May 1 2008
DA 06-0036
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 156
GERALD NEWBURY,
Plaintiff and Appellant,
v.
STATE FARM FIRE & CASUALTY INS. CO. OF
BLOOMINGTON, ILLINOIS, licensed to do business
in the State of Montana; and STATE FARM MUTUAL
AUTOMOBILE INS. CO. OF BLOOMINGTON,
ILLINOIS, licensed to do business in the State of Montana,
Defendants and Appellees.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-2003-643
Honorable Stewart E. Stadler, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Laurie Wallace, Bothe & Lauridsen, P.C., Columbia Falls, Montana
For Appellees:
Tracy Axelberg, Christensen, Moore, Cockrell, Cummins & Axelberg,
P.C., Kalispell, Montana
Submitted on Briefs: October 11, 2006
Decided: May 1, 2008
Filed:
__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
¶1 Gerald Newbury filed a complaint for declaratory relief seeking to have certain
provisions in his automobile insurance policies declared void as against public policy and
asking that State Farm Fire & Casualty Co. (State Farm) be required to pay outstanding
medical expenses. The parties filed cross-motions for summary judgment. The District
Court for the Eleventh Judicial District, Flathead County, granted State Farm’s Motion
for Summary Judgment and denied Newbury’s Motion for Summary Judgment.
Newbury appeals. We affirm.
¶2 Newbury raises three issues on appeal:
¶3 1. Whether the workers’ compensation provisions in Newbury’s policies are
ambiguous.
¶4 2. Whether the workers’ compensation provisions violate public policy by
violating Newbury’s reasonable expectations.
¶5 3. Whether the workers’ compensation provisions violate public policy by
defeating coverage for which valuable consideration has been paid.
Factual and Procedural Background
¶6 The facts in this matter are not in dispute. The parties submitted agreed facts
which the District Court relied on in ruling on the parties’ cross-motions for summary
judgment. The agreed facts are summarized below.
¶7 Newbury worked for the Montana Highway Maintenance Department. On
December 31, 1995, while plowing a stretch of highway, he came upon a vehicle in the
ditch. As Newbury was attempting to assist the driver of the vehicle, the driver struck
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Newbury with the door of her car as she backed out of the ditch and fled the scene.
Newbury was knocked down injuring his left arm and the left side of his back.
¶8 As a result of this incident, Newbury filed a claim for workers’ compensation
insurance benefits. The State Workers’ Compensation Insurance Fund (State Fund)
accepted the claim and paid medical benefits to Newbury. Between December 31, 1995,
and December 31, 1998, Newbury incurred medical expenses of $18,405.80. Of that
amount, the State Fund paid $17,230.00 in medical expenses “reduced by the schedule
applied to workers’ compensation claims.” The State Fund did not pay the remaining
$1,175.80 in medical expenses.
¶9 Newbury had two automobile insurance policies with State Farm. One policy
covered Newbury’s 1985 Honda Accord, and the other covered his 1985 Nissan pickup.
These policies provided medical payment coverage of $5,000.00 per policy for
reasonable medical expenses incurred within three years of a covered loss. Among other
things, the policies provided that medical expenses are payable to the insured for bodily
injury sustained “through being struck as a pedestrian by a motor vehicle or trailer.” The
policies also state that there is no coverage “to the extent workers’ compensation benefits
are required to be payable.” Newbury paid separate premiums for each medical payment
coverage.
¶10 On April 6, 2001, Newbury submitted a claim seeking payment of the full
$10,000.00 in medical benefits from his State Farm policies. State Farm paid the
remaining $1,175.80 for the medical expenses not paid by the State Fund. In the agreed
facts, the parties stated that after the payments by the State Fund and State Farm, “there
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were no balances owing to Gerald Newbury’s medical providers for services rendered
from December 31, 1995 through December 31, 1998.” The parties further stated that
“[f]or all amounts paid by the [State Fund], [State Farm has] denied payment of medical
benefits pursuant to the provision in the policies offsetting payments of benefits made by
[the State Fund].”
