Eugene L. MASON, individual, Plaintiff-Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign entity, Gary Stokes, agent for State Farm Mutual Automobile Insurance Company, and/or individual, Defendants-Appellants, and John Does, individually, Does I through X, and Business Entities, Does I through X, Defendants.
No. 33358
Supreme Court of Idaho
Dec. 24, 2007
Rehearing Denied Feb. 6, 2008
177 P.3d 944
Twin Falls, November 2007 Term.
Holland & Hart, LLP, Boise, and Pedersen & Jackson, Twin Falls, for respondent. Kenneth L. Pedersen argued.
J. JONES, Justice.
Eugene L. Mason sued State Farm in district court alleging negligence, bad faith, breach of contract, and intentional infliction of emotional distress, premised on the fact that State Farm refused to pay a portion of Mason‘s medical expenses. State Farm asked the court to compel arbitration of the dispute under the medical payment coverage provision of Mason‘s insurance policy. The district court denied the motion, holding the dispute to be outside the scope of the arbitration clause. We reverse.
I.
Eugene L. Mason was involved in an autоmobile accident on October 6, 2003. At the time of the accident, Mason‘s vehicle was
Mason made a claim under the medical payment coverage of his State Farm policy for payment of medical expenses incurred after the accident. The policy provides that State Farm will pay “reasonable medical expenses incurred, for bodily injury caused by accident, for services furnished within three years of the date of the accident.” Under the policy, “[e]xpenses are reasonable only if they are consistent with the usual fees charged by the majority of similar medical рroviders in the geographical area in which the expenses were incurred for the specific medical service.” “Services are necessary only if the services are rendered by a medical provider within the legally authorized scope of the provider‘s practice and are essential in achieving maximum medical improvement for the bodily injury sustained in the accident.”
Although State Farm paid 100% of the expenses through May 2004, the company requested an independent medical examination in March 2005. The independent medical examiner confirmed that the accident caused a major increase in Mason‘s neck and upper extremity pain, but also noted that he had ongoing symptoms due to prior incidents of trauma. The examiner further stated that “one would have to apportion his treatment between the pre-existing conditions resulting from injuries on June 16, 2003 and March 10, 2002 аgainst that of the incident of October 6, 2003.” Thus, the examiner concluded that Mason‘s “current trauma would account for 60% of his acute symptoms and 40% would be apportioned to the preexisting injuries.” Based on this determination, State Farm paid 60% of the remaining medical expenses, a total of $18,135.15.
Mason filеd a Complaint against State Farm seeking payment of the remaining medical expenses, and alleging four causes of action: negligence, bad faith, breach of contract, and intentional infliction of emotional distress, each premised on the fact that State Farm refused to pay all of Mason‘s medical expenses. State Farm filed a Motion for Stay of Proceedings and to Compel Arbitration pursuant to the language of Mason‘s insurance policy. The arbitration clause in the policy provides:
Deciding Amount
The amount due under this coverage shall be decided by agreement betwеen the person making the claim and us. If there is no agreement, the amount due shall be decided by arbitration upon written request of the person making the claim or us.... The arbitrators’ decision shall be limited to whether or not the medical expenses were reasonable and necessary, with the amount due being equal to the reasonable and necessary medical expenses only. The arbitrators shall not award punitive damages or other non-compensatory damages.
The district court denied State Farm‘s motion. The court stated that “the issue before this court is whether the arbitration clause covers the particular issue presented for review.” The court determined that the provision here was ambiguous and should be construed against State Farm. The court then construed the provision to limit arbitrators to determining whether the expenses sought for medical payments were reasоnable and necessary. The court refused to read the arbitration clause so broadly as to allow State Farm to apportion treatment expenses and argue some were not necessary. State Farm appealed to this Court.
II.
The sole issue in this case is whether the parties’ dispute as to whether State Farm may pay only 60% of Mason‘s claim for medical expenses falls within the scope of the policy‘s arbitration clause.
Arbitrability is a question of law to be decided by the court. Murphy v. Mid-West Nat‘l Life Ins. Co. of Tennessee, 139 Idaho 330, 331, 78 P.3d 766, 767 (2003). Thus, this Court exercises free review and may draw its own conclusions based upon the evidencе presented. Id.
B.
State Farm moved to compel arbitration under the policy and Idaho‘s Uniform Arbitration Act.
State Farm maintains that the district court erred in denying its motion to compel because the dispute between the parties over the amount due and causation under the coverage is within the scope of the arbitration provision. State Farm asserts that the dispute falls squarely within the scope of the clause: “Mason wanted 100% of his bills paid, while State Farm believed only 60% qualified for payment.” According to State Farm, since this dispute and all related issues, including causation, necessity, reasonableness, and how to calculate the amount due, fall within the scope of the arbitration clause, the district court should have ordered arbitration.
