Court Opinion

ID: 3099110
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:56:03.331108+00
Date Added: 2024-06-11T09:45:15.136158
License: Public Domain

COURT OF APPEALS
                              EIGHTH DISTRICT OF TEXAS
                                   EL PASO, TEXAS

 AMY WARMBROD,                                '
                                                             No. 08-10-00306-CV
                            Appellant,        '
                                                                Appeal from the
 v.                                           '
                                                          169th Judicial District Court
 USAA COUNTY MUTUAL                           '
 INSURANCE COMPANY,                                          of Bell County, Texas
                                              '
                            Appellee.         '                (TC#238,990-C)

                                         OPINION

       Amy Warmbrod filed suit against United Services Automobile Association (USAA)

alleging various causes of action and seeking damages arising out of USAA’s handling of her

underinsured motorist claim. Warmbrod appeals the summary judgment granted in favor of

USAA. We affirm.

                                        BACKGROUND

       Warmbrod sustained severe injuries in a car accident on July 28, 2006. She was treated

free of charge at United States Army hospitals by virtue of her husband’s military status.

Warmbrod’s injuries and damages were in excess of both the tortfeasor’s insurance coverage and

the underinsured motorist’s (UIM) provisions of her own USAA auto insurance policy.

Warmbrod demanded that USAA pay her the $100,000 UIM benefits under her policy. The

United States Army submitted a reimbursement claim to USAA for the medical care it rendered to

Warmbrod in the amount of $26,404.96 pursuant to 10 U.S. C. § 1095 and the Federal Medical

Care Recovery Act, 42 U.S.C. §§ 2651-53. After receiving two payments totaling $3,403.53, the

Army sought to recover from USAA the remaining balance of $23,101.43, claiming that it had a
right to all available insurance coverage including Warmbrod’s UIM benefits which were payable

to Warmbrod under her USAA policy. USAA paid Warmbrod $76,898.57 of the $100,000 UIM

benefits and issued a second check for the remaining $23,101.43 payable to Warmbrod, her

attorney, and the Army.

       Warmbrod brought suit against USAA alleging it violated the Texas Deceptive Trade

Practices Consumer-Protection Act, Texas Insurance Code, Fifth Amendment of the United States

Constitution, and Article 1 Section 17 of the Texas Constitution.      Specifically, Warmbrod

claimed USAA engaged in unfair claims settlement practices and its handling of her underinsured

motorist claim amounted to a taking of her private property without due process of law. USAA

filed a traditional motion for summary judgment, and later amended its motion to address

Warmbrod’s violation of due process allegations. Warmbrod filed a response to the motion for

summary judgment and also included a counter motion for partial summary judgment, in which

she asked the court to find that USAA acted with falsity and deception, intentionally committed

unfair claims settlement practices, and violated her due process rights under both the U.S. and

Texas Constitutions. The trial court granted summary judgment in favor of USAA without

specifying the grounds for its ruling. This appeal followed. The USAA check in the amount of

$23,101.43 remains unpaid and Warmbrod seeks to recover the entire amount.

                                        DISCUSSION

       Warmbrod raises four issues on appeal challenging the order granting summary judgment.

In Issue One, Warmbrod contends that the trial court erroneously granted USAA’s amended

motion for summary judgment because the Army is not entitled to reimbursement from her UIM

benefits under 42 U.S.C. § 2651 (a) and 10 U.S.C. § 1071. Warmbrod argues that the UIM

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provisions of her USAA policy is not a system of compensation under which the Army could be a

third-party beneficiary because, under Texas Insurance Code § 1952.106, her UIM coverage is a

contract between herself and USAA and gives her a legal right to recover for bodily injury and

property damage. In Issue Two, Warmbrod complains that she is entitled to be “made whole”

before her UIM benefits are paid to the Army. In Issues Three and Four, Warmbrod alleges that

under the Fifth Amendment of the United States Constitution and Article 1 § 17 of the Texas

Constitution, the trial court’s summary judgment amounted to a taking of her private property

without due process of law.