¶11 Newbury filed a Complaint for Declaratory Relief on December 9, 2003, seeking
to have the District Court declare the workers’ compensation provision in both policies
void as against public policy and order State Farm to pay the outstanding medical
payment benefits in the amount of $8,824.20.1 Newbury also sought the costs of suit and
attorney fees. The parties stipulated to an agreed set of facts (as summarized above) and
submitted cross-motions for summary judgment on October 18, 2004. The parties
waived oral argument on their summary judgment motions.
¶12 The District Court issued an order on December 6, 2005, granting State Farm’s
Motion for Summary Judgment and denying Newbury’s motion. In that order, the court
determined that the language of the workers’ compensation provisions in Newbury’s
State Farm policies was not ambiguous and, because the policies clearly demonstrated an
intent to exclude coverage, Newbury’s expectations did not meet the requirements of the
reasonable expectation doctrine. The court also determined that because the premiums
charged and collected by State Farm were for coverage of an insured’s medical
expenses—except to the extent that workers’ compensation benefits are required to be
1
The $8,824.20 represents the combined policy limits of $10,000.00 minus the $1,175.80
already paid by State Farm.
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payable—the exclusion did not negate coverage for which a premium had been paid.
Consequently, the court concluded that the workers’ compensation provision did not
violate Montana public policy and was enforceable. The court further concluded that
Newbury had not incurred any medical expenses that had not been paid for, thus he was
not entitled to additional medical payment coverage.
¶13 Newbury appealed.
Standard of Review
¶14 Summary judgment is proper only when no genuine issues of material fact exist
and the moving party is entitled to judgment as a matter of law. Watkins Trust v.
Lacosta, 2004 MT 144, ¶ 16, 321 Mont. 432, ¶ 16, 92 P.3d 620, ¶ 16 (citing M. R. Civ. P.
56(c)). Our standard in reviewing a district court's summary judgment ruling is de novo.
Watkins Trust, ¶ 16 (citing Johnson v. Barrett, 1999 MT 176, ¶ 9, 295 Mont. 254, ¶ 9,
983 P.2d 925, ¶ 9; Stutzman v. Safeco Ins. Co. of America, 284 Mont. 372, 376, 945 P.2d
32, 34 (1997)). We use the same M. R. Civ. P. 56 criteria applied by the district court.
Watkins Trust, ¶ 16 (citing Johnson, ¶ 9). Moreover, all reasonable inferences which
may be drawn from the offered proof must be drawn in favor of the party opposing
summary judgment. Watkins Trust, ¶ 16 (citing Johnson, ¶ 8; Schmidt v. Washington
Contractors Group, 1998 MT 194, ¶ 7, 290 Mont. 276, ¶ 7, 964 P.2d 34, ¶ 7). If there is
any doubt regarding the propriety of the summary judgment motion, it should be denied.
360 Ranch Corp. v. R & D Holding, 278 Mont. 487, 491, 926 P.2d 260, 262 (1996)
(citing Whitehawk v. Clark, 238 Mont. 14, 18, 776 P.2d 484, 486-87 (1989)).
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¶15 In addition, the interpretation of an insurance contract is a question of law for the
court to decide. Montana Pet. Tank Comp. Bd. v. Crumleys, 2008 MT 2, ¶ 32, 341 Mont.
33, ¶ 32, 174 P.3d 948, ¶ 32 (citing State Farm Mut. Auto. Ins. Co. v. Gibson, 2007 MT
153, ¶ 9, 337 Mont. 509, ¶ 9, 163 P.3d 387, ¶ 9). We review a district court's conclusions
of law to determine whether they are correct. Crumleys, ¶ 32.
Issue 1.
¶16 Whether the workers’ compensation provisions in Newbury’s policies are
ambiguous.
