IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

GERALD SCHEEL, 

Plaintiff, 

v. 

GUIDEONE MUTUAL INSURANCE 

COMPANY, an Iowa Corporation 

Defendant. 

ACOSTA, Magistrate Judge: 

Civ. No. 3:15-cv-01112-AC 

OPINION & 

ORDER 

In 2013, Plaintiff Gerald Scheel ("Scheel") was involved in an automobile accident in British 

Columbia, Canada which caused personal injury and required him to incur significant medical 

expenses. Scheel filed a claim with his automobile insurer, Defendant GuideOne Mutual Insurance 

Company ("GuideOne"). GuideOne covered portions ofScheel's claim, but denied compensation 

for medical expenses relating to back surgery Scheel underwent following the accident. Scheel filed 

this lawsuit against GuideOne for breach of the insurance policy. 

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The parties have now filed cross-motions for swnmary judgment. The motions tum on two 

points of contention. First, the parties disagree whether the limit of liability for Scheel' s claim is 

$25,000 or Can$150,000. Second, the parties disagree whether Scheel's back surgery was a 

"reasonable and necessary" result of the automobile accident which gave rise to his insurance claims. 

After carefully reviewing the record, the court concludes Scheel's Motion for Partial Swnmary 

Judgment is granted, and GuideOne's Motion for Summary Judgment is denied. 

Factual Background 

I. The Policy and the Power of Attorney and Undertaking 

Scheel purchased an automobile insurance policy ("the Policy") from GuideOne in 2002. 

(Declaration of Gerald Scheel in Support of Motion for Partial Smnmary Judgment ("Scheel Deel.") 

ii 2.) The Policy provides that GuideOne "will pay compensatory damages for 'bodily injury' or 

'property damage' for which any 'insured' becomes legally responsible because of an auto accident." 

(Declaration of James D. Vick in Support of Plaintiffs Motion for Partial Summary Judgment 

("Vick Deel.") Ex. 1 at 10.) Scheel frequently traveled to Canada for work and bought a policy with 

GuideOne specifically so the policy would cover him while traveling. (Scheel Deel. ii 2.) The Policy 

provides that the "policy territory" is the Untied States, Puerto Rico, and Canada. (Vick Deel. Ex. 

1at27.) The Policy dictates that the limit ofliabilityis $25,000 as reflected in the declarations. (Id. 

at 12.) However, it goes on to provide: 

OUT OF STATE COVERAGE 

If an auto accident to which this policy applies occurs in any state or province other 

than the one in which "your covered auto" is principally garaged, we will interpret 

your policy for that accident as follows: 

A. If the state or province has: 

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1. A financial responsibility or similar law specifying limits of liability for 

"bodily injury" or "property damage" higher than the limit shown in the 

Declarations, your policy will provide the higher specified limit. 

2. A compulsory insurance or similar law requiring a nomesident to 

maintain insurance whenever the nomesident uses a vehicle in that 

state or province, your policy will provide at least the required 

minimum amounts and types of coverage. 

(Id. at 13.) This language is consistent with the law of British Columbia, Canada, which sets 

minimum liability limits of Can$150,000 for personal injury protection ("PIP") insurance. Insurance 

(Vehicle) Act B.C. Reg. 447/83 Sched. 3, s.3(2) (West 2015). 

The Policy also contained an endorsement specific to Oregon which articulated the bounds 

of Scheel's personal injury protection ("PIP") insurance (the "Endorsement"). (Vick Deel. Ex. 1 

at 46-51.) That Endorsement, which amends the broader Policy, obliges GuideOne to pay"personal 

injury protection benefits to an 'insured' who sustains bodily injury" so long as that injury is "caused 

by an accident" and arises out of"the ownership, maintenance, or use" of an automobile. (Id. at 4 7.) 

The Endorsement obliges GuideOne to pay"[ a ]II reasonable and necessary expenses incurred within 

one year from the date of the accident for medical, hospital, [and] surgical" services. (Id.) The 

Endorsement makes no mention of the "OUT OF STATE COVERAGE" provision, but contains its 

own "LIMIT OF LIABILITY" section which limits GuideOne's liability to the PIP limit of$25,000 

described in the Declarations. (Id. at 49.) Finally, the Endorsement specifically provides that any 

"amounts paid under [the] endorsement to an 'insured' shall reduce any amount that person may be 

entitled to recover for the same damages under Part A of this policy." (Id at 49.) 

In an attempt to comply with Canadian laws governing minimum limits on PIP liability, 

GuideOne filed a "Power of Attorney and Undertaking" (the "PAU") in 2001. (Vick Deel. Ex. 2.) 

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The PAU appoints the Superintendent ofinsurance for each province and territory of Canada as an 

agent to receive service of process on behalf of GuideOne. (Id.) The PAU also serves as 

GuideOne's promise not "to set up any defence to any claim, action, or proceeding" which it could 

not raise had the policy at issue been negotiated under and consistent with the laws "of the Province 

or Territory of Canada in which such an action or proceeding may be instituted .... " (Id.) 