                                       Standard of Review

       We review a trial court’s summary judgment de novo. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). Summary judgment is appropriate

when the moving party shows there is no genuine issue as to any material fact and it is entitled to

judgment as a matter of law. Diversicare General Partner, Inc. v. Rubio, 185 S.W.3d 842, 846

(Tex. 2005). Once the defendant establishes a right to summary judgment as a matter of law, the

burden shifts to the plaintiff to present evidence raising a genuine issue of material fact. City of

Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678-79 (Tex. 1979); Scown v. Neie, 225
S.W.3d 303, 307 (Tex.App. – El Paso 2006, pet. denied). When reviewing a motion for summary

judgment, we must assume all of the evidence favorable to the non-movant is true, indulge every

reasonable inference in favor of the non-movant, and resolve any doubts in favor of the

non-movant. Edwards v. Mesa Hills Mall Co. Ltd. Partnership, 186 S.W.3d 587, 590 (Tex.App. –

El Paso 2006, no pet.). Where the trial court does not specify the grounds upon which summary

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judgment is granted, as in this case, we must affirm if any of the grounds are meritorious. FM

Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).

                                                     Analysis

        Warmbrod contends that the trial court erred by granting USAA summary judgment

because under the Federal Medical Care Recovery Act (FMCRA), USAA was not obligated to pay

the Army’s medical reimbursement claim from her UIM coverage. See 42 U.S.C. §§ 2651-2653

(West 2006). USAA takes the position that FMCRA is not applicable to the facts of this case and

asserts that, pursuant to 10 U.S.C. § 1095 and the implementing regulations, the Army is entitled to

recovery from Warmbrod’s UIM coverage.1

                                                   The FMCRA

        FMCRA is one of the federal statutes that gives the United States government the authority

to recover medical care it provides at its own expense to covered beneficiaries. See 42 U.S.C. §§

2651-53. In relevant part, FMCRA provides:

        (a) Conditions; exceptions; persons liable; amount of recovery; subrogation;
        assignment

        In any case in which the United States is authorized or required by law to furnish or
        pay for hospital, medical, surgical or dental care and treatment (including
        prostheses and medical appliances) to a person who is injured or suffers a disease,
        after the effective date of this Act, under circumstances creating a tort liability upon
        some third person (other than or in addition to the United States and except
        employers of seamen treated under the provisions of section 249 of this title) to pay
        damages therefor, the United States shall have a right to recover (independent of
        the rights of the injured or diseased person) from said third person, or that person’s
        insurer, the reasonable value of the care and treatment so furnished, to be furnished,
        paid for, or to be paid for and shall, as to this right be subrogated to any right or
        claim that the injured or diseased person, his guardian, personal representative,
        estate, dependents, or survivors has against such third person to the extent of the
        reasonable value of the care and treatment so furnished, to be furnished, paid for, or

1
  The Army’s correspondence to USAA cites both 10 U.S.C. § 1095 and the FMCRA as the authority under which it
asserts its claim against Warmbrod’s UIM coverage under the automobile policy provided by USAA.
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       to be paid for. The head of the department or agency of the United States
       furnishing such care or treatment may also require the injured or diseased person,
       his guardian, personal representative, estate, dependents, or survivors, as
       appropriate, to assign his claim or cause of action against the third person to the
       extent of that right or claim.

42 U.S.C. § 2651(a). FMCRA gives the United States government an independent right to

recover the reasonable value of medical care incurred under circumstances creating tort

liability upon some third person. See United States v. Haynes, 445 F.2d 907, 909-10 (5th

Cir. 1971); 42 U.S.C. § 2651(a).    Therefore, Section 2651 governs collection from a

third-party tortfeasor. 42 U.S.C. § 2651. However, the United States government does

not have a right to first party insurance proceeds under FMCRA. See Government

Employees Ins. Co. v. Andujar, 773 F. Supp. 282, 286 (D. Kan. 1991) (holding that the

United States did not have a right to uninsured underinsured motorist (UI/UIM) proceeds

under FMCRA). Under state law, the United States government is a proper claimant

against UI/UIM coverage pursuant to the insurance contract.              United States v.