¶17 Newbury argues that three ambiguities arise as a result of the language in the
policies that coverage is excluded “to the extent worker’s compensation benefits are
required to be payable.” First, he argues that the language itself is ambiguous, if not
completely incomprehensible. He maintains that this phrase is subject to multiple
interpretations because it is not defined anywhere in the policies, nor is it readily
understandable by a reasonable consumer of insurance. Second, he argues that the
language is ambiguous because the workers’ compensation provision presents itself as an
exclusion, but acts like an offset. Third, he argues that there is an ambiguity between this
provision, the declarations pages, and the limits of liability provisions.
¶18 State Farm argues that Newbury seeks to create an ambiguity where none exists
and that Newbury’s purported inability to understand the provision does not render it
ambiguous. State Farm maintains that, contrary to Newbury’s assertions, the language in
the policy is clear and unambiguous.
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¶19 When interpreting an insurance policy, we read the policy as a whole and, if
possible, we reconcile its various parts to give each one meaning and effect. Crumleys,
¶ 34 (citing Farmers Alliance Mut. Ins. Co. v. Holeman, 1998 MT 155, ¶ 25, 289 Mont.
312, ¶ 25, 961 P.2d 114, ¶ 25). The terms and words used in an insurance contract are to
be given their usual meaning and construed using common sense. Mitchell v. State Farm
Ins. Co., 2003 MT 102, ¶ 26, 315 Mont. 281, ¶ 26, 68 P.3d 703, ¶ 26 (citing Dakota Fire
Ins. Co. v. Oie, 1998 MT 288, ¶ 5, 291 Mont. 486, ¶ 5, 968 P.2d 1126, ¶ 5). If the parties
dispute the meaning of a term, we determine whether the term is ambiguous by viewing
the policy from the viewpoint of a consumer with average intelligence not trained in the
law or insurance business. Crumleys, ¶ 34. An ambiguity exists when the policy, taken
as a whole, is reasonably subject to two different interpretations. Mitchell, ¶ 26 (citing
Holeman, ¶ 25). However, this Court will not create an ambiguity in an insurance policy
where none exists. Stutzman v. Safeco Ins. Co. of America, 284 Mont. 372, 379, 945 P.2d
32, 36 (1997) (citing Canal Ins. Co. v. Bunday, 249 Mont. 100, 106-07, 813 P.2d 974,
977-78 (1991); Farmers Alliance Mut. Ins. Co. v. Miller, 869 F.2d 509, 512 (9th Cir.
1989)).
¶20 As to Newbury’s first contention, that the phrase “required to be payable” is
“ambiguous, if not completely incomprehensible,” we disagree. Instead, we conclude
that that phrase is clear and precise. Giving the terms and words used in the policies their
usual meaning and construing those terms and words using common sense, Mitchell,
¶ 26, we find no ambiguity in the language used. Moreover, we conclude that a
consumer with average intelligence, not trained in the law or insurance business,
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Crumleys, ¶ 34, would find only one interpretation for this language, i.e., that State Farm
was only obligated to pay the difference between the total medical expenses incurred by
Newbury of $18,405.80, and the amount “required to be payable” by the State Fund of
$17,230.00. In other words, under the terms of the policies, State Farm was only
obligated to pay the unpaid medical expenses of $1,175.80, which it did. Had Newbury
incurred additional medical expenses that were not “required to be payable” by the State
Fund, State Farm would have had to pay Newbury’s additional medical expenses up to
the aggregate limits of the policies. Similarly, if this were not an on-the-job injury, State
Farm would have had to pay all of Newbury’s medical expenses up to the aggregate
limits of the policies.
¶21 Newbury also argues that the workers’ compensation provision is an offset
provision, not an exclusion, and is, therefore, ambiguous based on our prior decisions in
Hardy v. Progressive Specialty Ins. Co., 2003 MT 85, 315 Mont. 107, 67 P.3d 892, and
Mitchell. Again, we find Newbury’s argument unpersuasive.
