Case Name: ALICE CASAREZ RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1992-12-03
Citations: 4 Cal. 4th 1
Docket Number: No. S023261
Parties: ALICE CASAREZ RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent.
Judges: 
Reporter: California Reports
Volume: 4
Pages: 1–28

Head Matter:
[No. S023261.
Dec. 3, 1992.]
ALICE CASAREZ RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent.
Counsel
Shernoff, Scott & Bidart, Robert K. Scott and Marian H. Tully for Plaintiff and Appellant.
Colbert, Kelly, Crowley & Jennett, James B. Crowley, Clifford H. Woosley and Michael I. D. Mercy for Defendant and Respondent.
Low, Ball & Lynch and Raymond Coates as Amici Curiae on behalf of Defendant and Respondent.

Opinion:
Opinion
PANELLI, J.
—We granted review to decide whether an uninsured motorist carrier committed a tortious breach of insurance contract by delaying payment on a claim when the insured's workers' compensation claim arising from the same accident had not yet been resolved. We conclude that there was no breach of duty and reverse the judgment of the Court of Appeal.
I. Facts and Procedural History
In December 1977, defendant Interinsurance Exchange of the Automobile Club of Southern California (the Exchange) issued an automobile insurance policy to plaintiff Alice Casarez Rangel (Rangel). In February 1978, Rangel was injured by an uninsured motorist in a hit-and-run accident. Rangel filed a claim for uninsured motorist coverage benefits under her policy shortly after the accident and also filed a demand for arbitration of the claim. Additionally, Rangel filed a workers' compensation claim asserting that she had been injured in the course and scope of her employment.
The uninsured motorist provision of Rangel's insurance policy provided for reduction of the loss payable by the amount of workers' compensation benefits received by the insured: "[A]ny loss payable to or for any person shall be reduced by the amount paid and the present value of all amounts payable to such person under any worker's [sic] compensation or workmen's compensation law, exclusive of non-occupational disability benefits." (Italics added.) Furthermore, the arbitration clause of the policy provided for arbitration in certain circumstances: "If the insured . . . and the Exchange are in disagreement as to whether any one of them are legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount of such damages which may be owing under this Part, then upon the demand of either, those said matters in disagreement shall be settled by arbitration .'' (Italics added.)
The Exchange initially refused to pay Rangel the uninsured motorist benefits, maintaining that under the terms of the coverage, it did not owe Rangel those benefits until her workers' compensation claim had been resolved. On January 25, 1979, Rangel filed a demand for arbitration of her uninsured-motorist claim. However, the American Arbitration Association ordered that the arbitration be held in abeyance while Rangel's workers' compensation proceeding was pending.
In September 1984, more than six years after the uninsured motorist claim was filed, the Exchange paid Rangel SIS.OQO, the maximum amount of the uninsured motorist coverage, contingent upon her execution of a release in full settlement of her uninsured motorist claim. Additionally, with Rangel's consent, the Exchange filed a lien in Rangel's workers' compensation action. The workers' compensation claim was not resolved until May 1986, when Rangel was awarded benefits for both temporary and permanent disability.
In September 1985, Rangel filed a complaint for tortious breach of the insurance contract, pleading two causes of action. First, Rangel pled that the Exchange had breached its duty of good faith and fair dealing. Second, Rangel claimed that the Exchange had breached its statutory duties by knowingly committing or performing specified unfair claims settlement practices prohibited by Insurance Code section 790.03, subdivision (h). In its answer, the Exchange denied the material allegations of Rangel's complaint and asserted eight affirmative defenses; among those being that the amount due on Rangel's claim for uninsured motorist coverage was uncertain and could not be determined while Rangel was pursuing her workers' compensation claim.
The Exchange unsuccessfully moved for summary judgment before Judge Deering of the law and motion department. Judge Shatford, a retired judge, was later appointed to determine all pretrial matters and to preside over the trial. The Exchange moved for judgment on the pleadings based on the defense that no duty to pay uninsured motorist benefits arose during the pendency of the workers' compensation proceedings. Judge Shatford granted the motion and Rangel appealed.