Government Employees Inc. Co., 440 F.2d 1338 (5th Cir. 1971); see also United States v.

Allstate Ins. Co., 910 F.2d 1281, 1283-84 (5th Cir. 1990) (under state law, the United

States can recover as a third-party beneficiary to the insurance contract). As neither

Warmbrod nor USAA were third-party tortfeasors, the Army cannot recover under

FMCRA on any settlement from the UIM coverage of Warmbrod’s auto policy.

                                             Section 1095

       We next consider whether the United States Army has a valid reimbursement claim

pursuant to 10 U.S.C. § 1095. In relevant part, Section 1095 provides:

       Health care services incurred on behalf of covered beneficiaries: collection from
       third-party payers

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       In the case of a person who is a covered beneficiary, the United States shall have the
       right to collect from a third-party payer reasonable charges for health care services
       incurred by the United States on behalf of such person through a facility of the
       uniformed services to the extent that the person would be eligible to receive
       reimbursement or indemnification from the third-party payer if the person were to
       incur such charges on the person’s own behalf. If the insurance, medical service,
       or health plan of that payer includes a requirement for a deductible or copayment by
       the beneficiary of the plan, then the amount that the United States may collect from
       the third-party payer is a reasonable charge for the care provided less the
       appropriate deductible or copayment . . . .

10 U.S.C. § 1095(a)(1) (West 2003). The United States has a right to collect reasonable medical

care costs rendered at its expense to a covered beneficiary under both Section 1095 and FMCRA.

32 C.F.R. § 220.11(b). The FMCRA does not purport to limit any other law authorizing the

United State government to recover the costs of medical care rendered at its expense as set forth in

42 U.S.C. § 2651. See 42 U.S.C. § 2653. If a medical care recovery claim is brought under the

concurrent authority of the FMCRA and Section 1095, the United States’ right to collect is

governed by Section 1095 and the implementing regulations. 57 Fed. Reg. 41096 (1992).

       Under Section 1095, the corollary to FMCRA, the United States government has the right

to collect reasonable medical expenses for the care it provided at government expense from

third-party payers. See 10 U.S.C. § 1095(a)(1). Moreover, Section 1095 limits its definition of

“third-party payer” to that section of the United States Code. See 10 U.S.C. § 1095(h)(1).

Section 1095 also reaffirms that collection from a third-party tortfeasor is governed by 42 U.S.C. §

2651. See 10 U.S.C. § 1095(i)(2).

       Section 1095 defines a third-party payer as:

       [A]n entity that provides an insurance, medical service, or health plan by contract
       or agreement, including an automobile liability insurance or no fault insurance
       carrier, and any other plan or program that is designed to provide compensation or
       coverage for expenses incurred by a beneficiary for health care services or

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       products. Such term also includes entities described in subsection (j) under the
       terms and to the extent provided in such subsection.

10 U.S.C. § 1095(h)(1). The plain language of 10 U.S.C. § 1095 is clear that the United States’

right to reimbursement from third-party payers includes reimbursement from automobile insurers.

See 10 U.S.C. § 1095(h)(1). USAA is a third-party payer under Section 1095, as it is an entity

that provides automobile liability insurance to Warmbrod. In essence, Section 1095 authorizes

the United States’ claims for recovery in states with no-fault statutes and against the MedPay,

UI/UIM, personal injury protection portions of the injured party’s insurance as well as Medicare

supplemental insurance. See United Services Auto. Ass’n v. Perry, 102 F.3d 144 (5th Cir. 1996);

see also 10 U.S.C. § 1095(h)(1), (2); 32 C.F.R. § 220.14.

