Dutta v. State Farm Insurance

CATHELL, Judge. In March of 1997, petitioner, Dr. Sisir K. Dutta, had at least two insurance policies — one was an automobile policy with respondent, State Farm Mutual Automobile Insurance Company (State Farm), and the other was a health insurance policy with an HMO, NYLCare. After being involved in an automobile accident on March 27, 1997, petitioner received medical ⁵⁴³ treatment, which was initially paid for by NYLCare. Petitioner filed a claim against the third party driver’s liability insurer.

Upon receiving a settlement check for this claim, petitioner reimbursed NYLCare pursuant to the HMO’s alleged right of subrogation included in petitioner’s policy agreement with NYLCare. Petitioner then submitted a claim for the amount paid for his treatment under his Personal Injury Protection (PIP) coverage, which was subsequently denied by State Farm. Petitioner presented one question to this Court for which we granted certiorari. We rephrase the question in order to properly address the issues presented: Does the PIP coverage at issue require State Farm to pay for petitioner’s medical treatment, even though petitioner’s health care provider and/or a third party, tortfeasor, actually paid the medical bills?[ 1 ] We answer the question in the affirmative.

We hold that the Circuit Court erred in finding that the expenses arising out of the medical treatment petitioner received at Suburban Hospital, which were initially paid for by NYLCare, were not an incurred expense for which petitioner was entitled to recover from his Personal Injury Protection coverage. We hold that the expense was incurred. Accordingly, we reverse the judgment of the Circuit Court for Montgomery County. I. Facts 2 On March 27, 1997, petitioner was injured when his vehicle was involved in an accident in Washington, D.C. At the time of the accident, petitioner was insured by a personal automo ⁵⁴⁴ bile policy through State Farm, which included PIP coverage in the amount of $10,000.

He was also a member of an HMO, NYLCare, through his employer, Howard University. Petitioner underwent examination and treatment for his injuries on the day of the accident in the Emergency Room at Suburban Hospital. 3 Upon being treated at the hospital, he signed a “Consent to Treat” form, which included a clause entitled “Agreement to Pay for Services.” 4 Approximately one to two months prior to the automobile accident, petitioner had suffered a heart attack for which he had received medical treatment. Because of this prior treatment, Suburban Hospital had his HMO information already on record. Unbeknownst to petitioner, Suburban Hospital and the other medical providers offering services at Suburban Hospital, submitted a claim for payment to petitioner’s HMO, NYLCare, in the amount of $941.84, which was subsequently paid by the HMO to the hospital.

On or about May 8, 1997, petitioner filed a claim with State Farm for payment of expenses relating to the treatment he received at Suburban Hospital for injuries sustained by him in the accident. State Farm paid $1995.00, an amount that constituted the copayment owed by petitioner to NYLCare under his HMO membership agreement; however, it withheld reimbursement of $941.84, the amount in excess of his copay for the emergency room treatment at Suburban Hospital, because that amount had been paid by NYLCare pursuant to the terms of the HMO membership agreement. ⁵⁴⁵ By letter dated December 12, 1997, Healthcare Recoveries, Inc. (Healthcare) 5 provided petitioner’s attorney with an “updated Consolidated Statement of the total benefits paid/incurred by [his] client’s Health Plan to date.” The statement attached to the letter indicated a balance due in the amount of $941.84, a claim for services provided when petitioner was treated at the Suburban Hospital emergency room on March 27, 1997. By letter dated December 19, 1997, petitioner’s attorney again requested benefits from State Farm and forwarded State Farm a copy of the letter from Healthcare accompanied by an earlier letter dated September 2, 1997, in which Healthcare requested reimbursements from petitioner for payments made by NYLCare to Suburban Hospital. State Farm advised petitioner that it would not pay him the $941.84 under his PIP coverage.

Petitioner had also filed a claim against the third party driver’s liability insurer with regard to his bodily injuries. That case was settled. In connection with the settlement against the third party driver, NYLCare notified petitioner’s attorney of petitioner’s alleged subrogation responsibilities under the Member Agreement. On December 29, 1997, petitioner, through his attorney, paid NYLCare $941.84 pursuant to the subrogation clause of the Member Agreement. 6 On March 22, 1999, having never received any funds from State Farm in respect to PIP coverage and almost two years after the injuries giving rise to the treatment costs were incurred, petitioner filed an action against State Farm in the District Court of Maryland sitting in Montgomery County, alleging that State Farm had failed to comply with the Personal Injury Protection provisions contained in petitioner’s policy.