The Court of Appeal held that Judge Shatford had jurisdiction to rule on the motion for judgment on the pleadings after Judge Deering denied the motion for summary judgment. The Court of Appeal then determined that an insurer may have a duty to settle an uninsured motorist claim before the pending workers' compensation claim is resolved when a lien on the workers' compensation claim is available. The court determined that a lien was available to the insurer in this case. Therefore, the court reversed the trial court's judgment and held that the complaint stated a cause of action for breach of the insurer's duty of good faith and fair dealing and for violation of the insurer's statutory duties under section 790.03, subdivision (h).
II. Is an Uninsured Motorist Insurer Obliged to Pay Benefits Before a Related Workers' Compensation Claim Is Resolved?
The standard of review in a motion for judgment on the pleadings is well settled. The motion is confined to the face of the pleading under attack, and all facts alleged in the complaint must be accepted as true. (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 815 [195 Cal.Rptr. 421].) With these principles in mind, we consider whether the facts alleged in Rangel's complaint were sufficient to state a cause of action.
The insurance contract between Rangel and the Exchange was issued pursuant to section 11580.2. This section requires automobile insurers to offer uninsured motorist coverage with all automobile liability insurance policies (§ 11580.2, subd. (a)(1)), and authorizes the insurer to reduce the loss payable to the insured by "the amount paid and the present value of all amounts payable" under workers' compensation law. (§ 11580.2, subd (h)(1).) By authorizing a reduction in the loss payable under the uninsured motorist coverage of the policy, the Legislature intended to prevent the insured from recovering twice for the same injury. (Interinsurance Exchange v. Marquez (1981) 116 Cal.App.3d 652, 656-657 [172 Cal.Rptr. 263], citing Waggaman v. Northwestern Security Ins. Co. (1971) 16 Cal.App.3d 571, 579 [94 Cal.Rptr. 170] (Waggaman); see also California State Auto. Assn. Inter-Ins. Bureau v. Jackson (1973) 9 Cal.3d 859, 869, fn. 13 [109 Cal.Rptr. 297, 512 P.2d 1201].) This court has previously explained that the Legislature's purpose in enacting section 11580.2 was to "shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workmen's compensation carrier." (California State Auto. Assn. Inter-Ins. Bureau v. Jackson, supra, 9 Cal.3d at p. 869.)
In addition to authorizing a reduction in the loss payable, the Legislature provided for arbitration in the event of disagreement over whether the insured is entitled to receive damages and the amount thereof. (§ 11580.2, subd. (f).) The Legislature also provided that such arbitration would be delayed until workers' compensation benefits have been resolved: "If the insured has or may have rights to benefits, other than nonoccupational disability benefits, under any workers' compensation law, the arbitrator shall not proceed with the arbitration until the insured's physical condition is stationary and ratable. In those cases in which the insured claims a permanent disability, the claims shall, unless good cause be shown, be adjudicated by award or settled by compromise and release before the arbitration may proceed. Any demand or petition for arbitration shall contain a declaration, under penalty of perjury, stating whether (i) the insured has a workers' compensation claim; (ii) the claim has proceeded to findings and award or settlement on all issues reasonably contemplated to be determined in that claim; and (iii) if not, what reasons amounting to good cause are grounds for the arbitration to proceed immediately." (Ibid., italics added.) Thus, in order to prevent double recovery, the Legislature has expressly permitted insurers to delay arbitration of uninsured motorist claims while a workers' compensation claim is pending, in the absence of a showing of good cause.
