ATLANTA SPECIALTY INSURANCE COMPANY v. GARY A. GRIGGS
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RENDERED: JUNE 14, 2002; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2001-CA-001138-MR
ATLANTA SPECIALTY
INSURANCE COMPANY
APPELLANT
APPEAL FROM MONTGOMERY CIRCUIT COURT
HONORABLE BETH LEWIS MAZE, JUDGE
ACTION NO. 00-CI-90100
v.
GARY A. GRIGGS
APPELLEE
OPINION
AFFIRMING IN PART - REVERSING IN PART AND REMANDING
** ** ** ** **
BEFORE:
BUCKINGHAM, GUIDUGLI AND HUDDLESTON, JUDGES.
GUIDUGLI, JUDGE.
Atlanta Specialty Insurance Company (Atlanta)
appeals an order of the Montgomery Circuit Court which required
it to pay $10,000 to Gary Griggs (Griggs) as personal injury
protection (PIP) benefits for loss wages after Atlanta had
already paid $10,000 in PIP benefits for medical expenses to
several medical providers.
We affirm in part, reverse in part,
and remand.
On June 21, 1998, Griggs was involved in a single car
motor vehicle accident in Clark County.
injuries and is now a quadriplegic.
Griggs sustained serious
As a result of the accident,
his medical expenses exceeded One Million Dollars.
At the time
of the accident, Griggs was insured by Atlanta under a policy of
motor vehicle insurance which provided for a payment of $10,000
in no-fault benefits pursuant to the Kentucky Motor Vehicle
Reparations Act (MVRA).
Griggs was also insured under a health
and accident insurance policy issued by Anthem Blue Cross/Blue
Shield.
On or about July 2, 1998, Atlanta received information
of the accident and the serious nature of Griggs’s injuries.
Attempts to contact Griggs’s wife were unsuccessful.
Shortly
after receiving notice of the accident, Atlanta began receiving
medical bills relating to medical care rendered Griggs following
the accident.
On July 14, 1998, Atlanta paid $1,157.20 to
several care givers based upon medical bills it had received.
Thereafter, on July 17, 1998, Atlanta exhausted Griggs’s PIP
benefits by paying an additional $8,842.80 to the University of
Kentucky Chandler Medical Center (U.K. Medical Center) where
Griggs was hospitalized.
On that same day (July 17, 1998),
Atlanta sent a letter to Griggs stating that the PIP benefits
were exhausted, and no more overage was available for medical
bills.
Atlanta closed its file relative to Griggs’s accident.
However, on September 18, 1998, Griggs’s attorney
contacted Atlanta and requested that Atlanta make wage loss PIP
benefits available to his client.
Atlanta informed Griggs’s
legal representative that the PIP benefits had been exhausted on
medical benefits.
Griggs then filed a complaint against Atlanta
on June 20, 2000, requesting judgment for loss wages due under
his insurance policy in the sum of $10,000.
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After discovery was
completed, each party moved for summary judgment.
On April 2,
2001, the Montgomery Circuit Court granted Griggs’s motion for
summary judgment awarding Griggs $10,000 for basic reparations
benefits, plus interest at 18% per annum from July 17, 1998, as
well as a reasonable sum for attorney fees.
Instead of this being the end of the matter, it was the
beginning of a flurry of new pleadings.
Atlanta filed a motion
to set aside the order, which was granted, in part, in order to
allow time for Atlanta to file a third-party complaint against
U.K. Medical Center and Clark Regional Medical Center, Inc.
(Clark Medical Center), the two health care providers that
received the $10,000 PIP medical benefits.
Thereafter, each
third-party defendant filed answers and separate claims against
Griggs seeking indemnification.
Atlanta filed an additional
motion to file a counter-claim against Griggs based upon unjust
enrichment.
Atlanta filed another motion to alter, amend or
vacate and Griggs and Atlanta filed additional memoranda in
support of their position relative to that motion.
Finally
Griggs filed answers to the third-party defendants’ claims
against him.
All this was accomplished by May 11, 2001.
On May
18, 2001, the trial court entered a new order and judgment which
incorporated the findings of fact and conclusions of law from the
previous order entered April 2, 2001, and further denied
Atlanta’s motion to alter, amend or vacate.
As to all remaining
issues (counterclaim and third-party claims), they were ordered
held in abeyance.
