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Barnes v. Western Heritage Insurance Company

(Claim For Medical Payments Coverage Potentially Owed By Insurer Notwithstanding Settlement of Personal Injury Lawsuit)

In Barnes v. Western Heritage Ins. Co., 217 Cal.App.4th  249 (June 18, 2013), the California Third District of Court of Appeal reversed the summary judgment entered in favor of Western Heritage Insurance Company (“Western Heritage”) in connection with a claim for medical payments coverage by Justin Barnes as a result of injuries sustained after a table fell on his back during a recreational program co-sponsored by The Shingletown Activities Counsel (“The Activities Counsel”). Subsequently, Justin filed a claim against the Activities Counsel. In turn, the Activities Counsel tendered the claim to its insurer, Western Heritage. Justin also tendered a claim for medical payments coverage under the Western Heritage policy over one year after his accident, along with filing a personal injury lawsuit against the Activities Counsel. Ultimately, Western Heritage settled Justin’s lawsuit on behalf of the Activities Counsel. However, Western Heritage continued to deny Justin’s claim for medical payments coverage under its policy. 

Thereafter, Justin filed a complaint for breach of contract and bad faith against Western Heritage based on its denial of medical payments coverage for the treatment of Justin’s injuries in connection with the accident. Thereafter, Western Heritage filed a motion for summary judgment arguing the following:

  • The settlement of Justin’s personal injury lawsuit collaterally estopped Justin from maintaining a claim for medical payments coverage;
  • Payment under the medical payments coverage would amount to a double recovery in favor of Justin; and
  • Because Justin tendered a medical payments coverage claim over one year after the accident, the one year statute of limitations for medical payments coverage barred Justin’s claim.

In reversing the trial court’s entry of summary judgment in favor of Western Heritage, the Court of Appeal held that the collateral estoppel rule did not apply to bar coverage of Justin’s medical payments coverage claim in that such claim was based on the direct coverage afforded to Justin under the Western Heritage policy; Justin’s recovery of damages for his personal injury lawsuit did not amount to a double recovery if medical payments are paid under the medical payments coverage afforded by the Western Heritage policy; and there was a triable issue of fact relative to whether Western Heritage is equitably estopped from relying on the one year statute of limitations in its policy for medical payments coverage claims as it failed to advise Justin of all applicable time limits in the Western Heritage’s policy as required by California Code of Regulation §2695.4(a). The Court of Appeal held that there were triable issues of fact relative to whether Western Heritage’s failure to advise him of the one year statute of limitations caused him to refrain from filing a timely claim and whether Justin’s reliance was reasonable.

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