Samsel v. Allstate Insurance

SAMSEL, Cynthia husband Michael and Samsel, single wife; Lisa Plaintiffs/Appellees,

woman,

v. COMPANY, ALLSTATE INSURANCE Defendant/Appellant.

No. CV-01-0158-PR. Arizona, Supreme Court of En Banc. Dec. coverage of an automo-

the medical expenses are policy when those bile immunized HMO and statute the insured’s liability for legal enrollees from the HMO’s covered

FACTS

¶ 1995, in- August Lisa was 2 In Samsel jured accident. She in a Tucson automobile University Medi- was taken ambulance (UMC) and treated there. cal Center day, signed a UMC “Condi- following Lisa form, agreeing part in Admission” tions of Q. Hoyt, Tuc- Bruce A. Burke and Robert Hospital charges as and “pay all of [her] son, Attorneys Plaintiffs/Appellees. for accident, billed.” At the time of when Johnson, by Floyd P. Steptoe L.L.P. & an Allstate auto- was an insured under Lisa Phoenix, Bienstock, Cooper, Bennett Evan parents policy issued to mobile Sonnenschein, Nath Rosenthal Jef- and & pay- policy included medical The Allstate Lennard, Hanover, Chicago, At- frey Mark $10,000, limit of coverage with a ments torneys DefendanVAppellant. annual parents paid an additional which her enrolled, also premium of Lisa was $300. Lawyers by Amy Arizona Trial Association 1995, Plan April in Partners Health since Phoenix, Langerman, Attorneys for Ami- G. (Partners), regulated a health an HMO cus Curiae. organization pursuant to A.R.S. care services seq. §§ 20-1051 et OPINION injuries, a result of her Lisa’s 13 As MYERS, Judge.* $16,413 in medical charges at UMC totaled ¶ Defendant/Appellant 1 Allstate Insur- $2,494 physicians’ and services. services summary appealed ance Co. from an adverse discharge, UMC billed Lisa as Upon her judgment a claim for breach of the medi- ultimately all guarantor. Partners payments coverage provisions cal of an auto- subsequent- expenses. She of Lisa’s $313.55 Plaintiffs/Ap- mobile Allstate issued to ly with Allstate under the Sana- filed a claim Cynthia pellees Samsel. The Michael coverage. payments Allstate seis’ medical affirmed, appeals holding that rea- court paid only the that had not been $315.55 expenses paid on behalf of sonable medical coverage on the re- by Partners and denied Samsel, injured party, her health Lisa Part- charges, saying that because maining (HMO) organization were ex- maintenance pay the obligated to and did ners was pur- penses actually Lisa for charges, had not Lisa poses of Allstate’s medical cover- pay- required the medical expenses, as age, notwithstanding provisions of A.R.S. policy. provision of its ments Co., § v. Allstate Ins. 20-1072. Samsel Allstate, alleging 480, peti- sued (App.2001). This The Samsels 19 P.3d 621 of contract and jurisdic- among their claims breach followed. tion for review We their They subsequently amended article bad faith. pursuant to Arizona Constitution tion 5(3) 23, allegations. add class action VI, Ariz.R.Civ.App.P. complaint We § and Rule summary judgment parties moved for question of first Both granted review to consider pro- before of contract claim expenses for medical ser- on the breach impression: are trial action issues. The injuries actually ceeding on the class necessary to treat vices summary judgment in favor meaning judge granted within the curred the insured * court, designated Maricopa County, to sit pursuant vacancy to article Court in on the Due to a Constitution, VI, 3, Honor- Arizona of the on this case. Judge Superior Myers, able Robert D. Reeves, claim, Ariz.R.Civ.P.;