¶22 In Hardy, plaintiff Hardy was seriously injured when the vehicle in which he was
riding was struck by another vehicle. Hardy recovered $50,000.00 from the liability
insurer of the other vehicle, however, this amount was insufficient to compensate Hardy
for his injuries. Consequently, Hardy sought compensation pursuant to the underinsured
motorist (UIM) coverage he had for three of his vehicles through Progressive. Hardy
paid a separate premium for each of the three $50,000.00 UIM coverages in his
Progressive policy. He believed that the UIM coverage for the three vehicles could be
stacked to aggregate $150,000.00 of UIM coverage. Progressive denied coverage
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arguing that the $50,000.00 Hardy received from the liability insurer of the other vehicle
had to be offset against Hardy’s $50,000.00 of UIM coverage and that Hardy’s UIM
coverages could not be stacked or aggregated to allow Hardy to receive anything over
and above that $50,000.00. Hardy sued for damages in the United States District Court
for the District of Montana. The United States District Court submitted a Certified Order
to this Court with three certified questions and we accepted certification. Hardy, ¶¶ 7-11.
¶23 In answering the certified questions, we determined that the definition of a UIM
under Hardy’s policy and the related offset provision were ambiguous because they were
subject to more than one reasonable interpretation. Hardy, ¶ 19. We further determined
that in nearly all conceivable situations, Progressive’s promise to pay up to $50,000.00 of
UIM coverage would not be honored. Hardy, ¶ 28. Thus, we held that the offset
provision and the UIM definition violated Montana public policy because they created an
ambiguity and rendered the coverage that Progressive promised to provide illusory.
Hardy, ¶ 29. In addition, we struck down as unconstitutional Montana’s anti-stacking
statute to the extent that it allowed charging premiums for illusory coverage. Hardy,
¶ 38.
¶24 Similarly, we determined in Mitchell that the offset provisions in the motor vehicle
insurance policies in question in that case were ambiguous because they were subject to
more than one interpretation. Mitchell, ¶ 28. Mitchell was injured while a passenger in a
vehicle owned and insured by others. Following the accident, he settled with the insurer
of the other vehicle for that vehicle’s policy limit of $50,000.00. Mitchell was insured by
his parents’ State Farm policies. Mitchell’s parents insured five vehicles for which they
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paid a separate premium for UIM coverage for each vehicle. By the terms of the policies,
the uninsured motorist (UM) provision included the UIM coverage. After the accident,
State Farm denied Mitchell’s request for UIM coverage reasoning that because the
$50,000.00 Mitchell received from the insurer of the other vehicle matched the highest
single UM coverage in his parents’ policies, that other vehicle was not “underinsured”
and Mitchell was not entitled to recover. Mitchell, ¶¶ 5-8.
¶25 We noted in Mitchell that the combined UM/UIM coverage provision in the
policies was confusing. Mitchell, ¶ 31. Mitchell’s parents paid five separate premiums
for $30,000.00 of UM coverage on four vehicles and $50,000.00 of UM coverage on one
vehicle. Mitchell, ¶ 27. We determined in Mitchell, that in all cases where the
tortfeasor’s liability coverage was equal to or greater than $50,000.00, Mitchell could
recover nothing. And, if Mitchell was injured by a tortfeasor who satisfied the UIM
definition in Montana, his recovery would automatically be offset by $25,000.00. In
addition, the UIM portions of the four $30,000.00 UM coverages were rendered valueless
by the anti-stacking provision. Mitchell, ¶ 28.
¶26 We held in Mitchell that the offset provision violated public policy because the
UIM coverage in the policy was part of the mandatory UM coverage and Montana public
policy prohibits offsets of mandatory coverage. Mitchell, ¶ 35 (citing Grier v.
Nationwide Mut. Ins. Co., 248 Mont. 457, 459, 812 P.2d 347, 349 (1991)). We further
held in Mitchell that the anti-stacking provision in the policies violated Montana public
policy because they defeated coverage for which valuable consideration had been paid.