The history of section 11580.2, subdivision (f), confirms the legislative purpose to prevent double recovery. Prior to 1973, although another subsection of the statute provided for reduction of the loss payable in the event of workers' compensation benefits, the provision concerning arbitration did not include the language quoted above. (Compare former § 11580.2, subd. (f), amended by Stats. 1972, ch. 952, § 1, p. 1722, with current § 11580.2, subd. (f).) In 1971, the Court of Appeal held the provision permitting deduction of "the present value of all amounts payable" under workers' compensation law inapplicable to cases in which the amount due under workers' compensation had not yet been determined. (Waggaman, supra, 16 Cal.App.3d at pp. 577-578.) The court reasoned that the arbitrator in that case could not calculate and deduct the anticipated, but as yet undetermined, workers' compensation benefits. Although the court recognized that this conclusion might lead to double recovery by the insured, the court decided that the statutory scheme compelled such a result. The court further noted that it could not authorize the insurer to obtain a lien on the workers' compensation award because the availability of such liens was strictly limited by statute, and because such liens fell within the original jurisdiction of the Workers' Compensation Appeals Board. (See Lab. Code, § 4901, 4903.)
Thus, the situation as of 1971 was that courts were powerless to prevent an insured from recovering twice for the same injury whenever the workers' compensation award had not yet been determined at the time the insured demanded arbitration. In such cases, the insured would recover once from the uninsured motorist insurer and, because no lien was available, once again from the workers' compensation carrier. While the court enforced the statute as written, it also invited the Legislature to provide a solution to the inherent inequity of double recovery. (Waggaman, supra, 16 Cal.App.3d at pp. 579-580.)
The Legislature responded the following year by amending section 11580.2, subdivision (f), to include the current language. The first version of the proposed bill would have subrogated the uninsured motorist carrier to the rights of the insured against the workers' compensation carrier for any amounts awarded as workers' compensation which had not yet been determined at the time of an uninsured motorist arbitration award. (Sen. Bill No. 66 (1972 Reg. Sess.) first version, introduced Jan. 17, 1972, § 1.) The bill would also have given the uninsured motorist insurer a lien against the workers' compensation award. (Ibid.) Furthermore, the bill would have amended Labor Code section 4903, which exclusively enumerates the liens allowable against workers' compensation awards, to permit a lien for the amount paid on an uninsured motorist insurance policy. (Sen. Bill No. 66 (1972 Reg. Sess.) first version, introduced Jan. 17, 1972, § 2.)
The first version of the proposed legislation did not pass. Instead, the Legislature chose a different way to address the problem of double recovery. Rather than subrogating the uninsured motorist insurer to the rights of the insured for, and providing for a lien against, the insured's workers' compensation benefits, the final version of the bill provides for a stay of arbitration until the insured's condition has become stationary and ratable. An insured who claims permanent disability is required to show good cause if he or she wishes arbitration to proceed before the workers' compensation award has been determined. (See § 11580.2, subd. (f).)
Rangel questions the relevance of the arbitration provision. (§ 11580.2, subd. (f).) She claims that the provision applies only to disputes over the liability of the uninsured motorist and the amount thereof. In her case, there was no dispute about the liability of and damages due from the uninsured motorist. Thus, Rangel argues that there was no arbitrable dispute. The flaw in Rangel's argument is that her policy contains clear and unambiguous language providing that any dispute over the amount owing to the insured from the Exchange would be settled by arbitration. The policy, which is incorporated by reference into Rangel's complaint, provides as follows: "If the insured . . . and the Exchange are in disagreement as to whether any one of them are legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount of such damages which may be owing under this Part, then upon the demand of either, those said matters in disagreement shall be settled by arbitration . . . (Italics added.) The Exchange clearly indicated in its answer that the amount owing under the policy was in dispute.
The policy's arbitration clause is broader than that required by the statute. The statute requires only that the damages due from the uninsured motorist be subject to arbitration. In contrast, the policy's arbitration clause encompasses disputes concerning the amount owing under the insurance policy as well as the damages due from the uninsured motorist.
