Case Title: Cotchan v. State Farm Fire & Casualty Co.

Citation: 

Docket Number: 941858

State: virginia

Court: Virginia Supreme Court

Date: 1995-09-15T00:00:00Z

Document:
Present:  Carrico, C.J., Compton, Stephenson, Whiting,
1 Lacy, 
Hassell, and Keenan, JJ. 
 
BARBARA E. COTCHAN, ET AL. 
 
 
OPINION BY JUSTICE ROSCOE B. STEPHENSON, JR. 
                                   September 15, 1995 
v.  Record No. 941858 
 
 
STATE FARM FIRE & CASUALTY COMPANY 
 
 
FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY 
 
Richard B. Potter, Judge 
 
 
The sole issue in this appeal is whether an exclusion in an 
automobile insurance policy respecting payment of medical expense 
benefits conflicts with and is prohibited by statutory law. 
 
State Farm Fire & Casualty Company (State Farm) filed a 
declaratory judgment proceeding against Barbara E. Cotchan, 
Wesley S. Cotchan, and Christopher J. Cotchan (collectively, the 
Cotchans), seeking a declaration that Christopher was not 
entitled to medical expense benefits under a family automobile 
insurance policy.  The parties stipulated the facts, and each 
party moved for summary judgment.  The trial court ruled in favor 
of State Farm, and the Cotchans appeal. 
 
The relevant facts, as stipulated, are as follows.  State 
Farm issued an automobile insurance policy to Barbara and Wesley 
Cotchan as the named insureds.  In accordance with Code § 38.2-
2201, the policy provides that State Farm will pay "to or on 
behalf of each injured person, medical expense benefits as a 
result of bodily injury caused by accident and arising out of the 
                     
     
1Justice Whiting participated in the hearing and decision of 
this case prior to the effective date of his retirement on August 
12, 1995. 
 
 
 
 
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ownership, maintenance or use of a motor vehicle as a motor 
vehicle."  The medical expense coverage provided protection not 
only to Barbara and Wesley, but also to other persons who are 
related to them by blood, marriage, or adoption and who are 
residents of the same household.  See Code § 38.2-2201.  An 
exclusion in the policy, however, provides that such insurance 
does not apply "to bodily injury sustained by the named insured 
or any relative while occupying any motor vehicle owned by or 
furnished or available for the regular use of such named insured 
or relative and which is not an insured motor vehicle."  The only 
vehicle listed in the policy was a 1987 Chevrolet Cavalier.   
 
On November 24, 1992, while the policy was in effect, 
Christopher sustained bodily injury and incurred medical expenses 
as a result of a motor vehicle collision which occurred while he 
was operating a motorcycle.  The motorcycle was owned by and 
registered to Christopher and was insured for liability by 
Progressive Insurance Company (Progressive).  Christopher had  
rejected medical expense coverage on his motorcycle under his 
policy with Progressive, and, therefore, the Progressive policy 
provided no medical expense benefits. 
 
Christopher filed a claim with State Farm requesting payment 
of medical bills incurred for the treatment of his injuries.  
State Farm, relying on the subject policy exclusion, denied 
medical expense coverage to Christopher because the motorcycle 
was not an insured motor vehicle under the provisions of its 
 
 
 
 
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policy. 
 
Code § 38.2-2201 provides, in relevant part, that an insurer 
shall provide medical expense coverage "(i) to persons occupying 
the insured motor vehicle; and (ii) to the named insured and, 
while resident of the named insured's household, the spouse and 
relatives of the named insured while in or upon, entering or 
alighting from or through being struck by a motor vehicle while 
not occupying a motor vehicle." 
 
The Cotchans contend that Code § 38.2-2201 mandates medical 
expense coverage for the resident relatives of the named insured 
while in or upon any motor vehicle.  The Cotchans assert, 
therefore, that the subject policy exclusion is invalid because 
it attempts to exclude coverage that is mandated by Code § 38.2-
2201. 
 
State Farm asserts, on the other hand, that Code § 38.2-2201 
does not prohibit reasonable exclusions of medical expense 
coverage that are clear and unambiguous.  State Farm opines that 
the subject policy exclusion is reasonable, clear, and 
unambiguous. 
 
We have considered the validity of policy provisions that 
excluded medical expense coverage in two recent cases.  In State 
Farm Mutual Auto. Ins. v. Gandy, 238 Va. 257, 258, 383 S.E.2d 
717, 717 (1989), the insurer agreed to pay all reasonable medical 
expenses for the named insured for bodily injury caused by 
accident through being struck by an automobile or by a trailer of 
 
 
 
 
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any type.  The insurance policy further provided, however, that 
it "does not apply . . . to bodily injury . . . sustained by the 
named insured . . . through being struck by . . . a farm type 
tractor or other equipment designed for use principally off 
public roads, while not upon public roads."  Id.  The insured was 
injured when his foot was "run over" by a forklift while he was 
standing on private property.  Id. 
 