Mitchell, ¶ 39.
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¶27 Whether denominated an offset or an exclusion, the workers’ compensation
provision in the case sub judice, unlike the UM and UIM coverages in Hardy and
Mitchell, did not defeat coverage and render any coverage that State Farm promised to
provide illusory. First, in Hardy and Mitchell, the insureds were not adequately
compensated because of the UIM provisions in their policies. Here, Newbury was
adequately compensated because all of his medical expenses were paid. Second, in
Hardy and Mitchell, the insurers refused to stack coverage to allow the insureds to
recover under the UIM provisions. Here, State Farm agreed that the $5,000.00 of
medical payment coverage in each of Newbury’s policies could be stacked for a total of
$10,000.00 in medical payment coverage. Third, unlike Mitchell, the workers’
compensation provision in the instant case does not “offset” any mandatory coverage.
Fourth, consistent with the language of the policies in the present case, State Farm paid
all of Newbury’s outstanding medical expenses and would have paid more in the absence
of an on-the-job injury or in the event Newbury incurred more medical expenses during
the three-year limitations period.
¶28 For his third contention that the workers’ compensation provision is ambiguous,
Newbury claims that there is an ambiguity between this provision, the declarations pages,
and the limits of liability provisions. He argues that the declarations pages set forth the
limits of coverage without any restriction or equivocation thereby placing them in
conflict with any coverage limitations in the policy booklets. Once again we find
Newbury’s arguments unpersuasive.
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¶29 Newbury was only able to produce the declarations page for the policy on his 1985
Nissan pickup. While that page does list the limit of liability under medical payments as
$5,000.00 for each person, the page also provides that the coverages are “AS DEFINED
IN POLICY.” In addition, the bottom of the declarations page reads “YOUR POLICY
CONSISTS OF THIS PAGE, ANY ENDORSEMENTS, AND THE POLICY
BOOKLET, FORM 9826.3.”
¶30 As we noted previously in this Opinion, an ambiguity exists only when the policy,
taken as a whole, is reasonably subject to two different interpretations. Mitchell, ¶ 26
(citing Holeman, ¶ 25). Here, the declarations page was expressly made a part of the
policy. The provision at issue provided that there was no medical payment coverage “to
the extent workers’ compensation benefits are required to be payable” and no other
policy provision conflicts with this exclusion.
¶31 “A declarations page which suggests coverage in an amount which is not actually
available is misleading.” Hardy, ¶ 23. In this case, coverage was available up to
$10,000.00, the aggregate amount of both policies. However, because the amount of
unpaid medical expenses totaled only $1,175.80, State Farm paid only that $1,175.80.
Under the workers’ compensation provision, if the extent to which worker’s
compensation benefits were “required to be payable” had only been $8,000.00 of
Newbury’s $18,000.00 in medical expenses, State Farm would have had to pay the
remaining $10,000.00 under the policies. Consequently, coverage was not “defeated” in
this case.
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¶32 Based on the foregoing, we hold that the workers’ compensation provisions in
Newbury’s State Farm policies were not ambiguous.
Issue 2.
¶33 Whether the workers’ compensation provisions violate public policy by violating
Newbury’s reasonable expectations.
¶34 Newbury argues that the workers’ compensation provisions are invalid because
they contravene the reasonable expectations of the insured and, therefore, Montana public
policy.
¶35 The reasonable expectations doctrine is inapplicable where the terms of the
insurance policy clearly demonstrate an intent to exclude coverage. Stutzman v. Safeco
Ins. Co. of America, 284 Mont. 372, 381, 945 P.2d 32, 37 (1997) (citing Wellcome v.
Home Ins. Co., 257 Mont. 354, 359, 849 P.2d 190, 194 (1993)). Moreover, expectations
that are contrary to a clear exclusion from coverage are not objectively reasonable.
