Appeals from the Superior Court of the District of Columbia (CA-8691-99) (CA-4675-99) (Hon. John H. Bayly, Jr., Trial Judge) (Hon. Rafael Diaz, Trial Judge)
Before Glickman and Washington, Associate Judges, and Newman, Senior Judge.
The opinion of the court was delivered by: Washington, Associate Judge
The question presented in these consolidated cases is whether the District of Columbia's Compulsory/No-Fault Motor Vehicle Insurance Act of 1982 *fn1 ("No-Fault Act"), as amended, makes personal injury protection ("PIP") benefits a secondary source of insurance coverage to a claimant's primary health care coverage provided by a Health Maintenance Organization ("HMO"). In deciding this issue, we must first decide whether HMOs are "insurers" and/or providers of "insurance coverage" under D.C. Code § 31-2406 (g) (2001). We conclude, that under D.C. Code § 31-2406 (g), an HMO is properly classified as a provider of "insurance coverage" and thus, an insured must exhaust any medical benefits the insured is eligible for under his or her health plan before seeking benefits under a PIP policy. We therefore affirm the ruling in Carter v. State Farm and reverse the ruling in State Farm v. Tindle, et al.
Prior to 1982, the District of Columbia (D.C.) followed common-law tort principles in adjudicating automobile accidents. *fn2 Following a study that reported over forty percent of D.C. residents were without automobile insurance under this common-law system, *fn3 the D.C. Council passed the No-Fault Motor Vehicle Insurance Act of 1982 ("1982 Act"). The purpose of the 1982 Act, which changed the D.C. insurance system from common-law tort principles to a no-fault system, *fn4 was to create an insurance system, "which provides, at reasonable and affordable rates, adequate protection for" D.C. residents. *fn5 The 1982 No-Fault Act did not alleviate all the problems it was designed to address. First, following the passage of the 1982 Act, insurance rates steadily climbed rather than declined. *fn6 Additionally, a portion of the No-Fault Act was deemed unconstitutional. *fn7 Following these revelations, and in an effort to keep the cost of insurance down, the D.C. Council passed amendments to the 1982 Act. *fn8
On June 2, 1986, amendments to the District of Columbia automobile liability statute went into effect. One of the most significant changes under these amendments dealt with personal injury protection benefits ("PIP"). PIP benefits provide "medical and rehabilitation expenses, work loss, and funeral benefits . . . to a victim who is an insured or an occupant of the insured's vehicle or of a vehicle which the insured is driving." *fn9 Prior to the 1986 amendments, drivers were required to have PIP insurance coverage because PIP benefits were the primary source of health insurance coverage when there was an automobile accident. As part of the 1986 amendments, a new provision was added to the D.C. Code. Under this new provision, PIP benefits became optional coverage for automobile owners. *fn10 The goal of this new provision, according to commentators, was to reduce the cost of automobile insurance by making PIP benefits a secondary source of compensation. *fn11 Under this scheme, persons injured in an automobile accident must first seek reimbursement from their insurer or under anotherinsurance coverage beforeseeking reimbursement under their PIP insurance policy. *fn12 The amendments also added § 31-2406 (g) *fn13 to the D.C. Code. This new provision states:
(g) Prohibitions -- A victim is prohibited from claiming personal injury protection benefits under this chapter, other than to compensate for any deductible, if the victim is eligible for compensation for the loss covered by personal injury protection from another insurer or another insurance coverage, unless the victim has exhausted benefits offered by the insurer or insurance coverage.
The interpretation of § 31-2406 (g) is the primary issue in this appeal.
This appeal consolidates two trial court cases, Carter v. State Farm Mut. Auto. Ins. Co., et al., (Case No. CA-8691-99) and Tindle v. State Farm Ins. Company (Case No. CA-4675-99). According to the pleadings submitted by the parties, both cases involve similar facts, which will be briefly reiterated in this opinion. *fn14
A. Carter v. State Farm Mutual Automobile Ins. Co., et al.
On January 19, 1998, Gloria Carter was injured in an automobile accident. Carter was insured with State Farm *fn15 at the time of the accident and had paid for PIP coverage, including medical benefits. Carter received treatment for her injuries from January 21, 1998 until June 12, 1998, incurring medical expenses in the amount of $5,344.50. *fn16 Carter submitted her accident-related medical bills to Kaiser Permanente, her HMO, which denied reimbursement on the ground that she had not obtained a referral from her primary care physician. *fn17 Carter then submitted her accident-related medical bills to State Farm for reimbursement under her PIP coverage. State Farm subsequently paid Ms. Carter $3,774.00 in lost wages, but denied her accident-related medical expenses because she was eligible to receive benefits from another source -- Kaiser Permanente.
On or about December 9, 1999, Carter filed a seven-count complaint against State Farm in the District of Columbia Superior Court. *fn18 On January 18, 2000, Carter filed a Motion for Class Certification. State Farm moved to dismiss the case and Carter moved for summary judgment. On June 15, 2000, the Honorable John H. Bayly entered an order granting State Farm's motion to dismiss, denying Carter's Motion for Summary Judgment, and denying Carter's Motion for Class Certification. Judge Bayly ruled that Kaiser Permanente, an HMO, qualifies as an insurer, or as a source of insurance coverage and that "PIP benefits are a secondary source of benefits, available to a plaintiff only after she has availed herself of 'benefits offered by the insurer or insurance coverage.'" Carter v. State Farm Mutual Auto. Ins. Co., No. 99-CA-8691 (D.C. Super. Ct. June 15, 2000). The court concluded that because Carter did not exhaust the medical ...