In Gandy, like the present case, the insured contended that 
the exclusion was invalid because it conflicted with the minimum 
requirements imposed by statute.  We rejected the insured's 
contention and held that the exclusion was valid.  In so holding, 
we noted that the statute did not address or prohibit policy 
exclusions and that the exclusion did not conflict with the 
statutory provisions.  Id. at 260, 383 S.E.2d at 718-19.  We 
further stated that an exclusion is valid if it is reasonable, 
clear, and unambiguous.  Id. at 261, 383 S.E.2d at 719. 
 
In Baker v. State Farm Mut. Auto Ins., 242 Va. 74, 75, 405 
S.E.2d 624, 624 (1991), the insured, while operating a bus in the 
course of his employment, sustained a back injury "when the 
steering on the bus locked up."  The insured received workers' 
compensation benefits for his medical expenses, and also sought 
to recover a part of his medical expenses under his automobile 
insurance policy.  Id. at 75-76, 405 S.E.2d at 625.  The policy, 
however, provided that the medical expense benefits coverage did 
not apply "to bodily injury sustained by any person to the extent 
 
 
 
 
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that benefits therefor are in whole or in part payable under any 
[workers'] compensation law."  Id. at 75, 405 S.E.2d at 624.  The 
insurer, therefore, declined to pay under the policy, and the 
insured contended that the exclusion was invalid because it was 
not authorized by Code § 38.2-2201.  Id. at 76, 405 S.E.2d at 
625. 
 
Relying upon Gandy, we held that "a clear and unambiguous 
provision reasonably excludes medical payments coverage where 
those benefits are payable under a workers' compensation 
statute," and that, as in Gandy, the "`statute does not address, 
or prohibit, policy exclusions.  Nor is there a conflict or 
inconsistency between the statutory provisions and the policy 
exclusion.'"  Id. at 76, 405 S.E.2d at 625 (quoting Gandy, 238 
Va. at 260, 383 S.E.2d at 719).
2
 
We find the rationale in Gandy and Baker controlling in the 
present case.  The policy provision excludes coverage for the 
named insured or any relative while occupying a motor vehicle 
owned by or available for the regular use of the named insured or 
relative and "which is not an insured motor vehicle."  Nothing in 
Code § 38.2-2201 prohibits such exclusion, and the exclusion is 
clear and unambiguous.  Moreover, as State Farm argues, the 
                     
     
2In Gandy, the insurer voluntarily provided medical expense 
coverage without a specific request by the insured.  Therefore, 
our analysis proceeded under Code § 38.2-124(B)(1).  238 Va. at 
259, 383 S.E.2d at 718.  In the present case, medical expense 
coverage was required to be provided under the provisions of Code 
§ 38.2-2201.  In Baker, we held that this distinction makes no 
difference.  242 Va. at 76-77, 405 S.E.2d at 625. 
 
 
 
 
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exclusion of substantial risks that are unknown to it and for 
which it receives no premium are clearly reasonable. 
 
Accordingly, we will affirm the trial court's judgment. 
 
Affirmed. 
CHIEF JUSTICE CARRICO, with whom JUSTICE LACY and JUSTCE KEENAN 
join, dissenting. 
 
 
I would reverse.  The majority acknowledges that the policy 
exclusion involved in this case is valid only if there is no 
conflict or inconsistency between the exclusion and statutory 
provisions.  As pertinent here, Code § 38.2-2201(A) provides that 
medical expense coverage shall be extended:  "(i) to persons 
occupying the insured motor vehicle; and (ii) to the named 
insured and, while resident of the named insured's household, the 
spouse and relatives of the named insured while in or upon, 
entering or alighting from . . . a motor vehicle." 
 
In other words, the coverage provided by (i) is extended to 
all persons occupying the insured vehicle while the coverage 
provided by (ii) is extended only to the named insured and to his 
or her resident spouse and relatives.  However, the coverage 
under (ii) is extended while the persons specified are occupying 
a motor vehicle, meaning any motor vehicle, whether insured or 
not.  Yet, State Farm's policy exclusion would deny coverage to 
the persons specified in (ii) while occupying a vehicle that is 
not insured.  Hence, there is a direct conflict or inconsistency 
between the policy exclusion and the statute, and the exclusion 
cannot stand.