Case Title: Scott v. State Farm Mutual Auto. Ins.

Citation: 

Docket Number: S055318

State: oregon

Court: Oregon Supreme Court

Date: 2008-07-24T00:00:00Z

Document:
FILED: July 24, 2008
IN THE SUPREME COURT OF THE STATE OF OREGON
LAURA SCOTT,
Petitioner on Review,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY,
a foreign corporation,
Respondent on Review.
(CC 0312-13683; CA
A127691; SC S055318)
En Banc
On review from the Court of Appeals.*
Argued and submitted March 7, 2008.
Meagan A. Flynn, Preston Bunnell & Flynn, LLP, Portland argued the cause and filed the briefs for petitioner on review.
R.
Daniel Lindahl, Bullivant Houser Bailey PC, Portland, argued the cause for
respondent on review.  With him on the brief was John R. Bachofner.
Robert K. Udziela,
Beaverton, filed a brief on behalf of amicus curiae Oregon Trial Lawyers
Association.
DE MUNIZ, C. J.
The decision of the
Court of Appeals is reversed.  The judgment of the circuit court is reversed,
and the case is remanded to the circuit court for further proceedings.
*Appeal from Multnomah
County Circuit Court, Marilyn Litzenberger, Judge. 213 Or App 351, 161 P3d 944
(2007).
DE MUNIZ, C.J.
Plaintiff brought this action against
defendant State Farm Mutual Automobile Insurance Company (State Farm), alleging
that State Farm had not paid uninsured motorist (UM) benefits owed to her after
a car accident, and asserting that she was entitled to recover her reasonable
attorney fees pursuant to ORS 742.061.  That statute allows an insured to
recover reasonable attorney fees if, among other things, "settlement is
not made within six months from the date proof of loss is filed with an insurer." 
The statute contains a corollary provision providing that a UM and underinsured
(UIM) insurer is not subject to attorney fees if it provides written acceptance
of coverage and consent to binding arbitration "not later than six months
from the date proof of loss is filed with the insurer." 
All of plaintiff's claims against
State Farm were settled except for her claim for attorney fees.  State Farm
then filed a motion for partial summary judgment on that claim, asserting that
plaintiff had failed to provide an adequate "proof of loss" more than
six months before it accepted coverage and consented to binding arbitration. 
The trial court granted State Farm's motion and dismissed plaintiff's claim for
attorney fees.  The Court of Appeals affirmed the trial court judgment.  
Scott v. State Farm Mutual Auto. Ins., 213 Or App 351, 161 P3d 944 (2007). 
Petitioner sought review in this court, asserting that she had provided the
statutorily required "proof of loss" when she filled out an
application for benefits on a form provided by State Farm.  We allowed review
and now reverse the decision of the Court of Appeals and the judgment of the
trial court.  
On review of a grant of summary
judgment, we view the facts and all reasonable inferences that may be drawn
from them in favor of the nonmoving party -- in this case, plaintiff.  Jones
v. General Motors Corp., 325 Or 404, 408, 939 P2d 608 (1997).  Summary
judgment is appropriate if there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law.  ORCP 47 C.  
The Court of Appeals adequately
describes the facts as follows:
"Plaintiff was involved in a car accident on January 8,
2002.  She was insured by State Farm, and the other driver was uninsured.  On
January 11, Sally Hess, a claim representative who worked on
uninsured/underinsured motorist (UM/UIM) claims for State Farm, contacted
plaintiff, informed her of the various types of coverage available to her, and
took her recorded statement.  According to Hess, plaintiff said that she was
not sure whether she would pursue UM bodily injury coverage.  Plaintiff does
not directly contradict that assertion, but emphasizes that she never said that
she was not bringing a UM claim.  Plaintiff told Hess that she was
receiving medical treatment, and Hess referred plaintiff to the personal injury
protection (PIP) department for coverage of her ongoing treatment.
"The adjuster for plaintiff's PIP claim
provided her with a form entitled 'application for benefits.'  Plaintiff
completed and submitted that form around January 20.  State Farm used that form
exclusively for PIP claims, although it did not have a separate proof of loss
form for UM/UIM claims.  According to plaintiff, State Farm never furnished her
with any other forms, and she understood that the application for benefits form
was an application for all benefits, including PIP and UM benefits.  The
completed application included a description of the accident and the resulting
injury to plaintiff, as well as contact information for the doctor who treated
her.  Near the top of the form was printed, in all capital letters, 'The
information provided will enable us to determine if you are entitled to
benefits under the policyholder's insurance contract.'  (Uppercase omitted.)  
The form also included an authorization for plaintiff's health care providers
to provide information to State Farm.
"State Farm separated processing of PIP and
UM/UIM claims and did not allow UM/UIM claim representatives to see PIP file
materials without authorization.  Accordingly, in keeping with State Farm's
usual practice, plaintiff's application for benefits form was not sent to the
UM department.
"On January 25 and 30, Hess left telephone
messages asking plaintiff to call about a possible bodily injury claim.  On
February 27, Hess and plaintiff spoke by telephone and, according to Hess,
plaintiff  'indicated for the first time that she might pursue a UM/UIM claim. 
As a result, I advised that I would send her a [m]edical [a]uthorization for
her to sign and return for State Farm to obtain records and information.'  That
same day, Hess wrote to the other driver and informed him that plaintiff was
making a claim for UM benefits and asked him to inform State Farm if he in fact
