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Youngblood v. American States Ins. Co.12/14/1993
ments received must be repaid out of a third-party recovery; and (3) the tortfeasor's carrier may consider that the injured person has already been paid medical expenses and can make a smaller offer which allows that such payment has already been made. Reitler, 628 P.2d at 670. In this case, all of those considerations are present. Here, Alfred paid a premium to American States to obtain the PIP endorsement. Clearly, Mary Ann, as one of the insured parties under the policy, would suffer a financial hardship if the PIP benefits she received had to be paid out of her settlement. This is especially true given Mary Ann's assertion that, when she settled with National, the medical expenses paid by American States were specifically excluded from the settlement, and National's claims representative made a smaller offer based on the fact that Mary Ann would not, presumably, have to repay those medical benefits to American States.
American States, nevertheless, argues that § 33-23-203, MCA, specifically allows the subrogation that is attempted here. This statute provides, in pertinent part:
(2) A motor vehicle liability policy may also provide for other reasonable limitations, exclusions, or reductions of coverage which are designed to prevent duplicate payments for the same element of loss.
American States has provided no legal authority or legislative history which would lead to the conclusion that subrogation is intended to work as a limitation, exclusion or reduction of coverage. Subrogation is a term of art and, had the legislature intended to include subrogation in this statute, it could have easily provided for the same. For example, see § 33-22-1601, MCA. Upon a plain reading of the statute, we are not persuaded that subrogation was intended to be or should be "read into" this statutory provision.
American States also argues that § 33-22-1601, MCA, allows subrogation in this case. That statute provides, in pertinent part:
A disability insurance policy subject to this chapter may contain a provision providing that . . . the insurer is entitled to subrogation. . . .
However, § 33-1-206(2), MCA, defines medical benefits issued incidental to and part of vehicle insurance as "casualty" insurance and specifically excludes such benefits from the statutory requirements governing disability insurance. In addition, § 33-22-101(1), MCA, specifically states that Chapter 22, which governs disability insurance, does not apply to any policy of liability insurance. In this case, we are dealing with a PIP endorsement in an automobile liability insurance policy. Clearly, § 33-22-1601, MCA, does not apply to the insurance policy at hand.
We reaffirm our decision in Reitler and hold that subrogation of medical payment benefits in Montana is void as against public policy. Here, the choice of law provision in the insurance contract would result in medical payment subrogation under Oregon law. Because such subrogation violates Montana's public policy, that term of the insurance contract at issue here is not enforceable. See Steinke, 525 F. Supp. at 236.
Reversed.
CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT, TRIEWEILER, GRAY, and WEBER concur.
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