Crumleys, ¶ 35 (citing Lee v. USAA Cas. Ins. Co., 2001 MT 59, ¶ 30, 304 Mont. 356,
¶ 30, 22 P.3d 631, ¶ 30). “Courts should not . . . seize upon certain and definite
covenants expressed in plain English with violent hands, and distort them so as to include
a risk clearly excluded by the insurance contract.” Crumleys, ¶ 35 (citing Mecca v.
Farmers Ins. Exchange, 2005 MT 260, ¶ 9, 329 Mont. 73, ¶ 9, 122 P.3d 1190, ¶ 9).
¶36 In Montana, parties to an insurance contract may include provisions that exclude
coverage without violating public policy if the exclusion applies to optional, rather than
mandatory, coverage. Stutzman, 284 Mont. at 380-81, 945 P.2d at 37. Mandatory
coverage in Montana consists of liability limits for bodily injury of $25,000.00 per person
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and $50,000.00 per accident, and a liability limit of $10,000.00 for injury to or
destruction of property. Sections 61-6-103(2) and 301(1), MCA. Medical payments
coverage is not mandatory in Montana. Its presence in an insurance contract is at the sole
discretion of the parties to the contract.
¶37 Newbury argues that our holding in Stutzman regarding optional coverage was
limited by our decision in Hardy wherein we stated that “[p]ublic policy considerations
that favor adequate compensation for accident victims apply to UIM coverage in spite of
the fact that UIM coverage is not mandatory in Montana.” Hardy, ¶ 21 (citing Bennett v.
State Farm Mut. Auto. Ins. Co., 261 Mont. 386, 389, 862 P.2d 1146, 1148 (1993)).
However, contrary to Newbury’s contentions, this statement from Hardy does not limit
our holding in Stutzman in the way Newbury suggests as nothing in Stutzman
contemplated that accident victims should not be adequately compensated whether the
provisions in the policy were optional or mandatory. Instead, we concluded in Hardy that
the holding in Stutzman was inapplicable to the policy at issue in Hardy because, unlike
the policy in Stutzman, the terms of the UIM coverage in the policy in Hardy were
ambiguous. Hardy, ¶ 26. We stated in Hardy that
[t]he household exclusion in Stutzman was not ambiguous and did not
violate public policy. Stutzman, 284 Mont. at 380-81, 945 P.2d at 37. We
emphasized that a household exclusion was not against public policy and
did not violate the consumer’s reasonable expectations when “the terms of
the insurance policy clearly demonstrate an intent to exclude coverage.”
Stutzman, 284 Mont. at 381, 945 P.2d at 37.
Hardy, ¶ 25.
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¶38 The policy in the present case clearly demonstrates an intent to exclude coverage
“to the extent worker’s compensation benefits are required to be payable.” We conclude
that while it was reasonable for Newbury to expect that his State Farm policies would pay
his medical expenses (up to the policy limits of $10,000.00) once the State Fund had paid
all it was required to pay, it was not reasonable for Newbury to expect to receive funds in
excess of his medical expenses.
¶39 Newbury’s policies provide the following with respect to medical expenses:
We will pay reasonable medical expenses, for bodily injury caused by
accident, for services furnished within three years of the date of the
accident. These expenses are for necessary medical, surgical, X-ray, dental,
ambulance, hospital, professional nursing and funeral services, eyeglasses,
hearing aids and prosthetic devices.
Based on this language, the medical payment benefits under the policies are payable only
for medical expenses. It is undisputed in this case that Newbury received full payment
for his medical expenses. He owes nothing to any health-care provider and there is no
evidence to suggest his health-care providers are seeking any additional payment.