the Samsels on the breach of contract Orme School v. (1990). 301, 309, 1000, issue, Ariz. 802 P.2d denied Allstate’s motion on the same judgment and entered final in favor of the policy provisions 8 Insurance $9,686.45, representing the dif- Samsels to be in a manner with construed consistent between the limits and ference ordinary Sparks plain meaning. their v. previously paid. $313.55 Co., 529, Republic Nat’l Ins. Life (1982). In deter appeal, ap- court 5 On Allstate’s mining ambiguity whether there is an peals signed held that when Lisa UMC’s insurer, against should be construed form,1 agreed accept admission she finan- language should be examined from the view responsibility liability cial for her medi- point of one not trained law or the insur Samsel, cal 199 Ariz. at 485 Finally, policy may ance business. Id. Therefore, 19 P.3d at 626 16. interpreted not be so as to defeat the reason expenses incurred those under the medical expectations able insured. Darner payments provision policy. Id. Allstate’s Sales, Motor Inc. v. Universal Underwriters notwithstanding The court found that Co., 383, 389-90, 388, Ins. 140 Ariz. 682 P.2d (A) (C) provisions of subsections of A.R.S. (1984). 394-95 (E) 20-1072, § subsection of that statute al- accept responsibility lowed Lisa to financial meaning “actually A. The incurred” hospital expenses for her and medical even ¶ though expenses argues most of the were 9 Allstate did not Lisa ¶ 12, actually hospital physician Id. at 19 P.3d at 625 incur the ex Partners. 484 penses eventually paid. that Partners ¶ payments medical of Allstate’s au ¶ granted petition 6 We Allstate’s for re- pertinent part: tomobile reads in “All question view on the of whether the court of pay state will to or on an insured behalf of appeals concluding by signing erred person expenses actually all reasonable in form, boilerplate hospital admissions ” person (Empha an .... curred insured expenses incurred medical within the added.) sis meaning payments of Allstate’s medical cov- ¶ In10 Allstate’s medical cover- when, 20-1072(A) § erage under A.R.S. age provision, phrase “actually incurred” (C), expenses paid by those were to be Part- ways. expenses is used in several Medical personal liability ners and Lisa had no cannot must have been incurred thus UMC. speculative anticipated expenses; or future year must have been incurred within one DISCUSSION accident; have been incurred and must However, person. an Allstate’s insured ¶ reviewing grant summary In7 payments provision medical does define judgment, we view the evidence and reason “actually pur- the words incurred” for these light able inferences most favorable to poses any or other. party opposing Fargo the motion. Wells ¶ Although conceding Bank v. Local No. 395 11 that Coconino Arizona Laborers Ass’n, Inc., Fund, 474, 13, County Trust 482 v. Fund Administrators Pension (2002). 427, judge (App.1986), A estab- 20 13 trial 719 P.2d grants summary judgment personally not have properly when lished Lisa need genuine paid hospital physician charges pre- as a there is no issue as to material seeking payment her med- moving party fact and the is entitled to a condition to under 56(c), judgment payments coverage, ical Allstate contends as a matter of law. Rule pa- deposit requested included a if and to all of the 1. The Conditions of Admission form billed, part: Hospital charges clause that read in as and when tient's except agrees to the extent UMC otherwise in a TO BY 3. PATIENT'S CONSENT SERVICES agreement. may UMC bill Hospital written financial exchange HOSPITAL.... In for the patient patient periodically before the providing patient, services to the the under- discharged____ signed agrees to make advance military duty, injured active County require does that she that Coconino payments. argues hospital It were be liable for such whose 20-1072(A) statute, required by provisions Navy, of A.R.S. under United States (C), ex- purposes Lisa was not liable for medical pay and thus could penses policy’s covered Partners under his automobile (Tex.Civ. provision. 353 ments S.W.2d by Partners. not covered App.1961); also Hollister v. Government see Co., 687, 224 Employees Ins. 192 Neb. County a student 12 Coconino involved (1974), 166-167 in which N.W.2d eligible county care who was In both court reached the same result. pursuant county regulations. to state and cases, the service the court noted that when under an inter- The student was also covered implied hospital, in the man was treated group insur- scholastic athletics association created, payment was and later contract for injured policy. The student was treated ance govern payment or reimbursement Hospital hospi- Flagstaff signed Hollister, not relieve the insurer. ment did agreement, assign- tal’s standard admission at 166. N.W.2d right reimburse- ing to the any applicable policy. ment from insurance v. Mutual Insurance Kopp 15 In Home group policy re- The administrator for the Co., that an whose the court held hospi- reimbursement of the student’s fused paid by were a Blue Cross expenses, arguing policy provided tal that the plan expenses and hospitalization incurred actually in- expenses reimbursement able to recover under his au therefore was charges payable curred. Because all were payments provi policy’s tomobile medical County, in- Coconino the student had (Wis. 53, 224 6 94 N.W.2d sion. Wis.2d expenses. curred no 1959). holding has been followed This See, appeals rejected many e.g., v. 13 The court of the ad- other courts. Feit St. “ Co., argument, finding Ins. 209 Cal. ‘[i]n- ministrator’s that Paul Fire & Marine 825, 870, generally accepted App.2d Supp. Cal.Rptr. cur’ is to mean ‘to become 27 871 ” (1962) (medical for,’ 430, payment in automo pay liable not ‘to for.’ Id. at 719 clause hospi- obliging pay expenses P.2d at 696. The court found that the bile insurer to signed by did not limit tal admission form the student’s incurred for medical services legal guardian “expressly provided recovery expenses incurred preclude insured’s recov [they] guarantors were the ultimate himself and did ery would have cost “[w]hether treatment costs” and held of sum medical services not, membership prepaid possibility private was remote or him health Co., hospital proceeded against plan); have v. Cas. 48 [the could Masaki Columbia (insured (1964) student], 136, 927, guarantor, sought pay- 931 Haw. Thus, incur ment.” the student “did whose treatment was covered on his expenses during hospitalization.” plan expenses his Id. health had incurred purposes payments behalf for of medical argues 14 that under Allstate Coconino policy); of his automobile see also pay County, legal obligation the claimant’s Co., 636, Ins. 248 Or. 436 Heis v. Allstate qua a sine non for its medical is (1968) (same). Similarly, in P.2d Sha 550 “actually apply, given the in- Co., court v. Insurance nafelt However, provision. curred” both Coconino found: County appeals’ and the court of decision “incur” primary definition of the word appear case to fit within a line of cases this for”____ Obviously, “to liable addressing question of whether claimants become plaintiff liable for her medical ex- expenses scope of medi- became incurred within the accepted treat- notwithstanding penses when she payments provisions, cal plaintiff had contract- paid by ment. The fact expenses question were company health insurance required by paid by other ed with a even law to be expenses, compensate her for her medical Indemnity v. Ole- sources. In American Co. instance, directly care pay an or to the health sijuk, the court found that 6 behalf, not alter the fact that Black noted the absence of other insurance