Guideone also promises to pay all judgments "rendered against it or its insured by a Court in such 

Province or Territory" up to the greater of: (I) the limit ofliability established by the insurance 

policy; or (2) "the minimum for that kind or class of coverage" in the Province or Territory in which 

the case is brought. (Id.) 

IL Scheel's Injurv and the Claims Process 

On July 25, 2013, Scheel was driving his car in British Columbia, Canada when a wheel 

came off of another vehicle and struck Scheel's car. (Scheel Deel. ii 3.) Following the accident, 

Scheel experienced tightness and pain in his neck, shoulders, and buttocks. (Id. at ii 6.) He also 

began experiencing bladder-control problems. (Declaration of Christine R. Olson ("Olson Deel.") 

Ex. 2, 3.) 

Even before the accident, Scheel had experienced chronic back pain for years. In 1996, 

Scheel underwent surgery to fuse his LS and S 1 vertebrae. (Id.) That surgery failed and a second 

surgery was performed in 2007. (Id.) Scheel had a third back surgery in 2010 to correct a 

malfunctioning screw inserted during the 2007 procedure. (Id. at ii 4.) The surgeries resolved 

Scheel's pain, but resulted in a "mild foot drop," a gait abnormality which causes weakness or 

paralysis in the muscles of the foot or ankle. (Id.) In 2012, Scheel had an MRI on his lower back 

which revealed no problem which would have required treatment or surgery. (Id. at ii 5.) 

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Immediately after the accident, however, a new MRI revealed a herniation in his L2-L3 disc. 

(Olson Deel. Ex. 1 at 1.) He first sought treatment by Dr. Stephen Chaffee, who opined that he felt 

Scheel's low-back pain was "reasonably attributed to the [motor vehicle accident] in July." (Id.) 

In November 2013, Scheel met with neurosurgeon Dr. Jerry L. Hubbard, MD ("Dr. Hubbard") to 

discuss the possibility of surgery. (Olson Deel. Ex. 2.) Dr. Hubbard similarly diagnosed Scheel with 

a herniated lumbar disc, but opined that it was "unclear that the accident precipitated this problem. 

It may be secondary to underlying degenerative disc disease." (Id. at 3.) Upon receiving Dr. 

Hubbard's analysis, Scheel sought a second opinion. (Olson Deel. Ex. 3.) 

In February 2014, Scheel was examined by another neurosurgeon, Dr. Serge Obukhoff, M.D. 

("Dr. Obukhoff'). (Olson Deel. Ex. 4.) In his February 6, 2014 report, Dr. Obukhoffrecounts 

Scheel's history of back problems and spinal surgeries. (Id.) He specifically discusses the 2012 

MRI, which showed no disc abnormality at the L2-L3 disc. (Id.) Dr. Obukhoff diagnosed Scheel 

with an "L2-3 new disc herniation" and issued an "urgent request for surgery authorization." (Id. 

at 2-3 .) In a subsequent letter, Dr. Obukhoff contrasted Scheel's 2012 MRI imaging, which showed 

no abnormality in the L2-L3 disc, with the post-accident MRI, which showed a "large disc 

herniation" at L2-L3. (Olson Deel. Ex. 12 at 1.) Dr. Obukhoff opined that the "need for surgery at 

L2-L3 arose due to the 7 /25/13 motor vehicle accident. It is medically improbable that a significant 

change would occur from 2012 to 2013 without a significant injury." (Id. at 2.) 

On May 1, 2014, Scheel's primary health insurer, Moda Health ("Moda") sent Scheel a 

letter explaining that two large bills associated with Scheel' s treatment were pending because Moda 

was under the impression GuideOne would cover them. (Olson Deel. Ex. 7 at.) Through his 

attorney, Scheel contacted GuideOne in June 2014 to discuss the status of his claims. (Hazard Deel. 

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if 11.) GuideOne represented that as of that date, it had paid $7,133 and that Scheel's PIP liability 

limits were $25,000. (Id.) Scheel instructed his healthcare providers, and specifically the provider 

of his spinal surgery, to send all bills to GuideOne for payment. (Id. at if 8.) 

On June 18, 2014, GuideOne sent a letter to Scheel's treatment providers which incoil'ectly 

stated that Scheel's PIP liability limits of$25,000 had been exhausted, and it instructed the provider 

to bill Moda. (Declaration of Laurie Alt ("Alt Deel.") Ex. 6.) On June 27, 2015, just days after 

Scheel filed this lawsuit, GuideOne sent Scheel a letter explaining that the June 18, 2014 letter was 

in error and advising Scheel that it would not reimburse Scheel for the cost of the back surgery 

because it "was not related to the accident of July 25, 2013 .... " (Alt Deel. Ex 7.) Since then, 

GuideOne has tendered no additional payment to Scheel, Moda, or Scheel' s healthcare providers. 

