House v. American Family Mutual Insurance

Allegrucci, J.,

dissenting: I disagree with the majority decision. The majority finds no support for House’s position in K.S.A. 40-3110(a), nor does it find any evidence that the legislature intended that House recover his full wage loss. I find such support in K.S.A. 40-3102, which provides: “The purpose of this act is to provide a means of compensáting persons promptly for accidental bodily injury arising out of the ownership, operation, maintenance or use of motor vehicles in lieu of liability for damages to the extent provided herein.” In Manzanares v. Bell, 214 Kan. 589, 608, 522 P.2d 1291 (1974), Chief Justice Fatzer, referring to this section of the no-fault act, stated:

“This .is the heart of the Act. The rest treats of [details] and procedures. The legislation forms the basis for a different approach in solving the inadequacies of the tort liability system, and provides a new method of affording prompt compensation to motor vehicle accident victims. Under the declaration of Section 2 and other provisions of the Act, we now approach reparation of motor vehicle accident victims on the basis of the interest of all the citizens of this state without losing sight of, but tempering, the right of an individual to pursue traditional remedies in tort. . . .
“It is evident the Legislature was concerned with the possible burden on society occasioned by inadequate or nonexistent compensation for economic loss suffered by motor vehicle accident victims, particularly when viewed in the context of the large number of persons and total financial loss involved. By requiring motor vehicle liability policies to include first party PIP benefits, the Legislature may have eliminated the former necessity of resorting to litigation in many cases. The requirement of PIP coverage bears a reasonable relation to the subject of reparation for losses arising out of the ownership and operation of motor vehicles.”

The effect of the majority’s decision is to discourage prompt and full compensation for an injured victim. Clearly, that is contrary to the purpose of no-fault legislation.

The majority also fails to find support for House’s argument in our recent decision in Rich v. Farm Bur. Mut. Ins. Co., 250 Kan. 209, 824 P.2d 955 (1992). I disagree. In Rich, this court reversed the district court’s ruling that the insurance carrier “was *429entitled to set off the underinsured motorist benefits it owed against the nonduplicative PIP benefits it previously paid.” 250 Kan. at 210. This court’s disapproval of the district court’s ruling was based in large measure on plaintiff’s contention the legislature did not intend to allow insurers to collect separate premiums for PIP and uninsured/underinsured motorist coverage and “at the same time permit those same insurers to deny nonduplicative coverage of their injured insureds.” 250 Kan. at 213.

In the present case, House’s workers compensation benefits were paid by his employer’s insurer, and he sought to recover PIP benefits from his personal automobile insurance carrier. In Rich, the insured sought to recover PIP and underinsured benefits from the same carrier, his own automobile liability insurer. Nonetheless, there is a common principle involved in these cases, and that is the payment of a premium with the reasonable expectation that it was purchasing nonduplicative coverage from the insurer.

In Rich, the trial court’s ruling was based on K.S.A. 1991 Supp. 40-284(e)(6), which provides as follows: “(e) Any insurer may provide for the exclusion or limitation, of coverage: ... (6) to the extent that personal injury protection benefits apply.” In the present case, the Court of Appeals’ opinion contains the observation that “K.S.A. 40-284(e)(4) allows uninsured motorist coverage to be excludéd to the extent that workers compensation benefits apply.” K.S.A. 1991 Supp. 40-284(e)(4) provides: “(e) Any insurer may provide for the exclusion or limitation of coverage: ... (4) to the extent that workers’ compensation benefits apply.” In Rich, the insurer argued that 40-284 allows exclusion of both duplicative and nonduplicative PIP benefits. This court rejected the argument and held that “the legislature intended K.S.A. 40-284(e)(6) to permit an insured to recover underinsured motorist benefits which are not duplicative of PIP benefits.” 250 Kan. at 216.

In Rich, the insured was a passenger in a one-car accident. He received $25,000 from the driver’s insurance carrier and $50,000 from the owner’s insurance carrier, the policy limits in each case. He had underinsured motorist coverage of $100,000. He received $40,667.52 in PIP benefits from his insurer, who thereafter refused to pay the balance of $25,000 in underinsured *430motorist claims because the $40,667.52 in PIP benefits exceeded the $25,000. The parties stipulated that the insured’s damages would exceed $177,000. The result of our decision in Rich was to allow the insured to recover $100,000 in underinsured benefits and $40,667.52 in PIP benefits. The majority seems to distinguish Rich from the present case on the basis that the parties stipulated that none of the damages claimed under the underinsured motorist coverage included damages covered by PIP. The only importance of that stipulation was that the damages were not duplicative. It does not support the majority’s denying PIP benefits to House simply because he was partially indemnified by workers compensation.

The wage loss in the present case is not duplicative, and the rationale of Rich is applicable. Here, as in Rich, we are concerned with compensation for the total loss suffered by the victim of a motor vehicle accident. Here, as in Rich, the primary coverage is not adequate to fully compensate the victim. Here, as in Rich, we have the premiums paid for coverage of the loss. In such a case, the setoff should apply only where the PIP benefits are duplicative. House should not be denied PIP benefits simply because he was partially compensated by workers compensation.