on her does Feit, obligated pay coverage provisions. 27 she was or coordinated Black, 872; Cal.Rptr. at 478 S.W.2d at 435. 625, 671, Mich.App. 217 552 N.W.2d 676 Kopp court found the insured’s (1996) (citation omitted). plan premiums hospitalization evidence In v. Auto 16 Holmes State California by the costs or insured. Ass’n, Appeal mobile the California Court of Holmes, Shanafelt, In 94 N.W.2d at 225. held that an insured whose costs Black, injured in the courts found the assigned were covered Medicare benefits pay for legal obligation sured incurred a to the for the hospital expenses at the time the services purpose recovering under her automobile Holmes, Cal.Rptr. 185 were rendered. policy’s payments provision. 135 676; Black, 524; Shanafelt, 552 N.W.2d at 521, (1982); 635, 185 Cal.App.3d Cal.Rptr. 524 at 437. S.W.2d 478 Co., Niles v. American Bankers Ins. see also 435, (La.App.1969); v. 229 So.2d Black ¶ 19 The narrow rule to be extracted from Co., 434, American Bankers Ins. 478 S.W.2d that “incurred” or “actu- all of these cases is (Tex.1972). in- ally language incurred” does not bar an ¶ 17 In Dutta v. State Farm Insurance sured who became liable for Co., whose her acci- HMO availability simply because “of the permitted dent-related medical liability discharging means of his of collateral policy’s person- to recover her automobile him the therefor so as to relieved injury protection provision. al 363 Md. charges personally.” need to Hollis- (App.2001). 769 A.2d 948 The court stated: ter, v. (quoting 224 N.W.2d at 166 Dillione Clearly, expense peti- was incurred on Hospital, N.J.Super. Deborah hold that in order to tioner’s behalf. We (1971)). present But in the A.2d scope fall under the of ... State Farm’s case, go step we further and decide must expense merely policy, the need what none of these cases had to consider— regardless of whether it is the curred — applies also when the whether this rule insured, insurer, the insured’s health the by legal liability immunized from sured is organization, health maintenance insured’s liability transfers for covered statute benefits, any of or other collateral source payment. expenses to the collateral source of ultimately pays who the bill. Id. at 961. § B. A.R.S. 20-1072 cases, course, 18 In all these ¶20 case, present argues In the the court noted that the insured had become organi that Partners —a health care services legally provided and liable for the treatments (HCSO) § zation under A.R.S. 20-1072—was incurred. the were therefore expenses; responsible for of Lisa’s concept requiring the to be (A) (C), no under subsections and Lisa had (and is) legally appropri come liable was an liability cov personal for the medical services if ate method which to determine the plan under her HMO and therefore ered for medi actually incurred for such services. debt was But none of those cases in cal treatment. Indeed, appeals our court of has held re volved situations in which the insured 20-1072(A) (C) § an en protects to A.R.S. necessary for treatment and ceived services liability cov personal rollee from for services legally would have become liable but for by an Andrews v. Samaritan ered HCSO. immunity. statutory The cited cases exam ¶21, P.3d Sys., 201 Ariz. 384 36 Health slightly in different fashions. ine the issue Nevertheless, (App.2001). An 62 the medical Some courts deemed “non-recourse holds than an actual drews provision vague in use the word “in its subject the medical Feit, and is debt” exists Cal.Rptr. 27 at 871-72. Oth curred.” ¶ 14, P.3d at 61 14. failing lien. Id. at 383 policy ambiguous in ers found the Thus, bringing “hospitals not ... the are specify incur the Id. at who must enrollees, Dutta, 872; legal against the HCSO at Feit and action 769 A.2d 960-61. organization for by the they owed § ... amounts prohibited 20-1072 A.R.S. statutory liable the con- against the is not [only] asserting a lien which the enrollee Id.; also La- tort claim.”2 see A provider enrollee’s under subsection tracting Sys., 195 v. Health Bombard Samaritan impairs in the Nothing D. this section (AHCCCS (App.1998) P.2d charge, hospital provider or right of a tort against re- enrollee’s liens enforceable from, or from attempt to collect collect personally covery though even enrollee not against enroll- action law an maintain an liable). following: the any ee for course, is also based Of Andrews amounts. Copayment 1. or coinsurance permit provisions the of law that part in on § filing liens. A.R.S. 33- of medical See care covered Health services ’ principle we basic 931. But think Andrews including of area organization, out present A debt to applicable to the case. is organization an claims that are not covered ser provider is when enrollee. behalf the enrollee. in vices are after 3. Health care services rendered or her tort property interest his sured’s the contract between termination of affected when claim and eventual is organization and care services health eventually if the is satisfied from and debt Also, health important hospital, or unless the property. provider insured’s does not during realize that A.R.S. 20-1072 con- rendered care services were immunity complete the enrollee’s from confer facility in an inpatient finement provider. The personal liability to the stat began prior to date of confinement reads as follows: ute termination, provider has or unless Every A. written contract between obli- post-termination treatment assumed organization care and a health services gations under the contract. hospital or forth if provider shall set Nothing prohibits E. this section organization to pay fails for covered seeking services health care enrollee care as set