Present: Kinser, C.J., Lemons, Goodwyn, Millette, Mims, and
Powell, JJ., and Koontz, S.J.
KEVIN CHRISTY
OPINION BY
v. Record No. 102138 SENIOR JUSTICE LAWRENCE L. KOONTZ, JR.
March 2, 2012
MERCURY CASUALTY COMPANY
FROM THE CIRCUIT COURT OF WASHINGTON COUNTY
C. Randall Lowe, Judge
In this appeal, we consider whether the circuit court
correctly determined that an exclusion in an automobile
insurance policy regarding coverage for medical expenses
barred the policyholder from receiving any payment for medical
expenses because a portion of those expenses had been paid by
workers' compensation benefits.
BACKGROUND
On November 23, 2005, Kevin Christy, a police officer in
the Town of Abingdon ("the Town"), was a passenger in a
Washington County Sheriff's vehicle being driven by a
sheriff's deputy. The sheriff's vehicle was involved in an
accident in which it was struck from behind while stopped.
Christy suffered injuries as a result of this accident. The
parties disagree as to the extent of those injuries. It is
not disputed, however, that this accident arose out of and
occurred during the course of Christy's employment by the
Town.
Christy was initially treated for his injuries in the
emergency room of Johnston Memorial Hospital in Abingdon on
November 24, 2005. Thereafter, Christy came under the care of
Dr. Timothy G. McGarry of Abingdon Orthopedic Associates for
joint pain in Christy's neck and left shoulder. Dr. McGarry
referred Christy to Dr. Richard Mullens of Abingdon
Radiological Services, who administered an MRI examination of
Christy's neck and spine on February 14, 2006 at Johnston
Memorial Hospital.
In a follow-up visit on March 1, 2006, Dr. McGarry
determined that Christy had a tear in the labrum of his left
shoulder, commonly called a "SLAP tear," that required
surgery. 1 Dr. McGarry was of opinion that Christy's SLAP tear
was caused by the November 23, 2005 accident and was not a
pre-existing condition.
At the time of Christy's accident, the Town obtained its
workers' compensation coverage through the Virginia Municipal
League Insurance Programs ("VMLI"). At the time of his
surgery, Christy received his primary health insurance through
1
In a medical context, "SLAP" refers to a lesion or tear
to the "superior labral, anterior to posterior," an injury to
the biceps tendon of the shoulder joint. 5 J.E. Schmidt,
Attorneys' Dictionary of Medicine Illustrated S-181 (28th ed.
1995); see also Tae Kyun Kim, et al., Clinical Features of the
Different Types of SLAP lesions, 85-A Journal of Bone & Joint
Surgery 66, 66 (2003).
2
a physician-hospital organization ("PHO") administered by John
Deere Health Insurance, and subsequently by United Health Care
Plan of the River Valley, Inc. Christy was also insured under
an automobile liability insurance policy issued by Mercury
Casualty Company which provided coverage for his two private
vehicles. The Mercury Casualty policy included coverage for
"medical expense benefits as a result of bodily injury caused
by an accident and arising out of the . . . use of a motor
vehicle as a motor vehicle" with a limit of coverage of $5000
per person for each vehicle. This policy contained a
provision for the exclusion of coverage which, in relevant
part, provided that the insurance does not apply "to bodily
injury sustained by any person to the extent that benefits
therefor[] are in whole or in part payable under any
[workers'] compensation law."
For purposes of our resolution of this appeal, it will
suffice to briefly summarize the total medical expenses that
Christy incurred, including those for the treatment of his
shoulder, and the payments made by the various insurance
providers after contract adjustments accepted by the medical
service providers. The total medical expenses incurred by
Christy amounted to $16,564.00. VMLI paid $1,815.18 on claims
submitted by Johnston Memorial Hospital for Christy's
emergency room visit, the MRI examination performed at the
3
hospital, Dr. Mullens' claim for evaluating this MRI, and for
Dr. McGarry's claim for Christy's initial visit. However,
VMLI denied the claims for the March 24, 2006 surgery
submitted by Johnston Memorial Hospital and Dr. McGarry,
asserting that the SLAP tear was a pre-existing condition and
not compensable under the workers' compensation policy.