The most recent billing summary available on the record shows that GuideOne paid $7,448.00 on 

total charges of $96,904.33. (Vick Deel. Ex. 3 at 2.) GuideOne contends it has paid $10,850.78. 

(Hazard Deel. if 15.) 

Legal Standard 

A court should grant a motion for summary judgment "if the movant shows that there is no 

genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." 

FED. R. C1v. P. 56(a). The moving party bears the burden of establishing that no issue of fact exists 

and that the nonmovant cannot prove one or more essential elements of a claim or defense. Celotex 

Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the movant meets his burden, the nonmovant must 

"go beyond the pleadings []by her own affidavits ... [to] designate specific facts showing that there 

is a genuine issue for trial." Id. (internal quotation marks omitted). On summary judgment, the court 

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is bound to view all facts in a light most favorable to the nonmovant and must draw all justifiable 

inferences in the nonmovant's favor. Narayan v. EGI, Inc., 616 F.3d 895, 899 (9th Cir. 2010). 

Discussion 

The parties have filed cross-motions for summary judgment. In his Motion for Partial 

Summary Judgment, Scheel asks the court to find that the insurance limits established in the P AU 

and under British Columbia, Canada law apply to set his insurance limit at Can$150,000 instead of 

the $25,000 limit which GuideOne argues applies. GuideOne moves for summary judgment on 

Scheel's claim in its entirety, arguing no reasonable jury could find that the medical expenses Scheel 

incurred were related to and caused by the automobile accident. 

I. Scheel's Motion for Partial Summarv Judgment 

Scheel moves for partial summary judgment and argues that he is entitled to reimbursement 

up to a limit ofCan$150,000 and not the $25,000 limit claimed by GuideOne. His argument is twofold. First, Scheel contends the PAU binds GuideOne to abide by the minimum liability established 

under Canadian law. Second, he argues that, even without applying the PAU, the language of the 

policy requires GuideOne to reimburse him up to the higher limit of liability. GuideOne argues the 

lower limit applies because, under the plain text of the Policy and the PAU, the higher minimum 

liability limits apply only to lawsuits filed in Canadian court. GuideOne also argues that the lower 

limit applies because Scheel was not at fault in the accident, and the liability provisions of the Policy 

are not implicated. The court will first analyze the effect of the PAU. Thereafter, the court will 

examine the language of the Policy to determine which minimum-liability limit applies. 

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A. ThePAU 

The parties disagree about which law the court should apply to interpretthe PAU. In Oregon, 

OR. REV. STAT.§ 15.360 governs choice-of-law decisions. That section provides: 

The most appropriate law is determined by: 

(1) Identifying the states that have a relevant connection with the transaction or the 

parties, such as the place of negotiation, making, performance or subject matter of 

the contract, or the domicile, habitual residence or pertinent place of business of a 

party; 

(2) Identifying the policies underlying any apparently conflicting laws of these states 

that are relevant to the issue; and 

(3) Evaluating the relative strength and pertinence of those policies in: 

(a) Meeting the needs and giving effect to the policies of the interstate and 

international systems; and 

(b) Facilitating the planning of transactions, protecting a party from undue 

imposition by another party, giving effect to justified expectations of the 

parties concerning which state's law applies to the issue and minimizing 

adverse effects on strong legal policies of other states. 

OR. REV. STAT. § 15.360. However, before the court can consider the factors articulated in the 

statute, it must first make the threshold determination of whether there is "a material difference 

between Oregon substantive law and the law of the other forum." Waller v. Auto-Owners Ins. Co., 

174 Or. App. 471, 475 (2001). Ifthere is no difference, or there is merely a "false conflict," Oregon 

law applies. Id. Thus, the court must review the law of Oregon and Canada to determine whether 

there is a conflict in the law interpreting the PAU. 

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1. Oregon Law 

Scheel contends that, even under Oregon law, the P AU conclusively establishes that 

GuideOne agreed to provide its policyholders with liability limits commensurate with the law of the 

territoty or province of Canada in which its policyholders are driving. GuideOne posits thatthe P AU 

has no effect on its legal duties in actions brought in any jurisdiction outside of Canada, and is 

relevant to its duties only in cases brought in the court of a province or territory of Canada. 

"The primary and governing rule of the construction of insurance contracts is to ascertain the 

intention of the parties." Totten v. New York Life Ins. Co., 298 Or. 765, 770 (1985). If the insurance 

policy does not define the term or phrase in question, courts resort to a three-step analysis to 

determine the parties' contractual intent. Hoffman Constr. Co. v. Fred S. James & Co., 313 Or. 464, 

469-471 (1992). First, "[i]f the phrase in question has a plain meaning, we will apply that meaning 

and conduct no further analysis." Holloway v. Republic Indem. Co., 341 Or. 642, 650 (2006). 

