Summary
indicating that a subrogee is a real party in interest and has the right to maintain an action in its name
Summary of this case from Liberty Ins. Corp. v. Advanced Servs. Heating & Cooling, Inc.Opinion
No. 76-1046
Decided April 27, 1977.
Contracts — Insurance — Automobile liability — Subrogation of insured's medical payments claim — Valid and enforceable.
CERTIFIED by the Court of Appeals for Franklin County.
On August 27, 1970, Irene T. Smith, co-appellant herein, was involved in an automobile collision with a vehicle operated by George Board. At that time, her vehicle was insured by The Travelers Insurance Company (hereinafter "Travelers"); the vehicle operated by Board was insured by Globe-American Insurance Company of Cleveland, Ohio, (hereinafter "Globe-American"). Due to the collision, Mrs. Smith sustained injuries, was given medical treatment, and incurred medical expenses in the approximate amount of $1,452.
Within one year of the date of the accident, Mrs. Smith submitted to Travelers proof of the medical expenses incurred, pursuant to the requirements of her insurance policy. The policy provided that Travelers would pay all reasonable expenses (incurred within one year of the date of the accident) for necessary medical services to the named-insured sustaining injuries, caused by accident, while occupying the automobile. That payment provision is subject to the following policy provision: "In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and * * * all the rights of recovery therefor which the injured person or anyone receiving such payment may have against any person or organization. The insured * * * shall execute and deliver instruments and papers, do whatever else is necessary to secure such rights and shall do nothing after loss to prejudice such rights."
On or about June 1, 1971, pursuant to the subrogation provision of her policy, Mrs. Smith executed a subrogation agreement, providing that Travelers be subrogated to the right of recovery of Mrs. Smith, to the extent of the payment made, against any person or organization. Mrs. Smith agreed to do nothing to prejudice such rights.
Mrs. Smith made claim against Board for her medical expenses incurred as a result of the accident. In July 1971, Globe-American paid Mrs. Smith the sum of $4,500 in settlement of her claim, and obtained a release from her. By the terms thereof, Mrs. Smith released Board and Globe-American from any liability arising from the accident. When Travelers became cognizant of the settlement with Globe-American, it refused to pay Mrs. Smith the medical expenses claimed by her, stating that she had prejudiced Travelers' right of subrogation.
On or about June 10, 1975, Mrs. Smith and Walter H. Smith, appellants herein, filed an action against Travelers to recover $1,000 for medical expenses incurred by them as a result of the Board accident. The Common Pleas Court found in favor of appellants in the sum prayed for in their complaint.
The Court of Appeals for Franklin County reversed the judgment of the trial court and remanded the cause for further proceedings. In so doing, the Court of Appeals determined that its judgment was in conflict with the judgment rendered in Nationwide Mut. Ins. Co. v. DeJane (1974), 42 Ohio App.2d 11, 328 N.E.2d 701, and certified the record of this cause to this court for review and final determination. Section 3(B)( 4) of Article IV of the Constitution of Ohio.
Mr. Philip Q. Zauderer, for appellants.
Messrs. McNamara McNamara, Mr. Dennis D. Liston and Mr. John L. Miller, for appellee.
The specific question certified below is as follows:
"Whether a single cause of action for personal injuries may be divided to the extent that an insurer, subrogated to the medical payments claim assigned by the insured, may prosecute this claim in a separate action against the tortfeasor?"
In the opinion written by Judge Holmes, the Court of Appeals below stated: "We feel that the latter position as taken by the Hamilton County Court of Appeals, in * * * [ Hartfold Accident Co. v. Elliott (1972), 32 Ohio App.2d 281], is the more reasonable view, and one which would express the better public policy in regard to an insured assigning his rights in an injury claim for medical expenses, as well as in the instance of assigning to the insurance company subrogee his interests in a property damage situation. We feel that the subrogee, upon such assignment, would become the real party in interest and have the right to maintain an action in the name of the subrogee as against the tort feasor for damages sustained to personal property of the insured, as well as for personal medical expenses as suffered by the insured." We agree with this conclusion.