An insurance policy may expand the issues subject to arbitration beyond the requirements of section 11580.2. (Pelger v. California Casualty Indemnity Co. (1980) 104 Cal.App.3d 861, 864 [163 Cal.Rptr. 891].) Other insurance policies containing language similar to the arbitration language in Rangel's uninsured motorist policy have been interpreted to expand the scope of arbitration beyond the statutory requirements. In Fisher v. State Farm Mut. Auto Ins. Co. (1966) 243 Cal.App.2d 749 [52 Cal.Rptr. 721] (Fisher), the Court of Appeal considered whether an uninsured motorist insurance carrier was bound by an arbitration award where the arbitrator failed to reduce the loss payable by amounts paid under a medical payment coverage, as authorized by former section 11580.2, subdivision (g)(2) (later subdivision (h)(2)). The court first noted that the arbitration provision in the insurance contract was broader than that required by section 11580.2, subdivision (f), which required arbitration only of the issue of "whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof. . . ." (Fisher, supra, 243 Cal.App.2d at p. 751, internal quotation marks omitted.) The contract between Fisher and State Farm provided instead: "If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount payable hereunder, then each party shall . . . select a competent and disinterested arbitrator. . . . The arbitrators shall then hear and determine the question or questions so in dispute. . . ." (Fisher, supra, 243 Cal.App.2d at p. 750, internal quotation marks omitted, italics added.) The Fisher court noted that the phrase "the amount payable hereunder" referred to the loss payable under the policy and not to the liability of the uninsured motorist to the insured. (Id. at p. 752, fn. 2.) Reasoning that the parties had validly agreed to submit to arbitration more than what the statute required, the court held that the parties were bound by the decision of the arbitrator regarding the amount payable under the policy's uninsured motorist coverage. (Id. at p. 752.)
Other California cases interpreting language similar to that in Rangel's policy have also confirmed that such language gives the arbitrator broader jurisdiction than required by section 11580.2. For example, an agreement that the parties would arbitrate the question whether "the insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle under this Part II or. . . the amount of payment which may be owing hereunder" has been held to be broader in scope than the minimum required by section 11580.2, subdivision (f). (Campbell v. Farmers Ins. Exchange (1968) 260 Cal.App.2d 105, 110 [67 Cal.Rptr. 175] (Campbell) [italics in original].) In that case, the court held that the emphasized language related "not merely to the amount of damages recoverable from the uninsured motorist, but includefd] the issue of the amount payable under the terms of the policy." (Id. at p. 111; see also Pelger v. California Casualty Indemnity Co., supra, 104 Cal.App.3d at pp. 864-866, citing Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 481 [121 Cal.Rptr. 477, 535 P.2d 341], and cases cited therein; Wallace v. Farmers Ins. Group (1986) 177 Cal.App.3d 735, 738-740 [223 Cal.Rptr. 171]; Hartford Accident & Indemnity Co. v. Jackson (1983) 150 Cal.App.3d 111, 114-115 [197 Cal.Rptr. 477].)
The arbitration clause in Rangel's policy was similar to the arbitration clauses in Fisher, supra, 243 Cal.App.2d 749, and Campbell, supra, 260 Cal.App.2d 105. The clause provided that the parties would submit to the arbitrator not only the liability of the uninsured motorist to the insured, but also the amount "owing under this Part." "This Part" refers to part IV of the insurance policy, entitled "Uninsured Motorist," which includes the condition that the loss payable will be reduced by the amount paid and the present value of all amounts payable under workers' compensation law. Virtually identical language in an insurance policy issued by the Exchange has been interpreted to refer not to "[the damages] which would be owed by the uninsured motorist to the insured," but rather to "those recoverable, by the insured, under the uninsured motorist provisions of the contract." (Cothron v. Interinsurance Exchange (1980) 103 Cal.App.3d 853, 858 [163 Cal.Rptr. 240].)
Since it is permissible to expand the issues subject to arbitration beyond the requirements of section 11580.2 (Fisher, supra, 243 Cal.App.2d at p. 750; see also Pelger v. California Casualty Indemnity Co., supra, 104 Cal.App.3d at p. 864; Campbell, supra, 260 Cal.App.2d at p. 110), the scope of arbitration will be determined by the contract between the insurer and the insured. Even when the policy expands the scope of arbitration beyond the minimum statutory requirements, the provisions of section 11580.2 continue to apply. (E.g., Freeman v. State Farm Mut. Auto. Ins. Co., supra, 14 Cal.3d at p.p. 486-487 [applying the one-year statutory time bar (§ 11580.2, subd. (i)) to an action to compel arbitration under an expanded arbitration clause].) Because the policy between the Exchange and Rangel provides for arbitration in the event of a dispute over the loss payable, and because Rangel's workers' compensation claim was not resolved until May 1986, there was an arbitrable issue which could be delayed under section 11580.2 unless good cause was shown.