Second, "[i]fthe phrase in question has more than one plausible interpretation ... we examine the 

phrase in light of the context in which that [phrase] is used in the policy and the broader context of 

the policy as a whole." Id. Third, if any ambiguity remains, the court will construe the disputed 

language in favor of the insured. Id. 

The PAU serves several purposes. First, it appoints the "Superintendents of Insurance" of 

British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince 

Edward Island, Newfoundland, Quebec, and Yukon Territory, the Northwest Territories and 

Territory ofNunavut" as GuideOne's agent and authorizes those bodies to "accept service of notice 

or process on its behalf' for any legal "action or proceeding" arising out of an automobile accident 

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occuTI'ing in Canada. Second, the PAU serves as GuideOne's promise to abide by the limitations 

and responsibilities articulated in sections A through D. 

Section C, the only portion of the PAU relevant to the court's analysis, contains two 

promises. First, GuideOne promises: 

Not to set up any defence to any claim, action, or proceeding, under a motor-vehicle 

liability insurance contract entered into by it, which might not be set up ifthe contract 

had been entered into in, and in accordance with the laws relating to motor vehicle 

liability insurance contracts or plan of automobile insurance of the Province or 

TeTI'itory of Canada in which such action or proceeding may be instituted .... 

(Scheel Deel. Ex. 2.) The plain text of this clause shows that it serves as a promise not to raise a 

defense to a legal challenge to the denial of a claim to the extent that defense is inconsistent with the 

laws of the "province or TeTI'itory of Canada in which such [legal] action" has been brought. The 

final portion of this section shows that GuideOne's promise applies only in cases brought in a 

teTI'itory or province of Canada and would not apply to cases filed in this jurisdiction. 

Moreover, GuideOne's promise "[n]ot to set up any defence" inconsistent with the laws of 

the Canadian forum does not substantively effect GuideOne's duties under the Policy. Instead, it 

serves as a waiver of certain legal defenses which would available to GuideOne under the Policy had 

the action been brought in another jurisdiction. The court notes that no policyholder is party to the 

PAU-only GuideOne signed the PAU and the language of that document shows that the promises 

contained therein run from GuideOne to the governments of the provinces and teTI'itories of Canada. 

In the second clause of Section C, GuideOne promises "to satisfy any final judgment ... by 

a Court in such Province or Territory ... up to the greater of' the liability limits articulated in the 

policy or the minimum limits of coverage "required by the laws of the Province or TeTI'itory" in 

which the judgment is rendered. This portion of Section C further supports the court's conclusion 

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that the P AU applies only to cases brought in Canada because it provides that the minimum liability 

limit should be supplied by the province or territory in which the judgment was rendered and not the 

laws of the territory or province in which the accident occurred. Thus, this section could only apply 

to a case brought in Canada and governed by the laws of Canada. Therefore, under the plain-text 

interpretation required by Oregon law, the P AU would not affect GuideOne' s duties under the Policy 

and would not affect GuideOne's limits of liability in this case because it was brought outside of 

Canada. 

2. British Columbia Law 

The laws of British Columbia and Oregon are similar: the court seeks to give effect to the 

"express terms of the contract." Diotte v. Ins. Corp. of British Columbia, 2000 BCSC 1799 if 43 

[2000]. "The golden rule is that the literal meaning must be given to the language of the contract, 

unless this would result in absurdity. Words of ordinary use in contract must be construed in their 

ordinary and natural sense." Id. (quoting The Law of Contracts, 4d (Toronto: Carswell, 1999), at 

p. 478). 

GuideOne argues that there is no conflict of law between Oregon and Canada because, 

similar to Oregon law, the ultimate aim of Canadian law is the determine the intent of the parties 

according to the plain text of the policy. Thus, according to GuideOne, the court's analysis should 

stop here and the court should apply Oregon law to interpret the PAU. However, the court is not 

convinced that the analysis must end here, as significant caselaw exists in Canada interpreting the 

effect of PAUs. Many of those cases have come to different conclusions about how PAUs apply 

than the interpretation which would be required under Oregon's three-step interpretive method. 

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In determining the effect of PA Us, Canadian courts have gone beyond the mere text of the 

P AU s and analyzed the practicalities surrounding their application. First, although the plain text of 

the PAU appears to be an agreement only between an insurance company and the various Canadian 

provincial governments, courts in Canada have held that the PAU serves as a contract running: 

at a minimum [to], (!) every person with whom [the insurer] has a contract of 

insurance; (2) every person who qualifies as an insured under a contract of insurance 

between [the insurer] and another party, including the plaintiffs; (3) the 

Superintendent [of Financial Institutions with whom the PAU is filed]; and (4) all 

other insurers who carry on business in [British Columbia]. 