This result is consistent with what appears to be the overwhelming majority of cases in those jurisdictions which have determined whether various subrogation agreements are valid and enforceable. See Alabama Farm Bureau Mut. Cas. Ins. Co. v. Anderson (1972), 48 Ala. App. 172, 263 So.2d 149, 154; Shipley v. Northwestern Mut. Ins. Co. (1968), 244 Ark. 1159, 428 S.W.2d 268, 270; Higgins v. Allied Amer. Mut. Fire Ins. Co. (D.C.App. 1968), 237 A.2d 471, 472; DeCespedes v. Prudence Mutual Cas. Co. (Fla.App. 1966), 193 So.2d 224, 225, approved, 202 So.2d 561; Rinehart v. Farm Bureau Mut. Ins. Co. (1974), 96 Idaho 115, 524 P.2d 1343, 1344-46; Bernardini v. Home Auto Ins. Co. (1965), 64 Ill. App.2d 465, 212 N.E.2d 499, 500-01; Imel v. Travelers Indemnity Co. (1972), 152 Ind. App. 75, 281 N.E.2d 919, 921; State Farm Mut. Auto Ins. Co. v. Roark (Ct.App.Ky. 1974), 517 S.W.2d 737, 739; Michigan Medical Service v. Sharpe (1954), 339 Mich. 574, 64 N.W.2d 713, 714; National Union Fire Ins. Co. v. Grimes (1967), 278 Minn. 45, 153 N.W.2d 152, 155; Davenport v. State Farm Mut. Auto Ins. Co. (1965), 81 Nev. 361, 404 P.2d 10, 13; Busch v. Home Ins. Co. (1967), 97 N.J. Super. 54, 234 A.2d 250, 251; Jacobson v. State Farm Mut. Auto Ins. Co. (1971), 83 N.M. 280, 491 P.2d 168, 170; Silinsky v. State-Wide Ins. Co. (1968), 30 A.D.2d 1, 289 N.Y. Supp. 2d 541, 548; Geertz v. State Farm Fire Cas. (1969), 253 Ore. 307, 451 P.2d 860, 862; Bradford v. American Mut. Liability Ins. Co. (1968), 213 Pa. Super. 8, 245 A.2d 478, 480; Foundation Reserve Ins. Co. v. Cody (Tex.Civ.App. 1970), 458 S.W.2d 214, 216; State Farm Mut. Ins. Co. v. Farmers Ins. Exchange (1969), 22 Utah 2d 183, 450 P.2d 458, 459; Collins v. Blue Cross (1973), 213 Va. 540, 193 S.E.2d 782, 785; Travelers Indemnity Co. v. Rader (1969), 152 W. Va. 699; 166 S.E.2d 157, 161; and State Farm Mut. Auto Ins. Co. v. Geline (1970), 48 Wis.2d 290, 179 N.W.2d 815, 819.
In our opinion, the majority of jurisdictions arrived at their ultimate conclusion mainly from the straightforward application of contract principles, and we adopt that ratio decidendi in the case at bar. As the Supreme Court of Tennessee has held: "It is common knowledge that a plaintiff holding an automobile liability policy providing for medical benefits is entitled to those payments when injured in an automobile accident and * * * is also entitled to recover * * * from the tort-feasor. If such plaintiff and his insurance company wish to enter into an agreement whereby the insurance company is subrogated to such medical payments, we fail to see the unfairness of such contract. * * * [S]ubrogation agreements are permitted for property damage payments and we know of no reason why subrogation should not be allowed for medical payments. Generally, parties may contract as they wish and we cannot see that it is against public policy for the parties to contract for subrogation of medical payments. To hold otherwise would permit an injured plaintiff to recover twice for the same medical expenses." Wilson v. Tenn. Farmers Mut. Ins. Co. (1966), 219 Tenn. 560, 566, 411 S.W.2d 699, 701-02.
In view of all the foregoing, the judgment of the Court of Appeals is affirmed.
Judgment affirmed.
O'NEILL, C.J., HERBERT, CELEBREZZE, W. BROWN, STERN, SWEENEY and LOCHER, JJ., concur.
STERN, J., retired, assigned to active duty under authority of Section 6(C), Article IV, Constitution, sitting for P. BROWN, J.