forth health services pro- noncontracting contracting from a or or contract enrollee’s evidence hospital accepting financial vider or provider the enrollee is not liable to the or responsibility for these services. amounts owed or- provider ganization charge hospital may F. No attempt to not bill or otherwise col- shall orga- of a care services an enrollee health lect from the enrollee amount owed provid- more than the amount the nization organization. the charge to the hospital er or contracted If between the B. the contract .written provider’s pursuant the con- to enrollee contracting provider hospital or the hospital’s with the health tract contract or required organization fails to contain the organization. care services subsection-A, in the prohibition en- stated ¶22 Thus, correct, despite if Andrews is contracting pro- rollee is not liable to the 20-1072(A) (C), § provisions of the A.R.S. any by or for amounts owed vider may for property or be liable an enrollee’s organization. the by charges the repayment of the covered provider contracting agent, or C. No plus remaining portion provider the HCSO contracting assignee pro- or trustee plus the charge, the usual fee or provider’s or may maintain an action vider (D). any subsection against to collect items covered an enrollee law course, assumes, We P.3d at 61 13. a 201 Ariz. at that the existence of 2. One of note, however, statutory against question tort lien a claimant’s that no of laches by charges provider made a enables for the full by court. Nor did the the Andrews considered charges those as items of that claimant to claim special damages. holding effect of that the adverse court consider holds Andrews also neither on efforts. We address settlement automatically on treat- lien arises and attaches ment, opinion. these in this issues provider. any without assertion regulatory They HMO zona’s scheme. C. The admissions form substantially “hold similar to the harmless” signed challenge 23 Lisa does not —and provisions Orga- of the Health Maintenance signing of—a UMC form in admission Act, promulgated by nization Model the Na- accepted which responsibility she financial tional Association of Insurance Commission- for the services UMC her. She (NAIC) following advisory ers NAIC held, argues, court appeals and the that in report regulation on insolvency HMO accepting responsibility for financial issues. relevant section the HMO services, she with- Model Act reads as follows: meaning pay- the Allstate medical ments and was to do authorized so Against Insolvency 13. Protection plain language § of A.R.S. 20- Hold D. Harmless 1072(E). But Allstate contends for (1) Every contract between health enrollees, 20-1072(A) (C) § HMO A.R.S. organization participat- maintenance and a statutory pay- to a from immunity amount ing provider of health care services shall expenses, ment for HMO-covered medical writing be in forth that in and shall set face, solely and that taken its subsection organization the health event maintenance (E) immunity, would eviscerate that a result fails for health care services as set legislature could not All- have intended. contract, forth the subscriber or argues § state also that A.R.S. 20-1072 was enrollee shall not be to the hable enacted without indication legislative sums for owed the health mainte- acceptance tent to allow enrollee of financial organization. nance responsibility in the manner which (2) In participating event that argue appeals per- Samsels and the court of provider contract been has not reduced to mitted. Allstate further argues that A.R.S. writing required by as this subsection or 20-1072(E) must instead be read relate contract to contain fails the re- (D)’s provisions permit- back to subsection quired prohibition, participating pro- ting providers health care to bill enrollees for attempt shah vider not collect or to collect copayment such or coinsurance the subscriber from or enrollee sums owed amounts, health care services not covered organization. the health maintenance HMO, claims, out-of-area health care (3) participating provider, No or the services rendered after termination of the agent, assignee, provider’s may trustee HMO-proyider contract. Since subsections (A) (C) against maintain action at law sub- provide immunity liability or enrollee to sums scriber collect owed expenses, says HMO-covered organization. health maintenance could never have incurred them. appeals National Association of Insurance Commis The court found authori sioners, ty Organization Health interpretation Maintenance Allstate’s and held that (NAIC (E)’s express 430-1). Model Act language subsection allows an accept responsibil HMO enrollee financial (and forty-seven At least states ity provided by for services contract either Columbia) adopted legisla- District ing non-contracting providers. or It further capitation insolvency. and tion on HMO “ignore explicit language held that to this Act; adopted half Model Over the NAIC requires give would violate the rule that us to adopted portions substantially or other states natural, obvious, ordinary words ‘their and Jay Howard, the Model Act. M. modified See ” Samsel, 10, 19 meaning.’ 199 Ariz. at 483 Insolvency: The HMO Consid- Aftermath of P.3d at 624 10. Providers, erations 4 Annals Health L. for ¶25 87, (1995); Druehl, agree not court Craig We do with the of P. HMO and 95-96 appeals Insolvency: § on this issue. 