The dissent dismisses as immaterial both the parties' agreement to arbitrate the amount of the reduction for workers' compensation and Fisher, supra, 243 Cal.App.2d 749, which enforced such an agreement. Instead, the dissent argues that arbitration can proceed even though the amount of the reduction cannot be determined until the workers' compensation proceeding has ended. The dissent's position might have merit if the parties had not agreed to arbitrate the amount of the reduction. However, "[w]here the arbitration clause in the insurance policy is broader than the statute, the arbitration of additional issues may be required. Cases involving such arbitration agreements must be distinguished from those which are concerned only with the statutory language." (Freeman v. State Farm Mut. Auto. Ins. Co., supra, 14 Cal.3d at p. 481.)
Rangel complains that the Exchange was aware of possible good cause to proceed with arbitration sooner and that the Exchange was therefore in bad faith for not proceeding with the uninsured motorist claim. However, she agreed to arbitrate under the rules of the American Arbitration Association, and that organization ordered the arbitration to be held in abeyance. The order was proper because her attempt to show good cause was plainly inadequate. In her demand for arbitration, Rangel asserted that she had "not completed all medical treatment to reach a permanent and stationary position." This is a reason to delay arbitration (see § 11580.2, subd. (f)), not a reason to advance it.
Rangel further asserts that this case is controlled by Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452 [113 Cal.Rptr. 711, 521 P.2d 1103] (Silberg). In Silberg, we held that a medical insurer's failure to pay medical bills incurred by an insured pending resolution of an ongoing workers' compensation proceeding violated the insurer's duty of good faith and fair dealing. However, as the Exchange correctly points out, Silberg's reasoning is inapplicable here.
Silberg involved a medical insurance policy which contained ambiguous language. We, therefore, construed the policy language strictly against the insurer. (Silberg, supra, 11 Cal.3d at pp. 464-466.) Here, unlike Silberg, Rangel seeks uninsured motorist benefits under an automobile insurance policy which contains clear and unambiguous language providing for a deduction from the uninsured motorist benefits of the amount paid or payable under workers' compensation and for a delay of arbitration in the event of a dispute over benefits owed under the policy.
Our decision in Silberg also rested in part on the availability of a lien for medical expenses in the workers' compensation proceeding. (Silberg, supra, 11 Cal.3d at p. 461.) We reasoned that if the medical insurer had made the payments, it could have filed a lien for payments made and could have recouped that amount from the proceeds of the workers' compensation award. However, as we will discuss, no such lien is available to an uninsured motorist insurer for payments made under such coverage.
The Court of Appeal in the case before us erroneously concluded that the Exchange could assert a lien in the workers' compensation proceeding for reimbursement of medical expenses pursuant to Labor Code section 4903, subdivision (b). The conclusion is based on mistakes of fact and law. Rangel did not specifically allege in her complaint that she intended to pay medical bills with the uninsured motorist benefits. Thus, the Court of Appeal's factual premise was mistaken. Moreover, although Rangel argued before the Court of Appeal that a lien was available to the Exchange, she now concedes that no such lien was available.
As noted above, there can be no lien against a workers' compensation award for any kind of debt except as the Labor Code specifically provides. (Lab. Code, § 4901.) Labor Code section 4903 itemizes the liens that the appeals board allows against a compensation award. "The [Workers' Compensation Appeals Board] may not allow a lien against an award of workers' compensation benefits in satisfaction of an obligation not specified in [Labor Code section 4903,] subdivisions (a) through (i); if it does so, it acts in excess of its authority and without jurisdiction." (Coltherd v. Workers' Comp. Appeals Bd. (1990) 225 Cal.App.3d 455, 461 [275 Cal.Rptr. 130] (Coltherd), citations omitted [annulling order which awarded uninsured motorist insurer a lien on workers' compensation benefits]; see also Prudential Insurance Co. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 776, 780 [151 Cal.Rptr. 537, 588 P.2d 239].) This list of allowable liens does not include the payment of uninsured motorist insurance benefits. (Coltherd, supra, 225 Cal.App.3d at p. 461.)