Id at '1[ 3 9. Moreover, courts in Canada have determined that the mandatory insurance requirements 

in cases like this one are supplied by the forum in which the accident took place and not the forum 

in which the case was brought. Wawanesa Mut. Ins. Co. v. Lindblom, 2001ABCA102, 'l['lf 40-52 

[2001]. 

In Wawanesa, a policyholder defendant who resided in the province of Alberta purchased an 

insurance policy from the plaintiff, her insurer. Id. The defendant was involved in an automobile 

accident in British Columbia. Id. at 'I[ 4. The plaintiff filed an insurance claim to cover her personal 

injuries in the amount of the minimum PIP limit established under British Columbia law, but the 

insurer denied her claim. Id. The insurer argued that the liability limits of Alberta applied, which 

were much lower than those of British Columbia. Id. Before the policyholder could file a lawsuit, 

the insurer filed a claim for declaratory judgment in Alberta and promptly filed a PAU nearly 

identical to the PAU in this case. Id. at 'I[ 7. The policyholder filed her own lawsuit in British 

Columbia, but the insurer successfully moved to stay the British Columbia suit until the Alberta 

claim was resolved. Id. at 'lf'lf 7-10. 

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In the Alberta lawsuit, the policyholder argued in a pretrial motion that under the P AU and 

relevant statutes, British Columbia law supplied the applicable liability limit. Id. aqr 13. The court 

disagreed and, after a stipulated-facts trial, entered a judgment in favor of the insurer. Id. The 

policyholder appealed, and the court of appeals reversed. Id. at ir 61. The court of appeals undertook 

a choice-of-law analysis similar to anErie analysis, and determined British Columbia law must apply 

to prevent an insurer from forum shopping by racing to file a declaratory judgment in a jurisdiction 

with more favorable law. Id. at irir 49, 55-59. 

Under law, the court must resolve two issues. First, whether the PAU is a contract between 

the insured and the insurer to pay the minimum PIP limits established by Canadian law. Second, 

whether, regardless of where Scheel brought his claim, the province in which the accident occurred 

supplies the applicable PIP liability limit. As demonstrated by the preceding analysis, the court 

would come to starkly different conclusions were it to apply Oregon law. Despite GuideOne's 

contention that no conflict exists between Oregon and Canadian law, it is clear there is a conflict of 

law. Therefore, the court must next determine which law to apply. 

3. Relative Interests 

Upon examination of the relative laws of contract interpretation, specifically interpretation 

of PA Us, the court concludes an actual conflict exists between Oregon law and Canadian law. Thus, 

the court must determine which jurisdiction has the "most significant interest" in having its law 

applied. Casey v. Manson Const. & Eng'g Co., 247 Or. 274, 278-79 (1967); Citizens First Bankv. 

Intercontinental Express, Inc., 77 Or. App. 655, 657-58 (1986). In determining which jurisdiction 

has the "most significant relationship," Oregon courts have cited favorably the approach articulated 

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in the Second Restatement, Conflict of Laws. Casey, 247 Or. at 278. Under that approach, the court 

should analyze the following factors: 

(a) the place of contracting, 

(b) the place of negotiation of the contract, 

( c) the place of performance, 

(d) the location of the subject matter of the contract, and 

(e) the domicile, residence, nationality, place of incorporation and place of business 

of the parties. 

RESTATEMENT (SECOND) CONFLICT OF LA ws § 188(2)(AM. LA w INST. 1971 ). The Restatement also 

commands that "[t]hese contacts are to be evaluated according to their relative importance with 

respect to the particular issue." Id. 

Here, nearly all of the factors weigh in favor of applying the law of Canada. The PAU was 

executed and negotiated between Canada and GuideOne. Further, the P AU' s subject matter pertains 

exclusively to the minimum liability limits to which GuideOne will be held while its policyholders 

operate automobiles in Canadian territory. The place of performance is also Canada, as the 

heightened minimum liability limits apply only while GuideOne's policyholders operate insured 

vehicles on Canadian highways. Although the Policy at issue in this case was issued in Oregon, 

Oregon has little to no connection to the PAU or its purpose. Thus, the law of British Columbia 

should apply to determine the effect of the PAU. Because Canadian courts have interpreted PAUs 

to hold insurers to the minimum liability limits of the territory in which the accident occurs, the PAU 

requires that GuideOne be held to the higher minimum liability limit of Can$150,000. 

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B. The Policy 

Even if the PAU was inapplicable, however, the language of the Policy dictates that 

GuideOne be held to the higher limit of PIP liability. Neither party contends Canadian law applies 

to interpret the Policy. Therefore, the court will apply Oregon's three-step analysis for interpreting 

insm·ance contracts. 