did have insurance.  Both parties apparently agree that plaintiff returned the
medical authorization form on March 6, although that form is not in the record.
"Nearly six months later, in a letter dated
August 28, 2002, plaintiff's counsel wrote to Hess, asserting that State Farm
had received notice of plaintiff's claim more than six months before and that
plaintiff  'has not received any written notice from State Farm containing the
written language approved in ORS 742.061.'  The letter warned that if the claim
did not settle, plaintiff would have the right to recover attorney fees.  State
Farm responded with a letter dated August 30 accepting coverage and consenting
to binding arbitration."
Scott, 213 Or App 353-55 (emphasis and brackets in
original; footnotes omitted). 
Plaintiff later brought this
action against State Farm, alleging that it had not paid UM benefits owed to
her and that she was entitled to recover her reasonable attorney fees pursuant
to ORS 742.061.  As noted, all other aspects of the case eventually settled,
except for plaintiff's attorney fees claim.  State Farm moved for partial
summary judgment dismissing plaintiff's claim for attorney fees, asserting that
plaintiff had failed to provide "proof of loss" more than six months
before it accepted coverage and consented to binding arbitration.  According to
State Farm, "proof of loss" requires a "written submission
containing full particulars regarding the accident, claimed injuries and
treatment," as well as written notice of the intent to claim UM benefits. 
Plaintiff filed a cross-motion for partial summary judgment on the same issue. 
Because State Farm accepted coverage and consented to binding arbitration on
August 30, 2002, plaintiff's right to attorney fees under ORS 746.061 hinged on
whether she had submitted the statutorily required "proof of loss" more
than six months earlier, or prior to February 28, 2002.  State Farm argued that
she had not submitted proof of loss of her UM claim until at least March 6,
2002, when she turned in the medical authorization form provided by Hess. 
Plaintiff argued that she had filed her proof of loss on January 20, 2002, when
she completed the application for benefits on the form provided by State Farm. 
After a hearing, the trial court granted defendant's summary judgment motion
and denied plaintiff's.  The trial court then issued a judgment dismissing
plaintiff's action.   
Plaintiff appealed, asserting that she
had submitted a sufficient "proof of loss" under ORS 742.061, as that
term was explained in Dockins v. State Farm Ins. Co., 329 Or 20, 985 P2d
796 (1999), when she submitted the application for benefits on the form
provided by State Farm.  She argued that, because defendant had only one
application form for benefits, she "did all she needed to do by January
20, 2002 [the day she completed the application for benefits] to advise State
Farm of sufficient facts for it to investigate her UM claim."  The Court
of Appeals, however, concluded that plaintiff was required to submit a written
claim sufficiently stating her intention to pursue a UM claim, and that she had
not done so before February 28, 2002.  According to the Court of Appeals,
"[a]lthough State Farm apparently at least recognized the potential for a
UM claim, it had nothing in writing from plaintiff indicating her intention to
pursue such a claim."  Scott, 213 Or App at 358.
On review, plaintiff reiterates her
argument that she submitted the statutorily required "proof of loss"
when she completed the application for benefits provided by State Farm around
January 20.  She contends that the Court of Appeals decision conflicts with
this court's decision in Dockins, and that the Court of Appeals incorrectly
equated the term "proof of claim" in ORS 742.504(5)(a) with the term "proof
of loss" in ORS 742.061.  We turn to that question.  
ORS 742.061(1) provides, in part: 
"Except as otherwise provided in
subsections (2) and (3) of this section, if settlement is not made within six
months from the date proof of loss is filed with an insurer and an action is
brought in any court of this state upon any policy of insurance of any kind or
nature, and the plaintiff's recovery exceeds the amount of any tender made by
the defendant in such action, a reasonable amount to be fixed by the court as
attorney fees shall be taxed as part of the costs of the action and any appeal
thereon."
In Dockins, this court was
required to discern the meaning of the term "proof of loss" as used
in a prior version of ORS 742.061 (1997).  The court observed that the prior
statute, by its terms, applied to "any policy of insurance of any
kind or nature," whether or not the policy included a specific proof of
loss requirement.  Dockins, 329 Or at 26 (emphasis added.)  Relying on
prior cases in which this court had considered the adequacy of an insurance
claimant's attempt to comply with a policy provision requiring proof of loss,
the court concluded that 
"an event or submission is adequate, both for purposes
of collecting on the policy itself and for obtaining attorney fees under ORS
742.061, if it accomplishes the purpose of a proof of loss.  That
purpose is to afford the insurer an adequate opportunity for investigation, to
prevent fraud and imposition upon it, and to enable it to form an intelligent
estimate of its rights and liabilities before it is obliged to pay. 
"* * * * *
"Indeed, our cases suggest that, at least
where ORS 742.061 is concerned, a plaintiff's burden, if anything, may be even
lighter.  In Heis [v. Allstate Insurance Co., 248 Or 636, 644-45,
436 P2 550 (1968)], in particular, this court placed insurers under a duty of
inquiry, holding that, even if a submission is insufficient to allow the
insurer to estimate its obligations, it will be deemed sufficient if the
insurer could accomplish that purpose through a reasonable investigation."