Christy concedes that he "did not pursue a [workers'
compensation] claim" against VMLI. The balance of $13,458.27,
after applying contract adjustments, for the claims of the
hospital and Dr. McGarry for the shoulder surgery was
ultimately paid or otherwise resolved by Christy and Christy's
PHO. 2
On April 20, 2009, Christy submitted a claim to Mercury
Casualty regarding his medical expenses incurred following the
November 23, 2005 automobile accident, asserting that he was
entitled to payment under the medical expenses coverage of his
policy. On June 12, 2009, Mercury Casualty denied the claim,
asserting the application of the exclusion to coverage
provision of the policy and maintaining that "[t]he bills in
2
Considerable litigation occurred between Christy, the
hospital, and Christy's PHO, which in part involved the
applicability of Code § 38.2-2201(A)(3)(b) to Christy's
medical expenses, to determine the amounts to be paid by
Christy and his PHO. These proceedings do not impact our view
of this appeal.
4
this case were, at least in part, 'payable' under the workers'
compensation law."
On September 4, 2009, Christy filed a warrant in debt
against Mercury Casualty in the Washington County General
District Court seeking $10,000 in contract damages. He
obtained a judgment for $9,500 and attorney's fees. Mercury
Casualty appealed this judgment to the Circuit Court of
Washington County.
The case was submitted to the circuit court on a joint
stipulation of facts and supporting briefs. Following oral
argument of the parties, the court issued an opinion letter
dated April 29, 2010, in which it concluded that based on the
unambiguous language of the exclusion, "payment of [workers']
compensation, even in part, as a result of this accident
triggers the exclusion and precludes payment" by Mercury
Casualty of the portion of Christy's medical expenses not paid
by VMLI. By order dated May 25, 2010, the court entered
judgment consistent with this opinion, but retained
jurisdiction over the matter to consider a motion for
reconsideration filed by Christy prior to entry of the order.
By letter opinion thereafter, the court affirmed its prior
ruling, and entered final judgment granting summary judgment
for Mercury Casualty on August 12, 2010. We awarded Christy
this appeal.
5
DISCUSSION
The dispositive issue in this appeal is whether the
language of the exclusion in Mercury Casualty's policy bars
recovery when its insured suffers injury in a work-related
motor vehicle accident and any portion of the medical expenses
incurred as a result are paid by a workers' compensation
carrier. Because this issue was decided by the circuit court
based on stipulated facts and involves the interpretation of a
written contract, we apply a de novo standard of review.
Farmers Ins. Exch. v. Enter. Leasing Co., 281 Va. 612, 617,
708 S.E.2d 852, 855 (2011); Johnson v. Hart, 279 Va. 617, 623,
692 S.E.2d 239, 242 (2010).
Our analysis begins with the undisputed fact that the
November 23, 2005 accident arose out of and occurred during
the course of Christy's employment. As such, any injury
Christy sustained in the accident would be subject to coverage
under the Workers' Compensation Act. Code § 65.2-300.
However, if an employee suffers from a pre-existing condition
at the time of the covered accident, compensation will only be
payable for expenses incurred if the accident "accelerates or
aggravates [the] pre-existing condition." Ohio Valley
Construction Co. v. Jackson, 230 Va. 56, 58, 334 S.E.2d 554,
555 (1985); see also Combs v. Virginia Elec. & Power Co., 259
Va. 503, 511, 525 S.E.2d 278, 283 (2000); Olsten of Richmond
6
v. Leftwich, 230 Va. 317, 319-20, 336 S.E.2d 893, 895 (1985).