State Farm filed a Notice of Intention to Defend and Demand Proof denying liability. The District Court awarded judgment ⁵⁴⁶ in the amount of $941.84 plus pre-judgment interest of $494.55 and costs of $28.20 in favor of petitioner. On January 13, 2000, State Farm filed a Notice of Appeal pursuant to Maryland Rule 7-104 and this matter was transferred to the Circuit Court for Montgomery County. State Farm filed a Motion to Dismiss or in the Alternative for Judgment in which it argued: (1) that NYLCare was statutorily prohibited from recovering medical expenses from its members in excess of deductibles or copays and, therefore, petitioner did not incur medical expenses; (2) that to require PIP insurers to provide benefits for covered services contravenes the express intention of the Legislature; and (3) that State Farm is not statutorily obligated to coordinate its benefits with HMOs.

Petitioner filed a Response to the Motion to Dismiss or for Judgment as well as a Motion for Summary Judgment in which he argued that: (1) NYLCare was entitled to reimbursement; (2) State Farm was both contractually and statutorily required to pay petitioner for the expenses he incurred as a result of his payment to NYLCare; and (3) the Maryland Legislature, by enacting Senate Bill 903 in 2000, allowed for the HMO to recover, through subrogation, monies paid to petitioner by a third party. On July 10, 2000, the Circuit Court granted the Motion for Judgment filed by State Farm. In doing so, the Circuit Court said: Okay. I have had occasion to review all of the pleadings and to consider the arguments of Counsel, and while it does appear to me that it is somewhat unfair I have to say that I end up being more persuaded by the logic of Mr. Redmond’s [State Farm’s attorney] arguments in that I don’t believe that the expense in this case was an expense that Dr. Dutta incurred within the meaning of the statute, and therefore, I do not believe that there is an obligation for the PIP carrier to pay it. ⁵⁴⁷ My sympathies are with you, but logic tells me that Mr. Redmond is probably correct and that this is what the legislature had intended.

As we indicated earlier, we disagree and, therefore, reverse the judgment of the Circuit Court.

II

Analysis To resolve the issue before this Court, we must ascertain whether the cost of the emergency treatment petitioner received while at Suburban Hospital was an incurred expense for which petitioner was entitled to recover from his PIP coverage through State Farm. 7 Our decision is controlled by Maryland Code (1995, 1997 Yol.), Title 19, subtitle 5 of the Insurance Article, 8 and the express language of petitioner’s State Farm policy. a. Background Before discussing the issue at bar, we feel it is helpful to define the purpose behind the passage of PIP legislation in Maryland. PIP coverage was first enacted by the Maryland Legislature in 1972 in order “to offer those injured in an ‘incident’ with an automobile to have ‘quick’ no-fault compensation for medical bills and lost wages up to a minimum amount, generally $2,500.” Robert H.B. Cawood, Personal ⁵⁴⁸ Injury Protection — A Primer, 2 (MICPEL) (2000). We said in Insurance Commissioner v. Property & Casualty Insurance Guaranty Corporation, 313 Md. 518, 532 , 546 A.2d 458, 465 (1988) “that one of subtitle 35’s[ 9 ] fundamental aims is the speedy provision of PIP benefits without the lengthy delays entailed by tort litigation.

Such prompt payment is a basic purpose of no-fault insurance generally.” We have additionally noted on numerous occasions that “[t]he primary purpose [behind requiring PIP coverage] is to assure financial compensation to victims of motor vehicle accidents without regard to the fault of a named insured or other persons entitled to PIP benefits.” Pennsylvania Nat’l Mut. Casualty Ins. Co. v. Gartelman, 288 Md. 151, 154 , 416 A.2d 734, 736 (1980); see Smelser v. Criterion Ins. Co., 293 Md. 384, 393 , 444 A.2d 1024, 1029 (1982) (“The purpose of [PIP legislation was] to put a limited amount of money in the hands of an injured individual under certain circumstances without regard to whether another person is liable for the injuries which the claimant sustained.”); see also Bishop v. State Farm, 360 Md. 225, 230 , 757 A.2d 783, 785 (2000); Clay v. GEICO, 356 Md. 257, 265-66 , 739 A.2d 5,10 (1999); Tucker v. Fireman’s Fund Ins.