Thus, the Court of Appeal erred when it held that the Exchange could have asserted a lien on Rangel's pending workers' compensation claim. The benefits required under the uninsured motorist coverage statute are a substitute for damages owed by the uninsured driver; they are not medical benefits. Section 11580.2 provides that "[n]o policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle" may be issued in California unless the policy contains provisions "insuring the insured, the insured's heirs or legal representative for all sums within the [specified] limits which he, she, or they, as the case may be, shall be legally entitled to recover as damages for bodily injury or wrongful death from the owner or operator of an uninsured motor vehicle." (Italics added.)
"Damages," for purposes of this statute, have been interpreted to mean "such damages as a California court would award" (Ramirez v. Wilshire Ins. Co. (1970) 13 Cal.App.3d 622, 631 [91 Cal.Rptr. 895]); they are not a form of medical benefits. In paying uninsured motorist benefits, the insurer cannot be said to have paid the "reasonable [medical] expense incurred by or on behalf of the injured employee." (See Lab. Code, § 4903, subd. (b).) Unlike the separate provision for medical expenses in part II of the policy, which provides for direct payment to the health care provider, the insurer would have no assurance that the uninsured motorist benefits would be used to pay for medical treatment. Since uninsured motorist benefits are not medical expenses for the purpose of Labor Code section 4903 (see Coltherd, supra, 225 Cal.App.3d at p. 461), no lien is available to uninsured motorist carriers in the workers' compensation proceedings.
This conclusion is supported by the history of section 11580.2, subdivision (f). As discussed above, after the decision in Waggaman, supra, 16 Cal.App.3d 571, the Legislature amended this section to prevent an injured person from recovering both uninsured motorist benefits and workers' compensation benefits for the same injury. The Legislature first considered amending the section to permit the uninsured motorist insurer to assert a lien against the workers' compensation award, but instead adopted the present approach, which permits the insurer to wait until the workers' compensation award has been determined before paying benefits to the insured, in the absence of a showing of good cause. (See Sen. Bill No. 66 (1972 Reg. Sess.) first version, introduced Jan. 17, 1972, § 1, 2; § 11580.2, subd. (f).) Thus, in response to Waggaman, which indicated that Labor Code section 4903 does not authorize uninsured motorist insurers to assert liens on workers' compensation claims, the Legislature considered and rejected a proposal to allow such liens.
Since no lien is available for an uninsured motorist coverage carrier, without a delay of arbitration over the loss payable, an insurer would be forced to incur a liability which it had never assumed. The insurer would be left to seek reimbursement of any overpayment from its insured with no guarantee of success. In fact, that is what occurred in the present case. Rangel received $15,000 from the Exchange in addition to her workers' compensation payment—$15,000 more than she was entitled to receive. By reading the policy language in conjunction with section 11580.2, such inequities can be avoided. Under the statute, arbitration is delayed until the workers' compensation claim is resolved. Because the loss payable is subject to arbitration under the policy, payment may be delayed until the amount of the loss payable has been determined in arbitration. This result is wholly consistent with the Legislature's goal of avoiding double recovery.
Finally, Rangel asserts that the Exchange may have owed her benefits, such as general damages, that were not compensable by workers' compensation. She contends that the Exchange had the duty to pay her benefits for such items as foreseeable economic loss regardless of the outcome of the workers' compensation case. This argument lacks merit. Section 11580.2, subdivision (h), specifically provides that "[a]ny loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced: (1) By the amount paid and the present value of all amounts payable to him or her, his or her executor, administrator, heirs or legal representative under any workers' compensation law, exclusive of nonoccupational disability benefits." (Italics added.) The terms of the insurance policy were nearly identical to this statutory provision. The language is clear and unambiguous. In Jarrett v. Allstate Ins. Co. (1962) 209 Cal.App.2d 804 [26 Cal.Rptr. 231], the Court of Appeal dealt with an uninsured motorist provision similar to that in Rangel's policy and held that the insured had bargained for a policy in which workers' compensation benefits would be deducted from the uninsured motorist policy limit, not the total damages. (Id. at p. 813.) Thus, the insurer is only liable for the excess, if any, of the policy limit over the workers' compensation benefits. If there is no excess, the uninsured motorist insurer has no duty to pay general damages that are not compensable by workers' compensation. (See Interinsurance Exchange v. Marquez, supra, 116 Cal.App.3d 652, 657; Jarrett v. Allstate Ins. Co., supra, Cal.App.2d 804, 812-813.) A contrary finding would once again force the insurer to assume liability for which it never bargained.