In the present case, VMLI, the workers' compensation carrier,
paid only a portion of Christy's claimed medical expenses
after concluding that Christy's SLAP tear was a pre-existing
condition. 3
Christy stresses that he does not challenge the validity
of the exclusion in Mercury Casualty's policy. Rather, he
maintains that the plain language of the exclusion means that
it applies only "to the extent" some portion of his medical
expenses were paid as a workers' compensation benefit, without
regard to whether he might have successfully pursued a claim
against VMLI for all the medical expenses. Thus, he contends
that the exclusion acts only to offset any amount actually
paid by VMLI for his medical expenses as a workers'
compensation benefit. Mercury Casualty responds that the
language of the exclusion is clear that no coverage is
available under its policy if any portion of the medical
expenses incurred is subject to workers' compensation, even if
those expenses are not actually paid by the employer's
workers' compensation carrier.
3
As previously noted Christy did not challenge VMLI's
conclusion by seeking a hearing for a formal determination of
that issue from the Workers' Compensation Commission.
Moreover, in the circuit court, the parties agreed to have the
issue whether the SLAP tear was caused by the accident
deferred for resolution by a jury.
7
In Baker v. State Farm Mutual Automobile Insurance Co.,
242 Va. 74, 405 S.E.2d 624 (1991) and again in Scarbrow v.
State Farm Mutual Automobile Insurance Co., 256 Va. 357, 504
S.E.2d 860 (1998), we addressed nearly identical exclusions as
the one at issue in this case. In Baker, a bus driver who was
injured in an automobile accident while in the course of his
employment sought to recover related medical expenses under
the medical expenses coverage of his personal automobile
liability insurance. We said that the action was intended "to
recover a portion of the medical expenses" Baker incurred as a
result of his injury in a work-related accident. Baker, 242
Va. at 75, 405 S.E.2d at 625. In the present case, it was a
point of contention in the circuit court and on appeal as to
whether this statement meant that only a portion of these
expenses actually had been covered by workers' compensation.
We have reviewed the record in Baker and have determined
that all of the medical expenses for the injury arising from
the work-related accident in that case were paid by the
workers' compensation carrier. It was because these expenses
exceeded the maximum coverage under the medical expenses
coverage of Baker's personal automobile liability insurance
that we said he sought "to recover a portion of the medical
expenses." Thus, Christy is correct that Baker is
distinguishable from this case in that all of the medical
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expenses for which Baker sought to recover were actually paid
by the workers' compensation carrier.
However, the issue in Baker was "whether an insurer may
enforce an exclusion from coverage absent specific
authorization for such an exclusion in a statute that required
the insurer to offer such coverage." Id. at 75, 405 S.E.2d at
624. Our decision in that case was limited to finding that
exclusions of the type at issue in that case, and here, are
valid and enforceable. Thus, Baker provides no direct
guidance on the issue presented in this appeal.
In Scarbrow, the insured was a driver for a parcel
delivery service who was injured in an automobile accident
while in the course of her employment. The facts of that case
differ somewhat from Baker in that Scarbrow's medical
expenses, although entirely covered by workers' compensation
benefits, were subsequently reimbursed to the carrier as the
result of a recovery in an action against the tortfeasor.
However, although it was alleged in the opening brief that as
a result of the reimbursement "Scarbrow received no benefit
from the [workers'] compensation payment," the issue in the
appeal was not whether this fact preempted the exclusion.
Rather, the issue was essentially the same as had been
addressed in Baker, and that is whether a provision in an
automobile insurance policy excluding coverage for medical
9
expenses that are payable under a workers' compensation
statute conflicts with Code § 38.2-2201 and is therefore
invalid and not enforceable. Scarbrow, 256 Va. at 358, 504
S.E.2d at 860. In accord with Baker, we rejected such a
contention and held the exclusion to be valid and enforceable.
Id. Thus, neither Baker nor Scarbrow required us to parse the
language of the exclusion, as the scope of the exclusion was
not at issue in either case.
Christy makes the facially appealing contention that the
language of the exclusion in Mercury Casualty's insurance
policy operates to prevent a "double recovery" in the sense
that the insured is not permitted to receive full payment for
medical expenses by a workers' compensation provider as well
as full payment for those expenses by his automobile insurance
provider. In doing so, Christy contends that the language of
the exclusion prevents a double recovery by limiting medical
coverage of the policy "to the extent that benefits therefor[]
are in whole or in part payable under any [workers']
compensation law." We agree that our decisions in both Baker
and Scarbrow avoided a double recovery by the insured in those
cases. However, because we are of opinion that the clear and
unambiguous language of the exclusion in Mercury Casualty's
policy creates a limitation to the scope of coverage of the
policy for medical expenses rather than a limitation on the
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amount of coverage in the form of a set-off against workers'
compensation benefits, we reject Christy's contention that, as
he would not gain a double recovery, his case differs from
Baker and Scarbrow.
