Opinion ID: 1095272
Heading Depth: 1
Heading Rank: 5

Heading: whether the claims against homestead insurance company should have been dismissed for failure to state a claim on which relief could be granted

Text: ¶ 22. On this issue we reverse and remand for further proceedings. ¶ 23. Although we recently provided for joinder of insurance companies in another context, see State Farm Mutual Automobile Insurance Co. v. Eakins, 1999 WL 798573, No. 96-CT-00034-SCT, ___ So.2d ___ (Miss. Oct. 7, 1999), we have not yet addressed specifically whether a medical payment (med-pay) claimant like Prince is an intended third party beneficiary under the insurance contract with the accompanying right to proceed directly against the insurer for refusing to pay medical benefits due under the contract. ¶ 24. Allowing direct actions against insurance companies, both alone and with other defendants, is not without precedent in the med-pay context. Medical payment provisions usually provide that the benefits are to be paid to the injured person regardless of fault. Under med-pay provisions the insurer is considered directly liable to the third party claimant; payment is not dependant on negligence. Typically these med-pay provisions will pay for reasonable medical expenses, surgical and nursing expenses and prosthetic or aid devices. William C. Walter & Michael V. Corey, The Circumvention of Mississippi's Prohibition of Direct Actions, 66 Miss. L.J. 493, 503-05 (Spring 1997). In the med-pay context other courts have found that med-pay claimants are intended third party beneficiaries. [2] We find these persuasive. ¶ 25. Homestead's settlement option is a typical med-pay type provision. The settlement option pays directly to the injured claimant regardless of a showing of fault. For this reason our decision in Part I finding that Bowman, Chambliss and the District are immune does not relieve Homestead of its obligation to pay under the terms of its policy. In order to recover, Prince must simply show that he meets the definition of a student catastrophically injured under the terms of the policy, which he should get an opportunity to do on remand. ¶ 26. We also find the no action clause in Homestead's policy is unenforceable in this context. ¶ 27. Homestead's policy provides: F. Conditions 8. No action shall lie against the Company unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this policy, nor until the amount of the Covered Person's obligation to pay shall have been finally determined either by judgment against the Covered Person after actual trials or by written agreement of the Covered Person, the claimant and the Company.    No person or organization shall have any right under this policy to join the Company as a co-defendant in any action against the Covered Person to determine the Covered Person's liability.... ¶ 28. Homestead argues this no action clause prevents Prince from filing suit to collect anything under the policy. According to Homestead because Prince has sued to enforce what he considers a valid claim to medical expenses, Prince has lost his right to collect under the settlement provisions of the policy. Homestead acknowledges that if Prince were a student catastrophically injured under the terms of the policy, he would be able to collect under one of the settlement options. Homestead, however, claims Prince does not meet the definitional requirements of a student catastrophically injured and refuses to pay. Prince is left in an impossible position. ¶ 29. The District paid premiums to Homestead in exchange for insurance coverage designed, in Homestead's words, to protect the Insureds from liability claims. Prince alleges he suffered injuries of the type contemplated and covered by the policy. From the outset Prince followed the requirements of the settlement option in the policy and sought to collect his medical expenses without suing the District or the coaches. Although Homestead argues Prince violated the no action term of the policy, he did so only when Homestead reversed its initial decision to pay for his injuries and denied his claim. Homestead now seeks to prevent Prince from challenging that decision. ¶ 30. Homestead states in its letter to Prince that because his hospital stay was lengthened due to a hospital acquired staph infection, his total medical costs related to the covered injury would be reduced. However, it is important to point out any costs incurred as a result of Prince's covered injury would be chargeable to Homestead under the policy. Prince should be able to include all costs resulting from his initial injury for purposes of calculating the amount required to be considered a student catastrophically injured See Huff v. Boyd, 242 So.2d 698, 701(Miss.1971) (discussing proximate and intervening causes). ¶ 31. On remand, Prince should be allowed to challenge Homestead's denial of his claim. To hold otherwise would create a windfall for Homestead by allowing the company to collect premiums from the District and then not pay claims on the very type of injuries the District sought to insure against. If the purpose of the policy is as Homestead claims to protect the Insureds from liability by providing, without a showing of fault, payments to any student who meets the definition of a student catastrophically injured, Prince must be given an opportunity to show he meets that definition.