On May 25, 2001, the court entered an amended
order and judgment which duplicated the May 18, 2001 order, but
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added an award of $5,000 to be paid by Atlanta for reasonable
attorney’s fees and taxable costs.
This appealed followed.
On appeal, Atlanta argues that Griggs is not entitled
to recover wage loss benefits because he failed to submit
documentation of such loss; he never formally made a wage-loss
benefit claim; payment of an additional $10,000 in PIP benefits
would violate KRS 304.39-050(3); and that Griggs had been
unjustly enriched.
Atlanta also contends that the award of
interest and attorney’s fees should be reversed.
Griggs responds
by claiming that Atlanta simply chose the fastest and cheapest
way to close the insurance claim by paying the PIP benefits in
medical expenses without the advice, knowledge or consent of
Griggs, and thus, violated its legal, contractual and fiduciary
duties owed Griggs.
He also insists that the award of attorney’s
fees and interest are justified because of Atlanta’s disregard of
the law and his rights.
However, Griggs does concede that the
trial court erred in its calculation of interest.
He agrees that
interest should not have been assessed from July 17, 1998, but
rather pursuant to KRS 304.39.130 interest should be assessed
from the date that each weekly payment (he believes it should be
$200 per week) was due.
While we question why Griggs did not include in his
complaint his primary health insurance carrier and the medical
providers who had received the PIP payments from Atlanta, and
while we are concerned that the trial court did not resolve the
indemnification issues between Atlanta and the medical providers,
we believe the trial court correctly resolved the issue of wage
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loss benefits between Atlanta and Griggs.
At no time prior to
the benefit disbursement by Atlanta did Griggs or his wife have
any contact with Atlanta.
Although it appears someone provided
the medical providers with information concerning Griggs’s
automobile insurance coverage through Atlanta, there is nothing
in the record to suggest that Atlanta received this information
from the Griggses.
Atlanta concedes that its attempts to contact
or notify the Griggses proved futile.
The Griggses made no
claim, submitted no form and requested no benefits of Atlanta.
In fact, considering the catastrophic injuries Griggs sustained
and the life and death struggle he was fighting, it is hard to
imagine that he or his wife was concerned with medical insurance
or payment of the bills at that time.
In times of such distress,
it is reasonable to believe all thoughts and efforts were to
provide the best medical treatment possible and not be concerned
about the costs until some later time.
Under these conditions, it is difficult to believe that
Atlanta was merely concerned with meeting its statutory
obligation to pay reasonable medical expenses within thirty (30)
days of submission.
KRS 304.39-210(1).
Rather, it is more
reasonable to believe, as did the trial court, that Atlanta acted
unreasonably in paying the medical PIP prior to receiving a PIP
application.
The trial court also noted that neither party had
placed a copy of the insurance policy in question in the record
and the court believed “there was no language in the policy which
allowed [Atlanta] to make payment without authorization from
[Griggs].”
The court then found that under current law (KRS
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304.39-241, which went into effect July 15, 1998) such language
in a policy would be contrary to law.
Specifically, KRS 304.39-
241 states:
An insured may direct the payment of benefits
among the different elements of loss, if the
direction is provided in writing to the
reparation obligor. A reparation obligor
shall honor the written direction of benefits
provided by an insured on a prospective
basis.
This statute was not in effect on the date of the accident (June
21, 1998), but was effective prior to the time the majority of
the benefits had been paid by Atlanta (on July 14, 1998 Atlanta
paid $1,157.20 to several health providers and on July 17, 1998,
paid $8,542.80 to U.K. Medical Center).
The trial court made the
following findings in its April 12, 2001, order based upon these
facts:
In the newly revised statute of KRS
304.39-241, the carrier clearly is obligated
by statute to make payment as directed by the
insured. However, this Court also finds that
prior to July 15, 1998, the insurer had an
obligation to ascertain (1) whether all of
the injuries did in fact occur as a result of
the motor vehicle accident, and (2) how the
insured desired to have the benefits
disbursed. It is evident, by the fact that
payment was made on the date of the bills
were received, and without even receipt of a
PIP application, that the Defendant merely
wanted to exhaust the PIP in order to close
the file and alleviate the cost of
administration.