Mason asserts the district court properly denied the motion to compel arbitratiоn. Although there is a general presumption in favor of arbitrability, parties cannot be forced to arbitrate an issue they did not agree to arbitrate. Mason further argues that the general presumption carries less weight when there is a limiting clause at issue. Since the scope of the clause hеre is narrow and limiting, the presumption does not apply. Further, Mason argues that the scope of the arbitration clause is ambiguous at best, and that the district court properly resolved the ambiguity against State Farm when it denied arbitration. Finally, Mason claims this is essentially a coverage dispute, which is nоt subject to arbitration.
When entertaining a motion to compel or stay arbitration, the Court must limit its inquiry to whether there is an agreement to arbitrate. Loomis, Inc., 104 Idaho at 109, 656 P.2d at 1362. Where parties have entеred into an agreement calling for arbitration as a means of settling a dispute, the court‘s scope of review is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the parties’ contract. Int‘l Ass‘n of Firefighters, 136 Idaho at 167, 30 P.3d at 945. Whether an arbitration clause in a contract requires arbitration of a particular dispute or claim depends upon its terms. Lovey, 139 Idaho at 46, 72 P.3d at 886. See also EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (absent some ambiguity in the agreement, it is the language of the contract that defines the scope of disputes subject to arbitration); Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995) (“[T]he FAA‘s proarbitration policy does not operate without regard to the wishes of the contracting parties.“). The presumption in favor of arbitration does not displace the parties’ intent. See Oil, Chemical & Atomic Workers Int‘l Union v. EG & G Idaho, Inc., 115 Idaho 671, 674, 769 P.2d 548, 551 (1989) (citing First Nat‘l Maint. Corp. v. NLRB, 452 U.S. 666 (1981)). Accordingly, the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985).
Thе agreement at issue here is an insurance policy. Insurance policies are a matter of contract between the insurer and the insured. Brinkman v. Aid Ins. Co., 115 Idaho 346, 352, 766 P.2d 1227, 1233 (1988). In construing an insurance policy, the Court must look to the plain meaning of the words to determine if there are any ambiguities. Cascade Auto Glass, Inc. v. Idaho Farm Bureau Ins. Co., 141 Idaho 660, 663, 115 P.3d 751, 754 (2005) (citing Clark v. Prudential Prop. and Cas. Ins. Co., 138 Idaho 538, 540, 66 P.3d 242, 244 (2003)). In resolving this question of law, the Court must construe the policy “as a whole, not by an isolated phrase.” Id. (citing Selkirk Seed Co. v. State Ins. Fund, 135 Idaho 434, 437, 18 P.3d 956, 959 (2000)). Where the policy language is clear and unambiguous, coverage must be determined according to the plain meaning of the words used. Cascade Auto Glass, Inc., 141 Idaho at 662-63, 115 P.3d at 753-54 (citing Clark, 138 Idaho at 541, 66 P.3d at 245). An insurance policy provision is ambiguous if “it is reasonably subject to conflicting interpretations.” Cascade Auto Glass, Inc., 141 Idaho at 663, 115 P.3d at 754 (citing North Pac. Ins. Co. v. Mai, 130 Idaho 251, 253, 939 P.2d 570, 572 (1997); City of Boise v. Planet Ins. Co., 126 Idaho 51, 55, 878 P.2d 750, 754 (1994)). If the Court finds any ambiguities in the insurance policy, they must be construed against the insurer. Id. (citing Farmers Ins. Co. of Idaho v. Talbot, 133 Idaho 428, 435, 987 P.2d 1043, 1050 (1999) (“The general rule is that, because insurance contracts are adhesion contracts, typically not subject to negotiation between the parties, any ambiguity that exists in the contract must be construed most strongly agаinst the insurer.“)).
The question here is whether the dispute over the amount State Farm is obliged to pay
III.
We reverse the district court and remand the case for further proceedings consistent with this opinion.
Chief Justice EISMANN, and Justices BURDICK and W. JONES concur.
KIDWELL, Justice Pro-Tem, dissenting:
The significant arbitration issue raised by this case is whether an automobile insurance company can pay only a percentage of rеasonable and necessary expenses where there is a pre-existing injury, when the arbitration clause provides for payment of “reasonable and necessary” medical expenses incurred for bodily injury caused by the accident.
An insurance company can limit their liability with express languаge in the policy. That is not the situation in this case and they should not prevail because of an arguable ambiguity. The overwhelming prevailing Idaho law gives the benefit of the doubt to the insured when a policy has unclear language.
Here, the insurance company should not be allowed to comрel arbitration because the dispute over the percentage apportionment of medical expenses is not, as required by the policy, a question of “whether or not the medical expenses were reasonable and necessary.”