Dockins, 329 Or at 28 (emphasis in original; internal
quotation marks and citations omitted).  The court concluded that
"the meaning of the statutory term 'proof of loss' is
clear:  Any event or submission that would permit an insurer to estimate its
obligations (taking into account the insurer's obligation to investigate and
clarify uncertain claims) qualifies as a 'proof of loss' for purposes of the
statute."
Id. at 29.  
In 1999, the same year that Dockins
was decided, the legislature amended ORS 742.061 (1) to add two new subsections regarding PIP and UM claims:
"(2) Subsection (1) of this section does
not apply to actions to recover personal injury protection benefits if, in
writing, not later than six months from the date proof of loss is filed with
the insurer:
"(a) The insurer has accepted coverage and
the only issue is the amount of benefits due the insured; and
"(b) The insurer has consented to submit
the case to binding arbitration.
"(3) Subsection (1) of this section does
not apply to actions to recover uninsured or underinsured motorist benefits if,
in writing, not later than six months from the date proof of loss is filed with
the insurer:
"(a) The insurer has accepted coverage and
the only issues are the liability of the uninsured or underinsured motorist and
the damages due the insured; and
"(b) The insurer has consented to submit
the case to binding arbitration."
Those provisions created the
corollary provision referred to above that shields  PIP and UM/UIM insurers from
the imposition of attorney fees if they provide written acceptance of coverage
and consent to binding arbitration "not later than six months from the
date proof of loss is filed with the insurer."  The legislature's use of
the same term, "proof of loss," in all three of the statute's
subsections indicates that the legislature intended the term to have the same
meaning throughout the statute.  See PGE v. Bureau of Labor and Industries,
317 Or 606, 611, 859 P2d 1143 (1993) (stating that "use of the same term
throughout a statute indicates that the term has the same meaning throughout
the statute").  The legislature did not otherwise modify the term
"proof of loss" in any part of the statute.  The foregoing history
notwithstanding, we now must determine whether the Court of Appeals correctly
concluded that the legislature intended some other meaning of the term
"proof of loss" in the UM context.
In reaching its conclusion that the
application for benefits submitted by plaintiff was not statutorily sufficient,
the Court of Appeals relied in part on one of its prior cases, 
Mosley v. Allstate Ins. Co., 165 Or App 304, 996 P2d 513 (2000).  In Mosley,
the Court of Appeals distinguished Dockins, noting that that case dealt
with a homeowner's insurance policy and that there was "no applicable statutory
definition of the term 'proof of loss'" applicable to the homeowner's
insurance coverage in that case.  Mosley, 165 Or App at 310-11.  Here, the
Court of Appeals noted that, in contrast, in order to receive UM benefits, a
claimant had to meet the additional requirements imposed by ORS 742.504(5)(a),
which sets out the requirements for a "proof of claim." (2) 
The court stated that,  
"[b]ecause ORS 742.061 specifies the prerequisites for
recovery of attorney fees for all types of insurance policies and because the
legislature used the term proof of claim to describe the initiation of the UM
claims adjustment process, it has obviously chosen to use the terms
interchangeably."
165 Or App at 311.  According to the Court of Appeals, in the
UM context, "proof of loss" in ORS 742.061 is synonymous with
"proof of claim" in ORS 742.504(5)(a) and, consistent with that
statute, a "proof of loss" must be a written submission including the
"'full particulars' of the nature and extent of the insured's injuries,
treatment and other material details."  Id.  For the reasons that
follow, we find the Court of Appeals' analysis unpersuasive.
Although ORS 742.061 and ORS
742.504(5)(a) relate to UM claims, the legislature used two different terms to
describe the insured's submissions, indicating that it intended two different
meanings for each.  See PGE, 317 Or at 611 (use of term in one section
and not in another section of the same statute indicates a purposeful
omission); State v. Guzek, 322 Or 245, 265, 906 P2d 272 (1995) ("When
the legislature uses different terms in related statutes, we presume that the
legislature intended different meanings.").  Nothing in the text of the
statute indicates that the legislature intended that the definition of
"proof of loss" in ORS 742.061(2) and (3) be identical to the
definition of "proof of claim" in ORS 742.504(5)(a).  ORS
742.504(5)(a) describes what is required to recover UM benefits, not