As noted by the majority, House’s argument finds support in other jurisdictions. In Walkowitz v. Royal Globe Insurance Company, 149 N.J. Super. 442, 445-46, 374 A.2d 40 (1977), the Superior Court of New Jersey, in holding a similar workers compensation setoff provision void and unenforceable, stated:

“Our holding is supported by the overwhelming weight of authority throughout the country. No useful purpose would be served by listing the cases following the majority view because most of them have been catalogued in Sweeney v. Hartford Acc. & Indem. Co., 136 N.J. Super. 591, 594, n.2, 347 A.2d 380 (Law Div. 1975), wherein Judge Smith held the identical worker’s compensation setoff provision void and unenforceable as against public policy. See also Annotation, ‘Uninsured Motorist Coverage: Validity and Effect of Policy Provision Purporting to Reduce Coverage by Amount Paid Under Workmen’s Compensation Law,’ 24 A.L.R.3d 1369, 1374-1376 (1969). Contra: Waggaman v. Northwestern Security Ins. Co., 16 Cal. App. 3d 571, 94 Cal. Rptr. 170 (D. Ct. App. 1974); Ullman v. Wolverine Ins. Co., 48 Ill. 2d 1, 269 N.E.2d 295 (Sup. Ct. 1970); Michigan Mut. Liab. Co. v. Mesner, 2 Mich. App. 350, 139 N.W.2d 913 (App. Ct. 1966); Hackman v. American Mut. Liab. Ins. Co., 110 N.H. 87, 261 A.2d 433 (Sup. *431Ct. 1970); Durant v. Motor Vehicle Acc. Indent. Corp., 15 N.Y.2d 408, 260 N.Y.S.2d 1, 207 N.E.2d 600 (Ct. App. 1965).”

A review of Annot., 10 A.L.R.4th 996, indicates a majority of jurisdictions still support House’s argument.

Comeau v. Safeco Ins. Co. of America, 356 So. 2d 790 (Fla. 1978), is representative of that support. The statutes and policy provisions in Comeau are, for purposes of determining the issue presented in the present case, indistinguishable. The Florida Supreme Court stated:

“We agree with petitioner’s position and disagree with the holding of the District Court of Appeal, First District, sub judice, that the total aggregate limit of personal injury protection benefits available with respect to such bodily injury shall be reduced by the amount of workmen’s compensation benefits received. Rather, we hold that an insurer is required to supplement workmen’s compensation benefits until the insurer has itself paid the limits of liability under its policy for required personal injury protection benefits. The legislative intent behind Section 627.736(4), Florida Statutes (1975), is that whenever an automobile accident occurs, the personal injury protection benefits are primary and that they are to be paid in full whether or not any other coverage exists. If workmen’s compensation benefits are available, personal injury protection benefits are still primary; however, to the extent that payments of workmen’s compensation are made, personal injury protection benefits are supplemental until either the injured party has been fully compensated or until the personal injury protection insurer has paid the full $5,000.00 in such supplemental payments. This statutory provision is intended to give a credit, as a loss accrues, for workmen’s compensation benefits, thereby preventing one from recovering for a loss which is not sustained because of workmen’s compensation benefits, and is not intended to reduce the limits of liability under the statutory minimum required for personal injury protection benefits.” 356 So. 2d at 794.

The majority cites the fundamental rule of statutory construction that the intent of the legislature governs. It then proceeds to give “words in common usage their natural and ordinary meaning” in interpreting K.S.A. 40-3110(a) to clearly preclude House’s claim.

In Todd v. Kelly 251 Kan. 512, 837 P.2d 381 (1992), this court was called upon to interpret the meaning of K.S.A. 40-3422. A judgement was entered against a health care provider for $21,244,824.90 plus interest and costs, and Insurance Commissioner Todd, on behalf of the Fund, appealed. Federal District Court Judge Patrick Kelly interpreted K.S.A. 40-3422 to require *432that Todd, on behalf of the Fund, post an appeal bond in the full amount of the judgment, notwithstanding that K.S.A. 1991 Supp. 40-3403(e) limited the Fund’s liability to $3,000,000. This court, in ruling that the commissioner was not required to post a bond in the full amount of the judgment, iterated a number of basic rules of statutory construction not mentioned by the majority in the present case:

“ ‘In construing statutes, the legislative intention is to be determined from a general consideration of the entire act. Effect must be given, if possible, to the entire act and every part thereof. To this end, it is the duty of the court, as far as practicable, to reconcile the different provisions so as to make them consistent, harmonious, and sensible.’ In re Marriage of Ross, 245 Kan. 591, 594, 783 P.2d 331 (1989).
“ ‘[T]he court must give effect to the legislature’s intent even though words, phrases or clauses at some place in the statute must be omitted or inserted.’ Ross, 245 Kan. at 594.
“ ‘In order to ascertain the legislative intent, courts are not permitted to consider only a certain isolated part or parts of an act, but are required to consider and construe together all parts thereof in pari materia. When the interpretation of some one section of an act according to the exact and literal import of its words would contravene the manifest purpose of the legislature, the entire act should be construed according to its spirit and reason, disregarding so far as may be necessary the strict letter of the law. Kansas Commission on Civil Rights v. Howard, 218 Kan. 248, Syl. ¶ 2, 544 P.2d 791 (1975).” 251 Kan. at 516.

This court then said:

“We agree with the trial judge that K.S.A. 40-3422, when read in isolation, is clear and unambiguous and appears to require a supersedeas bond in the full amount of the judgment. However, as the foregoing rules and authorities clearly demonstrate, such a simplistic and narrow reading of the statute is not available to us. K.S.A. 40-3422 may not be read in isolation but may only be considered in connection with the other provisions of the Health Care Provider Insurance Availability Act, K.S.A. 40-3401 et seq.” 251 Kan. at 516.

In my opinion, the interpretation of K.S.A. 40-31I0(a) by the majority is too simplistic and narrow and contravenes the purpose of the Automobile Injury Reparations Act. The legislature intended that an injured victim be fully, not partially, compensated for his or her loss. PIP benefits are primary when a party is injured in a motor vehicle accident. These benefits are payable irrespective of additional coverage. If, as here, workers compensation benefits cover only part of the loss, PIP benefits are primary *433to the loss not covered. In the instant case, since House continued to suffer a loss after workers compensation was paid, he is entitled to the PIP benefits. I would reverse the district court and the Court of Appeals.