We conclude that under the circumstances of this case the Exchange was not obligated to pay uninsured motorist benefits during the pendency of Rangel's workers' compensation claim. Therefore, the Exchange did not breach its duty of good faith and fair dealing by delaying payment pending the outcome of the workers' compensation proceeding. It also follows that the Exchange did not engage in unfair claims settlement practices in violation of section 790.03, subdivision (h). Accordingly, the Court of Appeal erred when it held that Rangel's complaint stated a cause of action against the Exchange for breach of the covenant of good faith and fair dealing and for violation of its statutory duties under section 790.03, subdivision (h).
Disposition
The judgment of the Court of Appeal is reversed.
Lucas, C. J., Arabian, J., Baxter, J., and George, J., concurred.
Of this award, $5,000 was subject to a lien by Rangel's former attorney.
The lien was for uninsured motorist benefits paid and not for payment of medical expenses. Rangel never asserted that any portion of the $15,000 would be used to pay medical expenses.
The Exchange has asked us to take judicial notice of the opinion and supplemental findings and award issued by the Workers' Compensation Appeals Board on May 7, 1986. We grant this request. (Evict. Code, § 452, subd. (c).) T[ie workers' compensation award provided at least $64,000 in benefits. The award makes no mention of the Exchange's lien; the Exchange maintains that it was not paid.
All further statutory references are to the Insurance Code unless otherwise noted.
Section 790.03 provides in pertinent part:
"The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.
"(h) Knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices:
"(1) Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.
"(3) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.
"(4) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.
"(5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear."
Although the parties have not addressed this issue, we note that in Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 [250 Cal.Rptr. 116, 758 P.2d 58], we held that section 790.03, subdivision (h) does not provide a private cause of action against insurance companies. However, we limited the application of our holding to cases that had not yet been filed at the time that case became final. (46 Cal.3d at p. 305.) Because Rangel filed her suit in 1985, it is not barred by Moradi-Shalal. (Ibid.; see also Zephyr Park v. Superior Court (1989) 213 Cal.App.3d 833, 838-841 [262 Cal.Rptr. 106].)
Rangel did not file an answer to the petition for review, and so did not challenge this portion of the Court of Appeal's judgment. Therefore, the question of whether the Court of Appeal erred in its holding on this procedural matter is not before us. (Cal. Rules of Court, rule 28(e)(2).) As a result, although Rangel argued in her brief that Judge Shatford was bound by the order denying the motion for summary judgment, we do not address that issue.
This language clearly applies to cases, like the one before us, in which the insured has suffered a permanent disability. It is not entirely clear whether arbitration would proceed before the workers' compensation claim is resolved in cases where the insured does not claim a permanent disability. We need not decide that issue here, as Rangel was awarded permanent disability benefits.
As noted earlier, liens against workers' compensation awards are only available if the Labor Code expressly provides for them. (Lab. Code, § 4901; Ogdon v. Workmen's Comp. Appeals Bd. (1974) 11 Cal.3d 192, 196-197 [113 Cal.Rptr. 206, 520 P.2d 1022].)
