received or will receive in the future are not permissible offsets from the NHIC 15 underinsured motorist policy limit. Therefore, with respect to 16 this issue, the Court denies NHIC's motion for partial summary 17 18 judgment, and grants McNab's cross-motion for partial summary 19 judgment. 20 II. Workers' Compensation Benefits 21 22 23 The parties agree that offsets for lost income payments and medical expenses paid by the State Fund are permissible. NHIC also seeks to offset from its UIM policy limits the value of the 24 job training voucher and future medical expenses to be covered by 25 26 the State Fund. California Insurance Code § 11580.2(h)(1) 27 provides that uninsured and underinsured coverage may be reduced 28 "[b]y the amount paid and the present value of all amounts 6 1 2 payable" under any workers' compensation law. Rudd, 219 Cal. App. 3d at 955 (applying § 11580.2(h)(1) to UIM coverage). 3 The California Court of Appeal has cited Black's Law 4 Dictionary for the definition of the term "payable:" "capable of 5 being paid; suitable to be paid; admitting or demanding payment; 6 justly done, legally enforceable." Bailey v. Interinsurance 7 Exchange, 49 Cal. App. 3d 399, 404 (1975). Bailey and Burkett v. 8 9 Continental Cas. Co., 271 Cal. App. 2d 360, 362 (1969) are not on United States District Court For the Northern District of California 10 point because the insured in those cases never applied for any 11 workers' compensation benefits, unlike the present case where 12 McNab has applied for and received benefits through the State 13 Fund. 14 In Waggaman v. Northwestern Sec. Insurance Company, 16 Cal. App. 3d 571 (1971), the court affirmed the denial of an offset for 15 future permanent disability payments through workers' 16 compensation. However, in Waggaman the insured's present physical 17 18 19 20 condition had not been determined, and permanent disability had not been established. In contrast to Waggaman, McNab has been deemed permanently 21 disabled, and the State Fund's Award on Stipulation provides: 22 "Further medical treatment to [McNab's] upper back, chest, ribs, 23 left shoulder and left elbow." McNab intends to seek further 24 payment from the State Fund for future medical costs, although the 25 26 precise amount is unknown. Thus, an offset for medical expenses 27 covered by the State Fund is warranted. 28 appears unlikely that McNab will be able to use the job training 7 On the other hand, it 1 voucher due his ongoing disability and his age. Since McNab will 2 not likely receive this benefit, an offset for its value is 3 unwarranted. 4 5 6 Accordingly, the Court grants NHIC's motion for partial summary judgment and denies McNab's cross-motion with respect to future medical expenses paid by the State Fund, but denies NHIC's 7 motion for partial summary judgment and grants McNab's cross8 9 motion for partial summary judgment regarding the offset for the United States District Court For the Northern District of California 10 job voucher. 11 adjudicate the amounts of McNab's future medical expenses. 12 fact that they will be paid for, however, can be taken into 13 account in any settlement or insurance arbitration. 14 The parties do not know and the Court cannot The III. Settlement from At-Fault Driver's Policy 15 McNab seeks summary adjudication that NHIC cannot offset the 16 full amount of the $100,000 settlement he received from the at17 18 19 20 fault driver's liability insurance policy because McNab reimbursed the State Fund $33,145.85 from that settlement. NHIC cites Waggaman, 16 Cal. App. 3d at 580 n.7, for support 21 that it is entitled to offset the full amount of the settlement. 22 The case, however, is not on point. 23 In addition, NHIC relies on a provision in its policy stating that its UIM and UM coverage do 24 not apply to the "direct or indirect benefit of any insurer or 25 26 self-insurer under any workers' compensation, disability benefits 27 or similar law . . ." 28 Coverage, Part C, ¶ 3. NHIC Policy, California Uninsured Motorist This language does not support NHIC's 8 1 contention that the parties agreed to offset such reimbursements. 2 McNab's reimbursement to the State Fund for a portion of benefits 3 he received is not a direct or indirect benefit to the State Fund 4 that the policy provision sought to proscribe. 5 received its reimbursement from a portion of McNab's settlement 6 The State Fund with the at-fault driver's liability insurer, not from any payment 7 made by NHIC pursuant to its UIM or UM coverage. 8 9 The basis for McNab's reimbursement to the State Fund and the United States District Court For the Northern District of California 10 terms of its lien are not clear. 11 McNab reimbursed the State Fund with a portion of his settlement 12 with the at-fault driver in compliance with law, NHIC is not 13 entitled to offset the full amount of the settlement. 14 However, to the extent that Rudd, 219 Cal. App. 3d at 956 (holding that an insurer may set off the 15 insured's underinsurance coverage for the amount of workers' 16 compensation benefits paid to the insured, except to the extent 17 18 that the insured did not receive or retain proceeds from the 19 tortfeasor because of the workers' compensation carrier's lien or 20 recoupment rights). 21 IV. Workers' Compensation Disability Payments 22 23 McNab's cross-motion seeks summary adjudication of the amount of disability payments he has received from the State Fund. 24 does not dispute the amount. Therefore, the Court summarily 25 26 27 adjudicates that McNab has received $88,283.08 in disability payments. The parties agree that this amount can be offset. 28 9 NHIC CONCLUSION 1 2 The Court denies NHIC's motion for partial summary judgment 3 that it may offset McNab's social security payments, and grants 4 McNab's cross-motion for partial summary judgment with respect to 5 that issue. 6 The Court denies NHIC's motion for partial summary judgment 7 and grants McNab's cross-motion for partial summary judgment that 8 9 the amount of the job voucher cannot be offset, but denies McNab's United States District Court For the Northern District of California 10 cross-motion and grants NHIC's motion that future medical expenses 11 paid by the State Fund may be offset. 12 the amount of future medical expenses that may be offset. 13 14 The Court cannot determine The Court summarily adjudicates that NHIC may offset only $66,854.15 of the $100,000 settlement McNab received from the at- 15 fault driver's liability insurance policy because McNab reimbursed 16 the State Fund $33,145.85 17 18 Finally, the Court summarily adjudicates that McNab has 19 received $88,283.08 in disability payments, which, the parties 20 agree, may be offset. 21 IT IS SO ORDERED. 22 23 24 Dated: 3/18/2011 CLAUDIA WILKEN United States District Judge 25 26 27 28 10
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