20-1072 A.R.S. was Insurance The and Benefits part addressing System, enacted in as of 23 Am. 1988 a bill Detriments Federal J.L. (1997). insolvency, capitation, regulatory thirty- 498-99 At least HMO and & Med. appear type is no have some issues. There doubt that subsections five of these states to (A) (C) appears important components provision. to of Ari- None to are of hold-harmless ly not for of them but others. Arizona’s liable some have a such as subsection are, fact, (E). charges in those for Some Thus, only may provider the be liable. which light foregoing the 27 In of all of debt, actually and a expenses were incurred 20-1072(A) (C), § the A.R.S. to and text of Andrews, non-recourse, according to albeit interpretation of the proper the we believe But All- created for Lisa’s treatment. was is the is immunized from statute that enrollee only not policy requires that state’s provider recovery of by the for actions actually actually they be incurred but that be by charges and covered for services person. by Does an insured this By agreement with the HMO. the enrollee’s incurred for treatment of mean subsections, however, remaining especial the person for or does mean insured (E), ly the remains liable subsection enrollee directly le- person the insured and which co-insurance, co-payments, non-covered for gally liable? services, non-contracting provid services of explain does not and does And, noted, er, the and similar costs. as case law cited not define the terms. The subject a lien property insured’s remains uniformly held are has above provider’s charges. the full by an when or insured he legislature clearly But we believe intend them, legally even she has become liable enrollee, would provider, ed that the not the by paid oth- those been when non-payment HMO cov run the risk of ¶¶ 15-18, 19 P.3d at 625- ers. Id. at 484-85 and also ered services enrollee ¶¶ applied rule has even been 15-18. This for the differ immunized from direct action entity in in cases which provider’s usual ence between the fees required provide expenses was law charges payable pur the lesser amount and when, charges as a services or provider contract suant between matter, pragmatic would not be Thus, disagree and the with the HMO. we legally responsible. Coconino held See appeals’ signed view when court 693; County, 149 Ariz. Hollis- form, directly she became liable for UMC’s ter, 192 Neb. 224 N.W.2d 164. later the HMO-covered services she received. ¶¶ Samsel, 10-11, at 482-83 See ¶30 difference, course, is that ¶¶ conclude, P.3d at 623-24 10-11. We how the bills present case not were 20-1072(E) ever, permits § that A.R.S. else, was immun- someone provider to obtain enrollee’s enforceable seeking action ized direct promise pay for all amounts and services if it makes difference who payment. But covered, including co-payments, services bills, why it make a differ- pays the should permitted different from or excess of those who can sued? Allstate nor ence be Neither contract, types and similar HMO provides found us case cited to or Andrews, liabilities. And under the insured’s fact, In no case has addressed the answer. property property interest a tort re arising provisions from the precise issue subject pro covery to a lien for the remain 20-1072(A) § (C), A.R.S. 33-931 A.R.S. Thus, charges. as the vider’s full additional statute), (the policy provi- medical lien stated, (E) appeals “en court subsection before us. We thus sions such courages providers furnish” services analysis. to our own left they paid, will giving them “assurance” time, though, even the existence E. Resolution coverage may disput extent of be doubtful or be considered Several factors should Id. ed. analysis. in the final By person D. an insured 1. Double —windfall interpretation of the 28 Given this statute, argues permitting the Allstate apparent that the enrollee who it is pay- under medical necessary pro from to recover their receives treatment Samsels may provision the amount of medical ex- legal- ments expenses and is or vider incurs penses covered them payment HMO would consti- medical coverage to or for duplicate, tute a recovery. windfall We actually paid by and not reimbursed to the any greater unable to see windfall have, not, to the insured. Allstate could but did insured when he or she recovers specifically provide for reduction of medical paid by the compared insured’s HMO as payments benefits a coordination of bene- recovery permitted any from other collateral fits or limiting other clause pay- medical source. Allstate has offered no evidence that coverage ments expenses actually paid by premiums its payments for medical coverage an insured. argues light that in were reduced reason of expectation 20-1072, A.R.S. there was pro- no need to it would be relieved coverage for vide for payments coordination of its medical expenses paid by HMOs for their enrollees. benefits to exclude HMO-covered Thus, we see no windfall when insureds who from coverage. its separate coverage for a just collect what Feit, In35 the court noted that: they Recovery for. medical, pre-paid existence of hospital- from payments both medical coverage and ization and plans funeral ais matter of other long sources has recognized been both knowledge common certainly and is known accepted in Arizona and elsewhere. As industry. the insurance If an insurer one commentator has written: does not wish to honor type claims of the [Tjhe tendency has been to allow double involved here it spe- should exclude them recovery where collection of the first bene- cifically so that an insured with additional fits has been completely from a different medical or coverage would know source, hospitalization such as a policy or that he is receiving coverage less for his might Medicare ... it be borne in mind premium dollar than some other insured unlikely that it is that one undergo would who is without outside benefits. injury merely serious purpose for the