¶40 Nevertheless, Newbury proclaims that “the workers’ compensation medical
benefits paid in this case amounted to approximately two-thirds of the total charges, or
$17,230.00 out of approximately $27,000.00. (Agreed Fact No. 10).” Nowhere in the
agreed facts does it state that Newbury incurred $27,000.00 in medical expenses of which
the State Fund paid only two-thirds. Agreed Fact No. 10 actually states:
Between December 31, 1995, and December 31, 1998, Mr. Newbury
incurred medical expenses of $18,405.80. Of that amount, the [State Fund]
paid approximately $17,230.00 in medical benefits reduced by the schedule
applied to workers’ compensation claims. Between December 31, 1995,
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and December 31, 1998, the [State Fund] failed to pay approximately
$1,175.80 in medical expenses.
The agreed facts further state that State Farm paid the remaining $1,175.80 in medical
expenses and that “there were no balances owing to [Newbury’s] medical providers . . . .”
¶41 Accordingly, we hold that the workers’ compensation provision did not violate
public policy as Newbury’s expectations were not objectively reasonable.
Issue 3.
¶42 Whether the workers’ compensation provisions violate public policy by defeating
coverage for which valuable consideration has been paid.
¶43 Newbury argues that the workers’ compensation provisions in his policies denied
him coverage for which he had paid valuable consideration, thus violating Montana
public policy.
¶44 “An insurance policy cannot include provisions that defeat coverage for which
valuable consideration was received.” Mitchell, ¶ 39 (citing Bennett, 261 Mont. at 389,
862 P.2d at 1148). In this case, Newbury paid valuable consideration for medical
payment benefits subject to the express condition that there was no coverage “to the
extent worker’s compensation benefits are required to be payable.” Coverage was not
“defeated” here as Newbury did not receive less coverage than he purchased, rather, he
received exactly the coverage he contracted for.
¶45 Montana law expressly relieves insurers of any legal obligation to include in their
automobile policies a provision of indemnity against employment-related harm. Section
61-6-103(5), MCA, provides in part: “A motor vehicle liability policy need not insure
any liability under any workers compensation law . . . .”
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¶46 Newbury contends that under Sullivan v. Doe, 159 Mont. 50, 495 P.2d 193 (1972),
he is entitled to his medical payment benefits regardless of any collateral source payment.
However, what this Court actually held in Sullivan was that an insurer could not reduce
its liability under the UM coverage below the statutory minimum by subtracting the
amount of workers’ compensation benefits a person has received. Sullivan, 159 Mont. at
60-61, 495 P.2d at 198-99. We did not, as Newbury implies, hold in Sullivan that
workers’ compensation benefits could never be applied to optional coverages.
¶47 What Newbury paid valuable consideration for in this case was to have his
medical expenses paid and it is undisputed that his medical expenses were paid. To allow
Newbury to receive in excess of the total amount of his medical expenses would result in
a windfall to Newbury.
¶48 Accordingly, we hold that the workers’ compensation provisions did not violate
public policy as Newbury received exactly the coverage for which he had paid valuable
consideration.
Conclusion
¶49 Because we have determined that the policies in question were not ambiguous;
they did not violate Newbury’s reasonable expectations; and they did not defeat coverage
for which valuable consideration had been paid, we hold that the District Court did not
err in granting State Farm’s motion for summary judgment.
¶50 Affirmed.
/S/ JAMES C. NELSON
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We Concur:
/S/ PATRICIA COTTER
/S/ JOHN WARNER
/S/ BRIAN MORRIS
Justice Jim Rice concurring.
¶51 I concur in the conclusions reached by the Court, but under a different rationale.
Under Issue 1, I agree that the policy language here is clear and unambiguous. I further
agree that Hardy and Mitchell provide no support for Newbury’s arguments because the
policy language in those cases is distinguishable from the language here, although not for
the reasons expressed by the Court in ¶ 27. The policies in those cases contained offset
provisions which made the coverage as stated on the declarations page illusory. Such
illusory coverage does not exist here, and it is for that reason—and not that the claimants
in those cases were not “adequately compensated” or that the insurers there refused to
stack the coverages—that I reject Newbury’s reliance on those cases. I continue to
maintain that these others issues were wrongly reasoned and decided by the Court.
/S/ JIM RICE
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