Grange Mutual Casualty Co. v. Lindsey

Clifford F. Brown, J.

In Shearer v. Motorists Mut. Ins. Co. (1978), 53 Ohio St. 2d 1 [7 O.O.3d 1], this court held that “[t]he uninsured motorist *155coverage required to be offered by R.C. 3937.18 in all automobile or vehicle liability policies issued in the state of Ohio cannot be diluted or diminished by payments made to the insured pursuant to the medical payment provision of the same contract of insurance. A contract condition providing for a deduction for medical payments paid under another portion of the insurance contract is in derogation of the public policy and purpose underlying R.C. 3937.18.”

In this case, appellant argues as its sole proposition of law that its contractual right of subrogation as to payments made under the medical payments provision changes the result mandated by Shearer “if the insured’s total damages are equal to or less than the limits of coverage provided for protection against uninsured motorists.”

We note at the outset that the terms of the policy at issue draw no distinction between those cases in which an insured’s total damages are less than the uninsured motorist coverage limits and those cases in which the damages exceed those limits. However, such a distinction, even if it had been drawn by the contract terms, would not alter our holding that Grange’s position is without merit. Indeed, in Shearer the total damages of two of the three plaintiffs were within the applicable uninsured motorist coverage limits, but that fact did not cause this court to reach a result in their cases different from the result reached for the remaining plaintiff whose total damages exceeded his respective uninsured motorist coverage limits.

Grange acknowledges that the only difference between the policy terms at issue in this case and the policy terms considered in Shearer is that Grange’s policy includes a clause by which Grange is subrogated to its insured’s rights of recovery, to the extent of payments made pursuant to the medical payments coverage section of the insurance policy. But an insurance policy clause which provides to the insurer a contractual right of subrogation as to payments made under the medical payments portion of the policy does not enable the insurer to avoid obligations it incurs pursuant to the uninsured motorist provisions of the same insurance policy. Thus, even where the policy provides for subrogation as to payments made as medical payments coverage, a contract provision which would, in essence, enable the insurer to set off such medical payments against amounts due to the insured pursuant to uninsured motorist coverage is void as in derogation of the public policy and purpose underlying R.C. 3937.18.

We recognize that our holding in this case, as did our holding in Shearer, results in a “double recovery” for the insured. However, nothing has occurred since our decision in Shearer which would alter that result. We cannot accept Grange’s argument that the presence of a subrogation clause prevents the medical payments coverage provided under one portion of an insurance policy from being considered as “collateral” to uninsured motorist coverage provided under a separate portion of the same *156policy. Grange’s arguments to the contrary amount to a rehashing of the arguments this court considered and rejected in Shearer. Rather, the following observations made by the Arizona Supreme Court remain relevant:

“Permitting offsets of any type would allow insurers, by contract, to alter the provisions of the statute and to escape all or part of the liability which the Legislature intended they should provide. The medical payment coverage part of the policy is independent of the uninsured motorist coverage and should be treated the same as if it were carried with a different company. * * *” Bacchus v. Farmers Ins. Group Exchange (1970), 106 Ariz. 280, 282, 475 P. 2d 264.

So long as the insured pays separate premiums for medical payments coverage and uninsured motorist coverage, each of which the insured considers to be additional protection, the mere inclusion of a subrogation clause within the policy, which will enable the insurer to pursue collection from the tortfeasor of both types of payments made, does not alter the result mandated by Shearer.

Therefore, although by virtue of the subrogation clause Grange is entitled to recover from the tortfeasor any and all amounts which Grange paid to Lindsey, Grange is not entitled to set off the payments made to Lindsey for medical payments coverage against amounts due as uninsured motorist coverage as the result of an arbitration award. Accordingly, we affirm the judgment of the court of appeals.

Judgment affirmed.

Celebrezze, C.J., Sweeney and Douglas, JJ., concur. Locher, Holmes and Wright, JJ., dissent.