recouping duplicate expenses. addition, Cal.Rptr. In agree. 872. We We note many have, there are recouped fact, so costs un- other insurers coordinated any type policy, der their repre- coverage which do and thus injured sent person, losses to the eliminated expenses paid by that he is unlikely emerge profit with a any HMO other collateral source: If event. against this were considered argues Safeco further that ... policy public policy, then insurers would be for- expressly provides issued to Allen that the bidden to sell contracts guaranteeing pay- first-party payments coverage ment of a per day fixed sum while one is coverage. excess Expenses “Medical hospitalized when it is known that the hos- policy Section” of the contains the follow- pital expense paid by will be Blue Cross ing provision: Medicare. “Other Insurance. If there is other medi- Appleman 8A on Insurance cal, Law & Practice (other hospital benefits insurance than (1997). § 4902.7 Medicare), Health Organiza- Maintenance tion or adopted Organization 33 Arizona Preferred Provider long ago. this view Scott, any against benefits available from Surety See Aetna Cas. & source Co. v. 609, 611, 463, (1971) (not- Expenses loss covered the Medical 491 P.2d policy, Section of this withstanding clause, this insurance “other insurance” shall be excess sured was insurance over other entitled to medical valid reim- medical, and collectible despite duplicate recovery bursement benefits insurance, source); Organiza- second Health Maintenance Schultz v. Farmers Ins. Group, 148, 150-51, tion or Organization Preferred Provider (1991). benefits.” 383-84 Allen, Ins. Co. v. 262 Kan. Safeco 2. Coordination of benefits (1997) P.2d (emphasis origi- 1368-69 nal). forms, policy 34 Unlike some other All- policy We also note that Allstate’s has state’s restricting contains clause included such a coordination with clause re-