At issue here is the intersection of several policy provisions. Primarily, the provisions 

governing out of state coverage and the PIP Endorsement. Part A provides that GuideOne "will pay 

compensatoty damages for 'bodily injury' or 'property damage' for which any 'insured' becomes 

legally responsible because of an auto accident. Damages include prejudgment interest awarded 

against the 'insured'." (Scheel Deel. Ex. 1 at 10.) Later in Part A, the Policy explains GuideOne's 

"LIMIT OF LIABILITY": 

The limit of liability shown in the Declarations for each person for "Bodily Injury" 

liability is our maximum limit of liability for all damages, including damages for 

care, loss of services or death, arising out of "bodily injury" sustained by any one 

person in any one auto accident. Subject to this limit for each person, the limit of 

liability shown in the Declarations for each accident for "bodily injury" resulting 

from any one auto accident. 

(Id. at 12.) The Policy defines "bodily injmy" as "bodily injmy, sickness or disease, including death 

that results at any time." (Id. at 46.) Finally, under the heading "OUT OF STATE COVERAGE," 

(the "Out of State Coverage Clause") Part A provides: 

If an auto accident to which this policy applies occurs in any state or province other 

than the one in which "your covered auto" is principally garaged, we will interpret 

your policy for that accident as follows: 

A. If the state or province has: 

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1. A financial responsibility or similar law specifying limits of liability for "bodily 

injury" or "property damage" higher than the limit shown in the Declarations, your 

policy will provide the higher specified limit. 

2. A compulsory insurance or similar law requiring a nonresident to maintain 

insurance whenever the nonresident uses a vehicle in that state or province, your 

policy will provide at least the required minimum amounts and types of coverage. 

The Endorsement provides that GuideOne "will pay personal injury protection benefits to an 

"insured" who sustains 'bodily injury'." (Scheel Deel. Ex. 1 at 47.) The endorsement defines 

"insured" as the policyholder, a member of the policyholder's family or "any other person who 

sustains 'bodily injury"' while using the policyholder's car or who was"[ a] 'pedestrian' struck by" 

the policyholder's vehicle. 

The court concludes the plain text of the Out of State Coverage Clause unambiguously 

applies to claims for personal injury. GuideOne is correct that the Endorsement articulates different 

limits of liability than those which apply to claims filed under Part A. However, the Out of State 

Coverage Clause specifically provides that it will pay the minimum limit for "bodily injury" 

established by the foreign state's law. The Endorsement promises to pay "personal injury protection 

benefits to any 'insured' who sustains 'bodily injury,"' and specifically provides medical expenses 

as one benefit recoverable under the Endorsement. Because the Endorsement and the Out of State 

Coverage Clause both definethe policyholder's right with reference to coverage for "bodily injury," 

the court concludes both sections objectively manifest the parties' intent for the Out of State 

Coverage Clause to supply the liability limits for PIP claims made after an accident occurring in a 

foreign state. Moreover, the Out of State Coverage Clause provides that if the jurisdiction in which 

the insured is driving has a "compulsory insurance or similar law requiring a nonresident to maintain 

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insurance whenever the nonresident uses a vehicle in that state or province, your policy will provide 

at least the required minimum amounts and types of coverage." In this case, British Columbia, 

Canada requires that all drivers maintain minimum limits of PIP coverage at a level ofCan$150,000. 

Thus, the plain text of the Policy promises Scheel that GuideOne will supply him with PIP coverage 

in the amount of Can$150,000 in the event he is involved in an automobile accident in British 

Columbia, Canada. 

GuideOne argues the Out of State Coverage Clause is contained within Part A and not the 

Endorsement, thus it applies only to claims under Part A. It argues further that Part A applies only 

to claims by third parties injured by an accident for which the policyholder is at fault. GuideOne's 

argument is not persuasive for two reasons. First, GuideOne's argument is based on the context in 

which this Policy provision lies. At step-one of the Policy interpretation analysis, the court may 

consider only the plain text of the Policy language. 

Second, even if the plain text of the relevant sections was ambiguous and the court 

considered the context in which those sections lie, the language of the Policy and the intent of the 

parties remains ambiguous. The insuring agreement in Part A promises, in imprecise language, that 

GuideOne will pay "compensatory damages for 'bodily injury' or 'property damage' for which any 

'insured' becomes legally responsible because of an auto accident." Reasonable minds could 

disagree as to whether Part A covers claims for personal injury by the policyholder. GuideOne's 

interpretation that this section applies to third-party claims for which the policyholder is at fault is 

a reasonable one. But because an injured individual becomes "legally responsible" to pay medical 

bills resulting from an accident for which the insured was not at fault, it is equally reasonable to 

interpret this clause to cover claims made by the policyholder to reimburse the policyholder for his 

OPINION & ORDER - 17 [RMD] 

Case 3:15-cv-01112-AC Document 28 Filed 03/24/16 Page 17 of 23
or her medical bills for which the policyholder "becomes legally responsible" after the care provider 

issues a bill to the plaintiff. 