Christy's workers' compensation claim for medical
expenses incurred as a result of an automobile accident
arising out of and in the course of his employment included
the medical expenses related to joint pain in his neck and his
shoulder injury as well as services provided by the emergency
room personnel at Johnston Memorial Hospital. VMLI paid a
portion of his claim in the form of workers' compensation
benefits. That Christy did not challenge VMLI's determination
that his shoulder injury was a pre-existing condition and not
compensable under its workers' compensation coverage does not
alter the fact that workers' compensation benefits for
Christy's bodily injuries were "in part payable" by workers'
compensation.
In short, the language of the exclusion is clear that it
applies to the circumstances under which the insured's
injuries occurred, not whether payment under the applicable
workers' compensation law was actually forthcoming.
Accordingly, as it is not disputed here that the accident
arose out of and in the course of Christy's employment, we
hold that the phrase "to the extent that benefits therefor[]
11
are in whole or in part payable under any [workers']
compensation law" in the exclusion permits Mercury Casualty to
deny coverage for any expenses which would have been subject
to workers' compensation coverage by VMLI without regard to
whether all of those expenses were actually paid by VMLI,
because the exclusion is not merely a set-off for workers'
compensation benefits actually paid but, rather, operates to
limit the scope of the coverage of Mercury Casualty's
automobile insurance policy.
CONCLUSION
For these reasons, we will affirm the judgment of the
circuit court granting summary judgment to Mercury Casualty.
Affirmed.
JUSTICE POWELL, with whom JUSTICE MILLETTE and JUSTICE MIMS
join, concurring in part and dissenting in part.
I concur with the majority on the well-reasoned part of
its opinion that effectively distinguishes Baker and Scarbrow.
However, I believe that the majority fails to recognize our
previous construction of the limiting phrase “to the extent,”
and the common meaning of the phrase in reaching its
conclusion. Accordingly, I must respectfully dissent.
In Landmark HHH, LLC v. Gi Hwa Park, 277 Va. 50, 57, 671
S.E.2d 143, 146 (2009), the dispute involved the
12
interpretation of contract language that absolved the parties
“from any losses . . . sustained ‘to the extent of the
insurance proceeds payable’ on such losses.” This Court held
that the plain meaning of this language “only prohibits [the
insured] from obtaining a double recovery on a loss
sustained.” Id. at 57, 671 S.E.2d at 146.
I find further support in the common definition of the
term “extent.” Extent is defined as “the range (as of
inclusiveness or application) over which something extends.”
Webster’s Third New International Dictionary 805 (1993).
Under this definition, the exclusion is limited to the “range”
of compensation payable under workers’ compensation law; any
compensation falling outside of that range would not be
excluded from the insurance policy.
The harsh result of the majority’s analysis is
highlighted by the facts of this case. There is ample
evidence that the benefits sought by Christy were not, in
fact, payable under workers’ compensation law. The record
demonstrates that Christy was only compensated for the post-
accident medical evaluation; once it was determined by VMLI
that the injury he sustained was not payable under workers’
compensation law, he did not receive any benefits. In other
words, it was specifically determined that the injury he
sustained was not “in whole or in part payable under any
13
work[ers’] compensation law.” However, the majority, in
effect, holds that the evaluation to determine whether
Christy’s injury was payable is considered payment “in part”
under workers’ compensation law. Thus, under the majority’s
opinion, because Christy sought and was ultimately denied
workers’ compensation benefits, he is now precluded from
filing an insurance claim.
For all the foregoing reasons, I would find that the
language of this policy only prohibits a double recovery.
Accordingly, I would reverse the judgment of the trial court
and remand the case for further proceedings.
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