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Texas Farmers Insurance Company v. Fruge3/9/2000
707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714, 721 (1985). To avoid the risk of making the same payment twice, Farmers may have been correct in not making an unconditional payment to Fruge reimbursing her for expenses it should have known had already been paid by Medicare. See Health Ins. Ass'n of America, Inc. v. Shalala, 23 F.3d 412, 418 (D.C. Cir. 1994).
While Farmers is correct in its assertion that federal statutes and rules preempted state law, it cannot, on the face of the record, claim that it had reason to suspect that Medicare was entitled to the sum represented by the checks that named Medicare as co-payee. Though the record speaks of six checks and Farmers appears to have named Medicare as payee on checks totaling $1,352, the record only shows a Medicare payment of $168.56. Accordingly, it appears that Farmers wrongfully named Medicare as a co-payee to part of PIP benefits.
We conclude that Farmers breached its contract and that Fruge was entitled to recover benefits, penalty and attorneys' fees under ยง 5.06-3. We affirm the judgment, but reform the judgment to allow Farmers to show Medicare as co-payee on $168.56 of the proceeds of the judgment. The judgment is reformed to decree that the plaintiff Carabell Fruge have and recover of and from the defendant Texas Farmers Insurance Company the sum of $2,331.44 to be paid directly to her and the sum of $168.56 to be paid to Carabell Fruge and Medicare as co-payees.
AFFIRMED AS REFORMED.
Submitted on December 2, 1999
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