The insuring agreement also defines coverage with reference to "bodily injury," a term 

defined in the Endorsement and used in the Endorsement to articulate the scope of the policyholder's 

PIP benefits. This interpretation is even more reasonable given the language of the Endorsement, 

which contemplates a situation where an individual could recover under both Part A and the 

Endorsement. The "LIMIT OF LIABILITY" section of the Endorsement provides: 

1. The limits of liability shown in the Schedule or Declarations for Personal Iajury 

Protection Coverage are the most we will pay to an "insured" as the result of any one 

"motor vehicle accident[.]" 

4. Any amounts paid under this endorsement to an "insured" shall reduce any amount that 

person may be entitled to recover for the same damages under Part A of this policy. 

(Vick Deel. Ex. 1 at 49.) It is possible the parties intended only third-parties to receive duplicative 

recovery under the Policy, as the Endorsement defines "insured" to include the policyholder, the 

policyholder's family, and pedestrians "struck by a 'motor vehicle,"' but the language used 

throughout the contract does not make that clear. (Id. at 47.) Analyzing the context in which the 

relevant sections lie, including the context GuideOne argues the court should consider, does not 

disambiguate the language of the Endorsement and the Out of State Coverage Clause as those 

sections apply to Scheel's claim. Even if the plain-text of the relevant sections was ambiguous at 

step-one, those sections would remain ambiguous after analyzing their context at step-two, and the 

court would be compelled to interpret the Policy in Scheel' s favor on step-three. Therefore, the court 

concludes that under the language of the Policy, the Can$150,000 limit established by British 

Columbia applies to Scheel's claim, and Scheel's motion for partial summary judgment is granted. 

OPINION & ORDER- 18 [RMD] 

Case 3:15-cv-01112-AC Document 28 Filed 03/24/16 Page 18 of 23
II. GuideOne's Motion for Summary Judgment 

GuideOne filed its own motion for summary judgment and argues that it is not liable to 

Scheel for the cost of his back surgery because no reasonable jury could find Scheel's back surgery 

was a "reasonable and necessary" result of his automobile accident. Scheel contends there is expert 

evidence suggesting his back injury resulted from the car accident and that the surgery was a 

"reasonable and necessary" remedial procedure to correct his injury. Thus, according to Scheel, 

genuine issues of material fact preclude summary judgment in GuideOne's favor. 

A. Evidentiary Objections 

Before the court considers the merits of GuideOne' s motion for summary judgment, it must 

address an evidentiary objection GuideOne raises in its Reply. GuideOne contends Scheel failed to 

authenticate and failed to adequately lay the foundation to introduce Scheel's medical records, 

including the medical opinion of Dr. Obukhoff. 

Federal Rule of Civil Procedure 56( c )(2) provides that,"[ a] party may objectthat the material 

cited to support or dispute a fact cannot be presented in a form that would be admissible in 

evidence." Rule 56 continues: 

If a paity fails to properly support an assertion of fact or fails to properly address 

another party's assertion of fact as required by Rule 56(c), the court may: 

(1) give an opportunity to properly support or address the fact; 

(2) consider the fact undisputed for purposes of the motion; 

(3) grant summary judgment, if the motion and supporting materials -

including the facts considered undisputed-show that the movant is entitled 

to it; or 

( 4) issue any other appropriate order. 

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Case 3:15-cv-01112-AC Document 28 Filed 03/24/16 Page 19 of 23
FED. R. C1v. P. 56(e). For evidence to be "properly supported" and thus admissible, it must be 

authenticated. FED. R. EVID. 901. "To satisfy the requirement of authenticating or identifying an 

item of evidence, the proponent must produce evidence sufficient to support a finding that the item 

is what the proponent claims it is." FED. R. EVID. 90l(a). The Ninth Circuit has taken a plain-text 

interpretation of Rule 56( c )(2), and held that evidence may be considered at the summary judgment 

stage where the evidence "could be presented in an admissible form at trial .... " Fraser v. Goodale, 

342 F.3d 1032, 1037 (9th Cir. 2003). 

Here, there is no indication Scheel will be unable to lay the foundation for introduction of 

his medical records. Scheel' s medical records may be admitted upon proper authentication by Dr. 

Obukhoff at trial. Therefore, the court denies GuideOne' s Motion to Exclude with leave to raise the 

motion again as a pre-trial motion in limine. 

B. Promissory estoppel 

GuideOne argues in its reply that Scheel should be "estopped form presenting evidence the 

surgery was related to the claim because [Scheel]" filed this lawsuit. The court disagrees. To prove 

a claim or defense on the basis of promissory estoppel, the party asserting must prove four elements: 

"(!)a promise (2) which the promisor, as a reasonable person, could foresee would induce conduct 

of the kind which occurred, (3) actual reliance on the promise ( 4) resulting in a substantial change 

in position." Neiss v. Ehlers, 135 Or. 218, 223 (1995). 