Rangel argues that section 11580.2, subdivision (g), does, in fact, subrogate the insurer to the rights of the insured against the workers' compensation carrier. She bases her argument on subdivision (g), which states: "The insurer paying a claim under an uninsured motorist endorsement or coverage shall be entitled to be subrogated to the rights of the insured to whom the claim was paid against any person legally liable for the injury or death to the extent that payment was made. The action may be brought within three years from the date that payment was made hereunder." However, we do not agree that "any person legally liable for the injury or death" refers to a class broader than tortfeasors. (Compare Rudd v. California Casualty Gen. Ins. Co. (1990) 219 Cal.App.3d 948, 954, fn. 7 [268 Cal.Rptr. 624] [This case discusses offsets against recovery for M/z<fe/insurance and analyzes section 11580.2, subdivision (p)(4), which encompasses broader language than does subdivision (g).].) As we will discuss below, the insurer cannot assert a lien against the insured's workers' compensation award.
The Exchange argues that the loss payable under the policy cannot be determined until the workers' compensation claim has been resolved; it therefore urges us to adopt the view that even if the insured shows good cause to proceed with arbitration immediately, the insurer has no obligation to pay the benefits until the amount of the workers' compensation award is known and can be deducted. That precise issue is not before us in this case because Rangel's uninsured motorist claim did not proceed to arbitration and, therefore, no arbitration award was made. Thus, it is not necessary for us to decide what the obligations of the insurance company might be if the insured showed good cause to proceed with arbitration while a workers' compensation claim was pending.
Former section 11580.2, subdivision (g)(2), provided that any "loss payable under the terms of the uninsured motorist . . . coverage . . . may be reduced . . . [b]y" the amounts paid under medical payment coverage. This subdivision was later renumbered as (h)(2). (Stats. 1975, ch. 194, § 2, p. 562.) The insurance policy at issue in Fisher expressly provided that the loss payable would be reduced by the amount of such payments.
As the Exchange correctly notes, uninsured motorist coverage is liability coverage, as it substitutes for the damages recoverable from the uninsured motorist. (California State Auto. Assn. Inter-Ins. Bureau v. Jackson, supra, 9 Cal.3d at p. 867; see also Waite v. Godfrey (1980) 106 Cal.App.3d 760, 770-771 [163 Cal.Rptr. 881].) To characterize the statutory uninsured motorist coverage as medical coverage would significantly alter the legislative scheme.
Labor Code section 4903 provides in pertinent part:
"The [workers' compensation] appeals board may determine, and allow as liens against any sum to be paid as compensation, any amount determined as hereinafter set forth in subdivisions (a) through (i). . . . The liens which may be allowed hereunder are as follows:
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"(b) The reasonable expense incurred by or on behalf of the injured employee, as provided by Article 2 (commencing with Section 4600) and, to the extent the employee is entitled to reimbursement under Section 4621, medical-legal expenses as provided by Article 2.5 (commencing with Section 4620) of Chapter 2 of Part 2." (Italics added.)
Labor Code section 4600 provides in pertinent part:
"Medical, surgical, chiropractic, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including artificial members, which is reasonably required to cure or relieve from the effects of the injury shall be provided by the employer. In the case of his or her neglect or refusal seasonably to do so, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing treatment."
We held in Silberg that Labor Code section 4903, subdivision (b), permitted an insurer who had provided medical benefits to assert a lien in a workers' compensation proceeding to recover payments made on behalf of the plaintiff. (Silberg, supra, 11 Cal.3d at p. 461.)
A separate section of the Exchange's form insurance policy, part II, provided coverage for medical expenses incurred within one year of an accident. Under that part, payments could be made directly to the provider of the medical services. That section of the policy is not at issue here.
Once the parties have submitted their dispute to arbitration, there is no legal recourse available to pursue reimbursement for overpayment. Under Fisher, supra, 243 Cal.App.2d 749 the parties are bound by the arbitration decision relating to the amount payable under the uninsured motorist coverage. If, on the other hand, the parties have not entered into arbitration, the insurer is relegated to filing a lawsuit for overpayment.
The dissenting opinion argues that it is inequitable to make the timing of arbitration turn upon whether or not the insured has a workers' compensation claim arising out of the same accident. However, the Legislature has expressly declared that insureds with workers' compensation claims are to be treated differently. (§ 11580.2, subds. (h), (f).) This makes sense, because it is only in such cases that the problem of double recovery arises.