H deductions, labor, employer con- payroll benefits but spect compensation to workers’ payments coverage. The for medical tributions. not pre- coverage issue we payments certainly resolved here is better sented with CONCLUSION exclusion, insurance,

by or a specific other ¶ Thus, compelling rea see no we by of clause than reli- coordination benefits coverage paid by the why expenses HMO son term, meaning of litigating ance bought paid for should be treated Lisa “actually by policy, in the incurred undefined expenses paid differently than insured.” might Lisa have expense policy or medical underwriting differential, Premium any collateral source or other purchased considerations, ex- and reasonable If own efforts. might acquired her have pectations coverage had to limit Lisa’s Allstate intended actually had be expenses for which she brings us to a final factor. One 36 This directly even those she legally hable or come truly inquire parties intended might what actually paid, could have so stated had it respect policy’s appli- expected with to the or Samsels. made it clear average this set of The cation to facts. that such It has not even evidence consumer, course, inkling no would have therefore con its own intention. We get problem and no intent than other from Sales, the benefits Lisa received clude that bought. what he or she Darner Motor noted, coverage her HMO should be treated 388. As All- any from other benefits received any language indicating same as state did not include acquired by insured. source an coverage intent to exclude in situations collateral its phrase “actually by an The paid which were insured’s undefined presented interpreted It that is mean HCSO. evidence insured” any way insured rather limitation was in called to the Sam- for treatment great In number treatment sels’ attention. view than incurred for issue, addressing many directly of them legally of cases hable. which the insured is Allstate, involving it not is unreasonable appeals’ opinion is there- 39 The court to exclude assume that had Allstate intended vacated, judgment trial court’s fore and the situation, coverage in it so such a would have affirmed. pres- policy. stated in the Nor did Allstate underwriting any de- ent evidence its CONCURRING: STANLEYG. partment premium charged, given FELDMAN, A. and THOMAS Justice its Nor such was intention. did (retired). ZLAKET, Justice insurers, presented like its show that some McGREGOR, Justice, Vice Chief coverage insureds with a choice for restricted dissenting: premium. lesser ¶40 pervasiveness coverage majority today that Lisa holds Given another, Samsel, in a service through or an enrollee health care type HCSOs one (HCSO) signed a boiler- expect organization that ab- who reasonable consumer would form, actually in- contrary, plate indication to the admission sent though she payments coverage apply expenses, to all ex- curred medical even would legally responsible for those penses incurred for treatment of his can never be Statutes injuries, regardless because Arizona Revised of what collateral bene- (A.R.S.) her im- may guarantees section 20-1072 purchased the insured fits munity. majority its conclusion reaches who are offered medical for. HMO enrollees path ig- following coverage a convoluted limited Allstate’s language clear of the contract informed that nores the terpretation are entitled upon interpret. Be- calls us to great is useless. this action to a extent language course, I conclude that contract coverage, gift cause is not some HMO reached, respect- I the result permit protection en- does handed to enrollee fully his or her dissent. earned and rollee has ¶ 41 presents straightforward This a says. action for expenses Allstate Lisa she actually issue. Our turns on plain- decision whether incurred. No more is under due the Samsel, insured, tiff Lisa “in- of policy. Allstate’s terms curred” expenses when she received ¶44 Rather than enforce the clear lan- University treatment at the Medical Center contract, of guage majority the insurance (UMC), Hospital provider a health care for approaches presented the issue one as Lisa’s HCSO. Allstate’s medical general public policy and concludes pay obligated it to “all reasonable provides policy insurance coverage for medi- expenses actually by incurred an insured expenses cal for which Lisa cannot held Hence, person” for medical care. if Lisa legally majority liable. The reaches re- expenses, incurred then Allstate’s medical not language sult because contract re- pay provision applies.3 quires it but rather because the court thinks