In addition to the new statute, the trial court relied
upon Blue Cross & Blue Shield of Ky. v. Baxter, Ky. App., 713
S.W.2d 478 (1986), as a basis for ruling for Griggs.
Baxter,
although factually similar, is procedurally different in that the
injured party brought suit against the health insurance company.
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In Baxter, her automobile insurer paid over $9,000 to the
hospital for medical expenses incurred by Baxter in the accident.
When Baxter requested Blue Cross/Blue Shield to duplicate those
medical expenses that the automobile insurance company had
already paid, Blue Cross/Blue Shield refused.
Blue Cross/Blue Shield.
Baxter then sued
This Court, in affirming the trial
court’s summary judgment in favor of Baxter, held:
If economic loss (exclusive of medical
expenses) exceeds the maximum BRB to which a
claimant is entitled, coordination is
impermissible. In this case, Helen’s
economic loss in wages alone exceeds the
$10,000.00 maximum to which she is entitled.
If we were to permit Blue Cross to coordinate
its responsibility for medical bills with the
payments which Helen has received from the
no-fault carrier, it would effectively
depreciate her recovery under the no-fault
act. This we cannot sanction. It would
vitiate the public policy set forth in the
Motor Vehicle Reparations Act. KRS 304.39010.
....
It is clear to us that in enacting nofault legislation, the intent was to provide
a remedy to automobile accident victims that
could not be impinged upon by any means
whatsoever. This was the victim’s reward for
sacrificing traditional tort rights. See
Fann v. McGuffey, Ky., 534 S.W.2d 770 (1975);
KRS 304.39-060(2); KRS 304.39-030(1). Nofault is a specie of compulsory insurance. 7
Am.Jur.2d Automobile Insurance §§ 20 and 341
(1980). It is remedial in nature and thus
will be broadly construed to carry out its
beneficial purpose of providing compensation
for persons injured by automobiles. 7
Am.Jur.2d Automobile Insurance § 28 (1980).
Although our statute provides that an injured
party may not collect from more than one
“reparation obligor” (KRS 304.39-050[3]),
there is every indication the legislature
intended that his one-time recovery not be
diminished. The statute defines reparation
obligor as “an insurer, self-insurer, or
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obligated government providing basic or added
reparation benefits under the statute.” KRS
304.39-020(13). The statute does not include
insurers, such as Blue Cross, who are not
providing insurance under the no-fault
statute. Further, BRB are qualifiedly exempt
from execution (KRS 304.390260[1]), and are
not subject to deductions or set-off. KRS
304.39-250. Apparently the only authorized
deductions in BRB are those arising from
social security or workers’ compensation.
KRS 304.39-120.
In view of the foregoing, we believe it
offensive to the public policy manifested in
the act to permit Blue Cross to coordinate
under the circumstances. Blue Cross has a
right to contract, but the right is not
unlimited. 17 Am.Jur.2d Contracts § 174
(1964).
Baxter, 713 S.W.2d at 480.
Although Griggs filed his action
directly against his automobile insurer, we believe the result is
the same.
Atlanta cannot ignore its duties to provide a remedy
to automobile accident victims.
and needs of its insured.
It cannot ascertain the wishes
It cannot expeditiously and without
direction or authorization pay out the victim’s benefits merely
to close its file and alleviate the costs of administration.
To
do so is offensive to the public policy manifested in the MVRA as
set forth in KRS Chapter 304.39.
As such, we believe the trial
court correctly granted summary judgment in favor of Griggs on
that issue.
As to the remaining issues of attorney’s fees and
interest, we believe the trial court did not abuse its discretion
in granting attorney’s fees to Griggs in this matter.
As to
interest, Griggs concedes that interest should not be paid except
on each weekly payment as it came due and we reverse and remand
with direction that the trial court conduct a new hearing on the
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amount of weekly wage-loss benefits due as well as interest due
on said weekly benefits.
For the foregoing reasons, we affirm in part, reverse
in part, and remand with directions the order of the Montgomery
Circuit Court.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF AND ORAL ARGUMENT FOR
APPELLEE:
Robert J. Stokes, Jr.
Ronald L. Green
Brennen C. Ragone
Lexington, KY
Leslie Rosenbaum
Lexington, KY
ORAL ARGUMENT FOR APPELLANT:
Ronald L. Green
Lexington, KY
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