Title: State Farm Fire and Casualty Company v. Knapp
Citation: 107 Ariz. 184, 484 P.2d 180
Docket Number: 10319
State: Arizona
Issuer: Arizona Supreme Court
Date: April 22, 1971

107 Ariz. 184 (1971) 484 P.2d 180 STATE FARM FIRE AND CASUALTY COMPANY, Appellant, v. Robert L. KNAPP and Martha Jean Knapp, husband and wife, Appellees. No. 10319. Supreme Court of Arizona, In Division. April 22, 1971. Kenneth S. Scoville and Leroy W. Hofmann, Phoenix, for appellant. T. Gale Dake, Phoenix, for appellees. CAMERON, Justice. This is an appeal from an order of the trial court denying the motion of the defendant, State Farm Fire and Casualty Company, for summary judgment and granting the motion of the plaintiffs, Robert and Martha Knapp, for summary judgment. We are called upon to determine whether the subrogation clause in the defendant insurance company's medical pay provision is invalid as an attempted assignment of a portion of the bodily injury claim. From an agreed statement of facts it appears that the grandchildren of the insured, Mary E. Knapp, were injured while passengers in the insured's automobile being driven, with permission, by insured's daughter. The other car was driven by Mark Garcia who was insured by the Farmers Insurance Group. Garcia's insurer settled the childrens' claims and Mrs. Martha Knapp (daughter-in-law of the insured), as parent and legal guardian, executed releases relieving Garcia from all further liability. A claim was then presented to State Farm for medical payments incurred and State Farm refused payment asserting breach of the subrogation clause. The insurer under policy coverage "C", "Division 2", contracted "to pay reasonable medical expenses * * * to or for any other person who sustains bodily injury, caused by accident, while occupying the owned automobile * * *." The subrogation clause qualifies this duty to pay as follows: Clearly, if this subrogation clause is enforceable then plaintiff's claim is defeated *185 as it is agreed that plaintiff by signing the release has prejudiced State Farm's right to subrogate. The cases are not extensive in this field, probably because the attempt by insurance companies to subrogate medical payments is a rather recent trend, and the courts are not in agreement concerning the propriety of subrogation of medical pay provisions in insurance policies. See Annotation commencing at 19 A.L.R.3d 1054. Some courts merely allow subrogation. Smith v. Motor Club of America Ins. Co., 54 N.J. Super. 37, 148 A.2d 37 (1959). Some cases hold that a claim for personal injury is assignable and that therefore there is no impediment in a subrogation clause medical payments provision. Davenport v. State Farm Mutual Auto. Ins. Co., 81 Nev. 361, 404 P.2d 10 (1965). Another view is that the subrogation clause in a medical payments provision of an insurance policy does not constitute an assignment of the personal injury claim and therefore the subrogation clause should be enforced. DeCespedes v. Prudence Mut. Cas. Co., 193 So. 2d 224 (Fla.App. 1966). This court, however, has taken the position in denying review in the case of Harleysville Mutual Insurance Company v. Lea, 2 Ariz. App. 538, 410 P.2d 495 (1966) that subrogation amounts to an assignment and that a claim for personal injuries is not assignable: We agree with the Missouri Court of Appeals: Judgment affirmed. UDALL and LOCKWOOD, JJ., concur.