Co., 308 Md. 69, 75-76 , 517 A.2d 730, 733 (1986). Additionally, in Insurance Commissioner, 313 Md. at 532 , 546 A.2d at 465 , we noted “[t]his accent on rapid payment cannot be reconciled with an interpretation of section 512(a)[ 10 ] requiring an injured party ⁵⁴⁹ to exhaust third party liability claims before recovering any PIP benefits from PCIGC.” PIP coverage, by its very design, attempts to avoid delays in providing monetary relief to automobile accident victims. 11 b. Section 19-507 Crucial to this analysis is section 19-507(a), which outlines when such PIP payments are payable. It provides: (a) When benefits payable. — The benefits described in § 19-505 of this subtitle shall be payable without regard to: (2) any collateral source of medical, hospital, or wage continuation benefits.

We start our analysis with a discussion of statutory construction. When attempting to discern the intention of the Legislature in enacting a particular statute, we recently said in Edgewater Liquors, Inc. v. Liston, 349 Md. 803 , 709 A.2d 1301 (1998): “In construing the meaning of a word in a statute, the cardinal rule is to ascertain and carry out the real legislative intention.” Legislative intent generally is derived from the words of the statute at issue. “We are not constrained, however, by ... ‘the literal or usual meaning’ of the terms ⁵⁵⁰ at issue.” “Furthermore, we do not read statutory language ‘in isolation or out of context [but construe it] in light of the legislature’s general purpose and in the context of the statute as a whole.’ ” Id. at 807-08 , 709 A.2d at 1303 (internal citations omitted) (alteration in original). We commented in an earlier case: When we pursue the context of statutory language, we are not limited to the words of the statute as they are printed in the Annotated Code. We may and often must consider other “external manifestations” or “persuasive evidence,” including a bill’s title and function paragraphs, amendments that occurred as it passed through the legislature, its relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case. ...

Thus, in State v. One 1983 Chevrolet Van, 309 Md. 327 , 524 A.2d 51 (1987), .... [although we did not describe any of the statutes involved in that case as ambiguous or uncertain, we did search for legislative purpose or meaning — what Judge Orth, writing for the Court, described as “the legislative scheme.”____ See also Ogrinz v. James, 309 Md. 381 , 524 A.2d 77 (1987), in which we considered legislative history (a committee report) to assist in construing legislation that we did not identify as ambiguous or of uncertain meaning. Kaczorowski v. Mayor & City Council of Baltimore, 309 Md. 505, 514-15 , 525 A.2d 628, 632-33 (1987); see Laznovsky v. Laznovsky, 357 Md. 586, 606-07 , 745 A.2d 1054, 1065 (2000); State v. Bell, 351 Md. 709, 717-19 , 720 A.2d 311, 315-16 (1998); see also Williams v. Mayor & City Council of Baltimore, 359 Md. 101, 115-17 , 753 A.2d 41, 48-49 (2000); Riemer v. Columbia Medical Plan, 358 Md. 222, 235-36 , 747 A.2d 677, 684-85 (2000). The mandatory language of section 19-507(a) emphasizes that petitioner can recover from his HMO, NYLCare, as ⁵⁵¹ well as PIP benefits from his automobile insurer, State Farm. “The benefits described in § 19-505 of this subtitle shall be payable without regard to ... any collateral source of medical, hospital, or wage continuation benefits .” (Emphasis added.) The Legislature could not have expressed its intent any clearer — an insurer must pay PIP benefits regardless of any collateral source of benefits — i.e., regardless of whether a health insurance provider, HMO, or other collateral source provides benefits. 12 NYLCare’s coverage of petitioner’s medical bills for his treatment at Suburban Hospital is exactly this — a collateral source of medical and hospital benefits. If the Legislature had meant to exclude members of HMOs that provide collateral benefits from PIP coverage, language to that effect would have been included in either section 19-505, section 19-507, or section 19-513.