       Warmbrod contends that the Secretary of Defense’s regulations implementing 10 U.S. C. §

1095 impermissibly extend the definition of automobile liability insurance to include UI/UIM

coverage. See 32 C.F.R. § 220.14. When reviewing a federal agency’s construction of a statute,

we first look to see if Congress has directly addressed the question at issue. Chevron, U.S.A., Inc.

v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S. Ct. 2778, 2781 (1984). If

Congress has directly answered the question at issue and its intent is clear, the inquiry is over and

we must give effect to the express intent of Congress as must the federal agency tasked with

administering the statute. Id. at 842-43. However, if Congress has not directly addressed the

issue and the statute is silent or ambiguous, we must determine whether or not the agency’s

interpretation is a permissible construction of the statute. Id. at 843. We need not conclude that

the agency’s construction was the only permissible construction it could have adopted to uphold

the agency’s construction of the statute. Id.

       The federal regulations promulgated by the Secretary of Defense pursuant to Section 1095

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state that “automobile liability insurance” means:

       [I]nsurance against legal liability for health and medical expenses resulting from
       personal injuries arising from operation of a motor vehicle. Automobile liability
       insurance includes:

       (1) Circumstances in which liability benefits are paid to an injured party only when
           the insured party’s tortious acts are the cause of the injuries; and

       (2) Uninsured and underinsured coverage, in which there is a third party tortfeasor
           who caused the injuries (i.e., benefits are not paid on a no-fault basis), but the
           insured party is not the tortfeasor.

32 C.F.R. §§ 220.14, 220.14 (1)-(2). Having already determined that USAA is a third-party payer

under the statute, we next look to see if Congress has directly addressed the question of what

constitutes “automobile liability insurance.” While Section 1095 itself does not define the term

“automobile liability insurance,” the legislative history of the 1990 amendments of Section 1095

suggest that Congress intended to enlarge the scope of the original statute and to expand the

definition of “third-party payer” in order to enlarge the government’s medical care collection

recovery. United States v. United Services Auto. Ass’n, 5 F.3d 204, 208 (7th Cir. 1993). Under

the original definition of Section 1095, automobile insurers were not considered third-party

payers, but under the statutory amendments the United States would now be able to collect from

automobile insurance policies. Id.

       Under the Texas Insurance Code, UI/UIM coverage is defined as “the provisions of an

automobile liability insurance policy . . . .” TEX. INS. CODE ANN. § 1952.101(a) (West 2009);

see also Howard v. INA County Mut. Ins. Co., 933 S.W.2d 212, 218 (Tex. App. – Dallas 1996, writ

denied) (every automobile liability insurance policy delivered in Texas includes UI/UIM coverage

by operation of law). Based on the plain language of the statute, the legislative history, and the

above definition of UI/UIM coverage, we find that the 32 C.F.R. § 220.14 is a permissible

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construction of the statute. We find no error as the United States Army has a valid claim against

the UIM portion of Warmbrod’s automobile policy as the government’s authority to recover is

derived from Section 1095 and the implementing regulations. See 10 U.S.C. § 1095; 32 C.F.R. §

220.14.

       In conclusion, Warmbrod failed to demonstrate the existence of a genuine issue of material

fact which precluded traditional summary judgment in favor of USAA. Issue One is overruled.

Because we conclude that the United States Army has a right to proceed against Warmbrod’s UIM

coverage under 10 U.S.C. § 1095, we need not address Warmbrod’s remaining issues. See TEX.

R. APP. P. 47.1 (“The court of appeals must hand down a written opinion that is as brief as

practicable but that addresses every issue raised and necessary to final disposition of the appeal.”).

                                          CONCLUSION

       We affirm the judgment of the trial court.

                                               GUADALUPE RIVERA, Justice
April 11, 2012

Before McClure, C.J., Rivera, J., and Antcliff, J.

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