Here, Guide One presents no evidence Scheel, or an agent acting on Scheel' s behalf, made 

a binding promise to GuideOne to not file a suit for breach of the Policy. Nor does GuideOne 

present evidence Scheel or his agent made a promise not to introduce evidence that his medical bills 

were reasonably related to the car accident giving rise to his claim under the Policy. Because no 

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Case 3:15-cv-01112-AC Document 28 Filed 03/24/16 Page 20 of 23
evidence exists Scheel made a such a promise to GuideOne, GuideOne cannot prove the first 

essential element to its defense of promissory estoppel. Therefore, this portion of GuideOne's 

motion for summary judgment is denied. 

C. Merits ofGuideOne 's Motion 

GuideOne moves for summary judgment on Scheel's claim for breach of the Policy. Scheel 

argues that GuideOne failed to rebut the statutory presumption that his back injury was caused by 

his automobile accident, and that the evidence submitted in response to GuideOne's motion created 

a genuine issue of material fact on whether he may succeed in his claims. 

OR. REV. STAT. § 742.520(1) mandates that all automobile insurance policies issued in 

Oregon contain "personal injury protection benefits." The personal injury protection benefits must 

cover all "reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and 

prosthetic services incurred within two years after the date of the person's injury." OR. REv. STAT. 

§ 742.524(l)(a). When a policyholder, or other person covered under a personal injury protection 

policy, files a claim under that section of the policy, the treatment "presumed to be reasonable and 

necessary unless the" insurer denies the claim within sixty days of the date on which the claim is 

filed. Id. The legal presumption established by § 742.524(l)(a) "functions as any other civil 

presumption, i.e., it shifts the burden of proof to the party against whom it is directed-in this case, 

the insurer." Ivanov v. Farmers Ins. Co. of Ore., 344 Or. 421, 429 (2008). "To challenge a denied 

claim, the insured may submit to binding arbitration under ORS 742.520(6) and ORS 742.522 or, 

as [Scheel] did in this case, file a civil action against the insurer." Id. Where an insurer sufficiently 

rebuts the presumption of reasonableness and necessity, the burden no longer lies with the insurer 

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Case 3:15-cv-01112-AC Document 28 Filed 03/24/16 Page 21 of 23
to prove the absence of reasonableness and necessity. Id. Instead, the burden would naturally shift 

back to the plaintiff to show a prima facie case of breach of contract. Id. 

It is unclear under Oregon law whether the presumption of reasonableness and necessity is 

sufficiently rebutted where, as here, the insurer denies a claim within the sixty-day statutory period, 

but for an erroneous or contractually insufficient reason. It is, however, irrelevant for the purposes 

of this motion whether the burden of persuasion lies with Scheel or GuideOne, as Scheel produces 

evidence which demonstrates a genuine issue of material fact under either burden allocation. On a 

motion for summary judgment, the movant has the initial burden of demonstrating there are no issues 

of material fact and that the nonmovant cannot prove an element essential to his or her claim or 

defense. If the movant meets this burden, the nonmovant must introduce evidence showing the 

existence of a genuine issue of material fact. 

The parties in this case did just that. GuideOne produced evidence suggesting Scheel' s back 

injury pre-existed the automobile accident and was not covered under the Policy as a result. In 

response, Scheel produced the medical reports of Dr. Obukhoff in which he states the back injury 

and associated bladder-control issues "started after the motor vehicle accident, July 25, 2013, when 

his car was hit by another vehicle and pain started in his lower back. Since that time, he has been 

having constant pain and there is no improvement despite physical therapy." (Olson Deel. Ex. 4 at 

1.) In another chart note, Dr. Obukhoff wrote that Scheel "sustained injuries during a motor vehicle 

accident." (Olson Deel. Ex. 5 at 1.) Finally, Scheel introduced a memorandum written by Dr. 

Obukhoff summarizing how he came to the conclusion that the accident caused Scheel' s back injury. 

(Olson Deel. Ex. 12 at 1-2.) He explains that an MRI predating the accident showed no abnormality 

in the L2-L3 vertebral juncture, but that problems at the L2-L3 disc arose immediately after the 

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Case 3:15-cv-01112-AC Document 28 Filed 03/24/16 Page 22 of 23
incident and led to the symptoms necessitating the back surgery. (Id.) At this stage in the case, it 

is irrelevant whether Scheel or GuideOne bears the initial burden of production. As soon as one 

party demonstrates a genuine issue of material fact, the court's analysis is ended and the court should 

deny the motion for summary judgment. Scheel has demonstrated such a genuine issue of material 

fact. Therefore, the court denies GuideOne's Motion for Summary Judgment. 

Conclusion 

For the aforementioned reasons, the court GRANTS Scheel's Motion for Partial Summary 

Judgment (Dkt. No. 6) and DENIES GuideOne's Motion for Summary Judgment (Dkt. No. 13). 

IT IS SO ORDERED 

DATED thiS-~Q-'/fa;; of March, 2016. 

OPINION & ORDER - 23 

JO~ V. ACOSTA 

United States Magistrate Judge 

[RMD] 

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