To interpret this language in any other way would render section 19-507(a)(2) meaningless. When we examine the plain meaning of the words of a statute, “[o]ur examination of such words is guided by the principle that we should read ‘pertinent parts of the legislative language together, giving effect to all of those parts if we can, and rendering no part of the law surplusage.’ ” Holman v. Kelly Catering, Inc., 334 Md. 480, 485 , 639 A.2d 701, 704 (1994) (quoting Sinai Hosp. v. Department of Employment, 309 Md. 28, 40 , 522 A.2d 382, 388 (1987)); see Giant Food, Inc. v. Department of Labor, 356 Md. 180, 194 , 738 A.2d 856, 863 (1999). State Farm’s argument that petitioner cannot recover both PIP benefits and collateral medical and hospital benefits demonstrates complete disregard for the plain language of section 19-507. Moreover, State Farm v. Insurance Commissioner, 283 Md. 663 , 392 A.2d 1114 (1978) involved facts that, with one important statutory exception, were remarkably similar to the facts at issue here.

Patrick Morris, the insured in that case, was injured by a tortfeasor while he was driving his own vehicle at work. He sought, and received, “workmen’s” compensation ⁵⁵² benefits. Subsequently, Morris received a settlement from the negligent third party. Out of that settlement, he reimbursed the “workmen’s” compensation carrier.

He then filed a claim for PIP benefits from State Farm. State Farm reduced the amount of his benefits by the amount he had reimbursed the compensation carrier. Morris argued that because he had reimbursed the carrier, “he had not ‘recovered’ workmen’s compensation benefits within the meaning of § 543(d)[ 13 ].” Id. at 666, 392 A.2d at 1115 . There we held, because of the express provisions in section 539(d) relating to workmen’s compensation, Morris was not entitled to recover PIP benefits to the extent he had recovered workmen’s compensation benefits.

In contrast, Title 19, subtitle 5 contains no exception for HMO benefits or reimbursements. The statute applicable to the case sub judice states that PIP benefits are payable “without regard to ... any collateral source of medical, hospital, or wage continuation benefits.” As evidenced by section 19-513(e), the Legislature has clearly demonstrated that it knows how to exempt certain benefits from the requirement for payment of PIP benefits. It has elected to do so in respect to worker’s compensation benefits; however, it has not elected to do so in respect to HMO benefits. As we noted in West American Insurance Company v. Popa, 352 Md. 455, 475 , 723 A.2d 1, 10-11 (1998): This Court has consistently held that exclusions from statutorily mandated insurance coverage not expressly authorized by the Legislature generally will not be recognized.

See, e.g., Enterprise v. Allstate, 341 Md. 541, 547 , 671 A.2d ⁵⁵³ 509, 512 (1996) (“Where the Legislature has mandated insurance coverage, this Court will not create exclusions that are not specifically set out in the statute”); Van Horn v. Atlantic Mutual, 334 Md. 669, 686 , 641 A.2d 195, 203 (1994) (“this Court has generally held invalid insurance policy limitations, exclusions and exceptions to the statutorily required coverages which were not expressly authorized by the Legislature”); Allstate Ins. Co. v. Hart, 327 Md. 526, 531-532 , 611 A.2d 100, 102 (1992); Larimore v. American Ins. Co., 314 Md. 617, 622 , 552 A.2d 889, 891 (1989); Nationwide Mutual Ins. Co. v. USF & G, 314 Md. 131, 141 , 550 A.2d 69, 74 (1988); Gable v. Colonial Ins.

Co., 313 Md. 701, 704 , 548 A.2d 135, 137 (1988) (“As a matter of statutory construction, where the Legislature has required specified coverages in a particular category of insurance, and has provided for certain exceptions or exclusions to the required coverages, additional exclusions are generally not permitted”); Lee v. Wheeler, 310 Md. 233, 239 , 528 A.2d 912, 915 (1987) (“we will not imply exclusions nor recognize exclusions beyond those expressly enumerated by the legislature”); Jennings v. Government Employees, 302 Md. 352, 358-359 , 488 A.2d 166, 169 (1985) (“we will not insert exclusions from the required coverages beyond those expressly set forth by the Legislature”); Nationwide Mutual Ins. v. Webb, supra, 291 Md. [721,] 730, 436 A.2d [465,] 471 (“conditions or limitations in an uninsured motorist endorsement, which provide less than the coverage required by the statute, are void”); Pennsylvania Nat'l Mut. v. Gartelman, 288 Md. 151, 160-161 , 416 A.2d 734, 739 (1980). The rules of statutory construction relating to statutory provisions that create exceptions or exemptions from other statutory provisions reinforces our view that no other exceptions were intended. It is not our proper function to add to the statute another class of exemptions. That is a legislative function.