¶42 Determining policy provide whether Lisa I coverage. incurred should cannot expenses not legal approach. does involve difficult concur with that First, analysis. majority agrees, as the one majority 45 The case concedes that law expenses incurs if legally she becomes re- uniformly expenses “has held that are actual- sponsible Supra for expenses.4 ly by incurred an insured when he or she has (“The case uniformly law cited above has legally become Supra liable for them.” 29. that expenses actually held by majority The then devotes remainder of an insured legal- when he or has she become how, opinion explaining if Lisa them, ly expenses liable for even when those expenses by liable for her virtue of stat- others.”). Second, paid by have been by ute, expenses “incur” she could under the 20-1072, enacting Legis- section the Arizona policy. majority terms the insurance clearly decisively lature acted to ensure begins deciding concept requir- that the that HCSO enrollees cannot be liable to a ing legally expenses one to become liable for provider for the cost of medical services. one expenses before “incurs” an ap- is but majority agrees premise. also with this propriate method which to determine ¶27 (“[W]e Supra proper believe the inter- whether incurred medical pretation of [A.R.S. section 20-1072.A to C] expenses.5 justifies majority Id. 18. The is that the enrollee is immunized from ac- ways its decision seek other to define charges tions “actually by noting incurred” none for services and covered developed cases that rule the uniform HMO.”). agreement enrollee’s with the Be- volved situation “in which the insured re- statutory immunity her, granted cause necessary ceived services for treatment and legally Lisa cannot be liable for the cost of legally would have become liable but far provided by Therefore, care UMC. under the added). statutory immunity.” (emphasis Id. “incur,” accepted definition of no “reasonable words, In other none of the cases from which the insured” we derive the uniform rule involved situa- result, paid. exist to be As a Allstate’s insur- tions which the was not and could provide coverage. ance did not legally not become liable. That difference analysis point. 48 Our should end at this does distinguish more than this situation The contract of insurance means what it from others: the difference should determine $315.55, (App.1986); 3. Allstate the amount she in- see also Haisch v. Co., curred not covered under her (App. Ins. 5 P.3d 940 agreement, HSCO as authorized A.R.S. sec- 2000); (3d 12 Couch on Insurance 180:5 tion This 20-1072.D. action involves Lisa’s ed.1998). subject demand that Allstate also amount to the terms HSCO for which Lisa is meanings 5. if Even we could discern various not liable. incur,” "actually seems inconsistent con- clude, majority, "actually as Arizona, does the incur” jurisdictions, as well as most defines legally can mean both expenses" equivalent "become liable" for medi- being "incur becom- See, ing expenses. e.g., legally liable cal and "not for those become liable” for Coconino Ass’n, 427, 430, County v. Fund Adm’rs lan- meaning of contract regarded as hav- does the Or that this insured cannot be the insured vary according to whether guage under lan- ing incurred medical negligence? negligent or the victim policy. guage of this a pursue who tort what of those do And ¶46 upon an majority embarks The next they actually ex- remedy? incur medical Do from the analysis departure notable for its penses they at receive treatment the time First, relying language at issue. contractual their only they if recover medical when and System, Health upon Andrews v. Samaritan they actually a If expenses from tortfeasor? (App.2001), the 36 P.3d 57 recovery, they expenses only upon can incur majority a situation concludes that under payment before to make their insurers ask Lisa, involving debt to the “[a] such as that If tort re- ends? the action the tort action covered services provider is incurred when settlement, has the insured through solves ¶21 enrollee,” supra the not? Or expenses or has incurred medical added), provider can (emphasis because the only expenses if incurred medical the insured But lien. as Andrews enforce its medical agreement separately defines settlement the brought pur- expressly recognizes, an action expenses? requires payment of such and lien is not suant to Arizona’s medical statute majori- questions by virtue of the arise These against the and cannot be an action HCSO unnecessarily con- interpretation, which ty’s enrollee, grant the HCSO statutes because And, language of contract. torts the the against a immunity to the such enrollee end, if reality us that even the tells Lisa ¶ Andrews, claim. action, successfully pursues tort she will a holding simply P.3d at 61. Andrews’ em- actually the ex- incurred medical phasizes that not incur lia- an insured does payment. All- penses seeks for which she provid- bility expenses the for the medical insurance still will not contract of state’s therefore, and, provides for the support er no actually provide coverage, for Lisa still has majority’s approach. expenses. incurred no medical ¶ Andrews,6 relying upon the ma- 47 Still ¶ majority finally 48 The addresses the bring jority Lisa’s situation within seeks by asking whether issue raised this action policy by point- language of the Allstate expenses policy’s to medical reference that, action, ing a brings out Lisa tort if if person an insured incurred recovery expenses for she seeks “actually for treatment an incurred means recovers, liable, which she was not she if person expenses for or ... which the insured provider may a medical lien assert directly person legally is liable?” insured recovery provid- against her for the debt the legally Only of the Supra in the world 28. Supra party er incurred. 21. Because lan- suggest one that contract could arcane argument, nothing in the made this record “by referring expenses incurred guage who tells us the number enrollees HCSO expenses really “in- person” means insured medical treatment their HCSO obtain under provider] [by the treatment of curred action, I plan and later recover in tort Certainly no person.” reasonable percentage suspect the number as interpret his or her insur- holder could policy If, exceedingly small. HCSO enrollees meaning contract as ance language ap- opinion suggests, policy by the in- incurred promised for she plies only to the extent that some by the in- includes sured action, day in a tort receives provider. sured’s approach significant ques- majority’s leaves its just majority’s failure limit re- left tions unanswered. One is to wonder interpretation insurance language for all the contract means view what majority provokes to ask involved policy who not fit within those enrollees do noting again that plaintiffs: question. final After category of successful tort one small liability, was immunized incur medical also? they do correct...."). ("If Andrews, majority upon it Andrews is Although 6. relies Supra approving opinion. stops short of asks, opinion why ... “[b]ut should it make a liable those She received ex- difference who can Supra actly be sued?” promised those under benefits the con- simple inescapable is that answer tract of when insurance makes a difference because the obli- portions of her for which she was gates Allstate to those insureds who liable under I section 20-1072. re- would liability. Lisa cannot be sued superior verse the decision court and because she is immune from opinion vacate the Appeals. the Court of suit. The fact that Lisa can never held that,

liable for means JONES, Concurring: CHARLES E. Chief under policy, the terms she never Justice. incurred those we Because interpreting a contractual related insured, legal liability

to the it matters who can be sued. my 50 I return to statement that this is a

simple case. Lisa did not incur her treatment at UMC because she was not

Case Details

Case Name: Samsel v. Allstate Insurance

Court Name: Arizona Supreme Court

Date Published: Dec 12, 2002

Citation: 59 P.3d 281

Docket Number: CV-01-0158-PR

Court Abbreviation: Ariz.