Law School Case Brief
Case v. State Farm Mut. Auto. Ins. Co., Inc. - 30 Cal. App. 5th 397, 241 Cal. Rptr. 3d 458 (2018)
Under the loss-payable-reduction policy provision allowed by Ins. Code, § 11580.2, subd. (h)(1), the insurer is liable only for the excess, if any, of the policy limit over the workers' compensation benefits, that is, the difference between the policy limits and the applicable workers' compensation benefits.
Melissa Case was employed by Lawry's Restaurant, and insured under a personal automobile policy issued by State Farm. The policy's uninsured-underinsured motorist (UM) coverage for bodily injury was $100,000 per person and $300,000 per accident. On March 29, 2013, while returning to Lawry's Restaurant from an offsite catering location, Case was injured in a car accident involving an uninsured driver. The next day, she sought workers' compensation benefits through her employer's policy and submitted a claim to State Farm under her personal automobile policy. In 2014, after Case submitted a demand for UM policy benefits, State Farm sought verification of a “final lien” relating to medical expenses incurred as workers' compensation benefits. When State Farm failed to pay UM benefits, Case requested arbitration. On May 28, 2015, Case initiated the underlying action against State Farm for breach of an insurance contract and bad faith. The complaint asserted that State Farm acted improperly in delaying arbitration and settlement of Case's claim for UM benefits, alleging that although she verified a final workers' compensation lien relating to medical expenses no later than November 2014, State Farm neither paid her claim for UM benefits nor undertook arbitration. The complaint requested compensatory and punitive damages. State Farm sought summary judgment on the claim for breach of the insurance contract, contending it had provided all policy benefits due Case. The trial court granted summary adjudication in State Farm's favor on each claim and on the request for punitive damages. Case appealed asserting that the trial court erred in granting summary judgment.
Did the trial court err in granting summary judgment in State Farm's favor?
The court affirmed the judgment of the lower court. It held that a loss-payable-reduction policy provision, as allowed by Ins. Code, § 11580.2, subd. (h)(1), authorized the insurer to reduce uninsured-underinsured motorist (UM) benefits to reflect medical expenses that were potentially included in the insured's demand, specifically, past and future expenses for injury-related treatments payable through, but not submitted to, the workers' compensation system. State Farm acted reasonably when it requested a determination of the extent to which medical expenses were eligible for payment through the workers' compensation system because its liability for all UM benefits was determined by the amount of the eligible expenses.
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