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Anderson v. Farmers Insurance Company of Oregon6/12/2003
Argued and submitted May 21, 2002, at La Grande.
Affirmed.
Defendant Farmers Insurance Company of Oregon (Farmers) appeals from a judgment for plaintiff, its insured, on plaintiff's claim for breach of contract arising out of Farmers' failure to preauthorize payment of personal injury protection (PIP) benefits for the full cost of plaintiff's knee replacement surgery after an automobile accident. We affirm.
Most of the facts are not in dispute. Plaintiff was injured while driving his own automobile, which Farmers insured. At that time, plaintiff and his wife had three separate but identical policies insuring three different vehicles, each providing $25,000 in PIP coverage. The parties agree that the PIP policy insuring the car that plaintiff was driving at the time of the accident was the "primary" policy and that the policies covering the two other family vehicles were "excess" policies. ORS 742.526. Each PIP policy contained an "other insurance" clause prohibiting the "stacking" of coverage:
"If any applicable insurance other than this policy is issued to you or a family member by us or any other member company of the Farmers Insurance Group of Companies, the total amount payable among all such policies shall not exceed the limits provided by the single policy with the highest limits of liability."
(Emphasis in original.) The parties agree that, by its terms, the clause restricts plaintiff's PIP benefits to the limits of the highest policy, in this case $25,000. As Farmers acknowledges, however, the clause is not enforceable "in full." Because the policies are for equal amounts, the clause would have the effect of completely denying PIP coverage on the two excess policies, when Oregon law requires some coverage. ORS 742.520 and 742.524 require every motor vehicle insurance policy to provide $10,000 in PIP coverage for each insured for "all reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetic services incurred within one year after the date of the person's injury ." Thus, Farmers concedes that, despite the anti-stacking clause in its policies, it was required to provide the minimum statutory PIP coverage in each policy; it calculates the amount due plaintiff as $25,000 under the primary policy and $10,000 under each excess policy, for a total PIP benefit of $45,000. In plaintiff's view, he is entitled to the full limits of his PIP policies on each policy for a total of $75,000 in PIP benefits.
Plaintiff's damages, including the proposed surgery, were in excess of $65,000. Farmers paid $32,000 toward plaintiff's medical expenses and agreed to pay an additional $13,000, which would have covered half the cost of the surgery, for a total PIP benefit of $45,000. Because plaintiff could not afford to pay the remaining $13,000 for the surgery, he chose not to have it and canceled the surgery and a pre-operative medical examination. He brought this action against Farmers seeking damages for Farmers' failure to agree to pay the full cost of the surgery. The trial court concluded as a matter of law that plaintiff was entitled to the full PIP limits on each policy, to the extent of his damages. A jury found that Farmers had breached its contract with plaintiff by refusing to pay the full cost of the knee replacement surgery and awarded plaintiff $26,000 in economic damages and $200,000 in non-economic damages. Farmers appeals from the judgment that the court entered on the jury verdict.
Farmers concedes that the challenged policy provision, if applied according to its terms, likely violates ORS 742.520. It asserts, nonetheless, that the anti-stacking provision can be applied with respect t
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