Payment of the medical expenses arising out of petitioner’s automobile accident by NYLCare does not absolve respondent of its duty under the statute to provide PIP benefits to ⁵⁵⁴ petitioner. In the case sub judice, respondent was statutorily-mandated by section 19-507 to provide PIP benefits to petitioner regardless of the fact that he also received health insurance benefits from his HMO, NYLCare. c. Section 19-505 and State Farm’s Policy Section 19-505, titled “Personal injury protection coverage — In general,” is also helpful in our analysis. It provides in relevant part: (a) Coverage required. — Unless waived in accordance with § 19-506 of this subtitle, each insurer that issues, sells, or delivers a motor vehicle liability insurance policy in the State shall provide coverage for the medical, hospital, and disability benefits described in this section for each of the following individuals: (1) except for individuals specifically excluded under § 27-606 of this article: (i) the first named insured, and any family member of the first named insured who resides in the first named insured’s household, who is injured in any motor vehicle accident, including an accident that involves an uninsured motor vehicle or a motor vehicle the identity of which cannot be ascertained____ (b) Minimum benefits required.— (2) The minimum medical, hospital, and disability benefits provided by an insurer under this section shall include up to $2,500 for: (i) payment of all reasonable and necessary expenses that arise from a motor vehicle accident and that are incurred within 3 years after the accident for necessary prosthetic devices and ambulance, dental, funeral, hospital, medical, professional nursing, surgical, and x-ray services ----[Some emphasis added.] 1996 Maryland Laws, Chapter 11 enacted section 19-505 with “new language derived without substantive change from former Article] 48A, [sections] 545, 538(d) and (e), and 539(a) ⁵⁵⁵ through (d).” The relevant language of section 19-505 remains unchanged from its original form, which provided: No policy of motor vehicle liability insurance shall be issued, sold or delivered in this State after January 1, 1973, unless the policy also affords the minimum medical, hospital and disability benefits set forth herein....

The benefits, or their equivalent, shall cover the named insured.... The minimum medical, hospital and disability benefits shall include up to an amount of $2,500, for payment of all reasonable expenses arising from the accident and incurred within three years from the date thereof for necessary medical, surgical, x-ray and dental services.... Md.Code (1957, 1972 Repl.Vol., 1978 Cum.Supp.), Art. 48A § 539(a). It is clear from the plain language of section 19-505 and the language of its predecessor, section 539, that automobile insurers who provide services in Maryland are mandated to provide coverage for the medical, hospital, and disability benefits for individuals identified as first named insureds on their policies except if waived by the insured. 14 The Legislature included mandatory language to require insurers to at least offer PIP coverage to potential insureds.

The intent of the Legislature is clear — -that unless waived by the insured, PIP benefits are to be provided to cover appropriate expenses arising out of a motor vehicle accident, which are incurred within a certain time period. At the time of the accident, petitioner had a current automobile policy with respondent, in which he was the first named insured. The policy was paid for and in effect at the time of the accident on March 27, 1997. By design, with regard to PIP coverage, State Farm’s policy follows the language of section 19-505. 15 The policy provides: ⁵⁵⁶ We will pay in accordance with the No-Fault Act for bodily injury to an insured, caused by a motor vehicle accident, for: 1.

Medical Expenses. Reasonable charges incurred within three years after the date of the accident for necessary: a. medical, surgical, X-ray, dental, ambulance, hospital and professional nursing services; b. eyeglasses, hearing aids and prosthetic devices; and e. funeral services. In Cheney v. Bell National Life Insurance Company, 315 Md. 761, 766 , 556 A.2d 1135, 1138 (1989), we discussed the applicable rules of construction of insurance contracts, stating in part: “In the interpretation of the meaning of an insurance contract, we accord a word its usual, ordinary and accepted meaning unless there is evidence that the parties intended to employ it in a special or technical sense.” In that vein, insurance contracts are construed as ordinary contracts. Litz v. State Farm, 346 Md.