attorney fees, when those benefits are wrongfully withheld.  Moreover, ORS
742.061 was originally enacted in 1919 as General Laws of Oregon, chapter 110,
sections 1 and 2.  That statute allowed for the recovery of attorney fees in
actions or suits on insurance policies "provided, that settlement is not
made within eight months from the date proof of loss is filed."  Although
renumbered and amended various times in the intervening years, the term "proof
of loss" has remained the same.  On the other hand, the legislature
enacted ORS 742.504, which sets out minimum requirements for UM insurance
policies, (3)
in 1967.  The fact that "proof of claim" postdates "proof of
loss" by nearly 50 years demonstrates the flaw in the Court of Appeals'
determination that the legislature somehow intended "proof of claim"
to describe what is required of an insured in making a "proof of
loss."
In our view, the meaning of
"proof of loss" in ORS 742.061 is as the court defined it in Dockins: 
Any event or submission that would permit an insurer to estimate its
obligations (taking into account the insurer's obligation to investigate and
clarify uncertain claims) qualifies as a "proof of loss" for purposes
of the statute.  The legislature has not altered that definition.  We turn now
to the question whether plaintiff submitted an adequate proof of loss for UM
benefits before February 28, 2002.
By January 11, State Farm was aware
that plaintiff was receiving medical treatment for injuries sustained in a car
accident with an uninsured motorist.  By January 20, plaintiff had completed
and submitted an "application for benefits," which stated that
"[t]he information provided will enable us to determine if you are
entitled to benefits under the policyholder's insurance contract," and
included an authorization for plaintiff's health care providers to provide
information to State Farm.  The application included a description of the
accident and the resulting injury to plaintiff, as well as contact information
for the doctor who treated her.  The form did not indicate that it was an
application for PIP benefits only and, indeed, State Farm did not have a
separate proof of loss form for UM/UIM claims.  Though it is State Farm's
practice to separate processing of PIP and UM/UIM claims and to not allow
UM/UIM claim representatives to see PIP file materials without authorization,
there is no evidence in the record that plaintiff was aware of that practice. 
We are not aware of any reason why that knowledge should be imputed to
plaintiff or of any reason to permit an insurer's unilaterally imposed
corporate practice to compromise an injured party's right to timely acceptance
of a claim under ORS 742.061.  Even if plaintiff stated on January 11 that she was
not sure whether she would pursue UM coverage, State Farm was aware that
plaintiff might want UM benefits, and State Farm was in the best position to
know to which coverage plaintiff was entitled.  Moreover, the letter State Farm
sent to the other driver on February 27, 2002, informing him that plaintiff was
making a claim for UM benefits, indicates that State Farm understood that
plaintiff was making a UM claim.  By January 20, plaintiff's written submission
satisfied the "proof of loss" requirements established in Dockins
in that it was sufficient to enable State Farm to estimate its obligations
regarding plaintiff's UM claim, or to do so after a reasonable investigation. 
That is all that is required under ORS 742.061.
 The decision of the Court of Appeals
is reversed.  The judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.
1. ORS 742.061 was also amended in 2003.  Or Laws 2003, ch 794, § 328. 
That amendment has no effect on our analysis of this case.  
2. ORS 742.504(5)(a) provides:
"As soon as practicable, the insured or
other person making claim shall give to the insurer written proof of claim,
under oath if required, including full particulars of the nature and extent of
the injuries, treatment and other details entering into the determination of
the amount payable hereunder.  The insured and every other person making claim
hereunder shall submit to examinations under oath by any person named by the
insurer and subscribe the same, as often as may reasonably be required.   Proof
of claim shall be made upon forms furnished by the insurer unless the insurer
fails to furnish the forms within 15 days after receiving notice of
claim."
3. ORS 742.504 provides, in part: 
"Every policy required to provide the
coverage specified in ORS 742.502 shall provide uninsured motorist coverage
that in each instance is no less favorable in any respect to the insured or the
beneficiary than if the following provisions were set forth in the
policy."