Court Opinion

ID: 9782259
Source: CourtListenerOpinion
Date Created: 2023-08-30 18:14:18.672659+00
Date Added: 2024-06-11T12:15:33.957738
License: Public Domain

Six, J.,
dissenting: This is a K.S.A. 40-3107 motor vehicle liability insurance policy interpretation case. The policy in question, issued under the Kansas Automobile Injury Reparations Act (KAIRA), contained a nonassignability clause. The question is whether the nonassignability clause in the policy bars Dr. Bolz’ claim. I would answer “yes” and affirm the district court.
On July 26, 1997, Emerson signed an “Irrevocable Assignment, Lien and Authorization” on a preprinted Bolz Chiropractic form authorizing payment of her personal injury protection (PIP) benefits to Dr. Bolz. On August 6, 1997, Dr. Bolz forwarded the as*436signment form to State Farm Mutual Automobile Insurance Company (State Farm) and made a demand for payment of medical expenses incurred by Emerson totaling $3,359.
The district court here keyed on Parrish Chiropractic v. Progressive Cas., 874 P.2d 1049 (Colo. 1994), to support its rationale for denying Dr. Bolz’ claim. The district judge characterized Parrish as “a case directly on point.” Dr. Bolz does not mention Parrish in his appellate brief. In Parrish, the Colorado Supreme Court held that purported assignments of PIP benefits to a chiropractic center in the face of a policy nonassignment clause were void and unenforceable against the insurer. See 874 P.2d at 1055. The Parrish nonassignment clause, similar to the one in issue here, was unambiguous and enforceable against the chiropractic clinic. See 874 P.2d at 1056. Parrish further reasoned that the clinic was only an incidental beneficiaiy of the policy rather than a third-party beneficiary. Thus, the clinic was not entitled to recovery in a direct action to enforce the terms of the policy. 874 P.2d at 1056-57. The Parrish court noted that its decision would have limited precedential value because the Colorado Legislature amended the no-fault act to allow assignment of benefits to a licensed health care provider. 874 P.2d at 1055 n.9.
A similar amendment by the Kansas Legislature, not a court opinion, in my view, is the appropriate method for altering the KAIRA to allow die assignment of PIP benefits.
Texas Farmers Ins. Co. v. Gerdes, 880 S.W.2d 215 (Tex. App. 1994), and Parkway Ins. Co. v. NJ Neck & Back, 330 N.J. Super. 172, 748 A.2d 1221 (1998), also support State Farm’s position here. As noted by the majority Santiago v. Safeway Insurance Co., 196 Ga. App. 480, 396 S.E.2d 506 (1990), supports Dr. Bolz’ position. I favor the analysis used in Parrish, Texas Farmers, and Parkway.
Texas Farmers considered a single issue: Did a nonassignment clause in an automobile policy bar the plaintiff chiropractic clinic’s patient from assigning her rights to PIP benefits? The Texas Farmers’ insured had assigned her rights under the policy to the chiropractic clinic without obtaining the written consent of Texas Farmers. The Texas Farmers court, in holding for the defendant insurance company, said: “Because we conclude the non-assign*437ment clause was valid, we reverse and render a take-nothing judgment.” 880 S.W.2d at 216.
In Parkway Insurance, the issue was whether the prohibition against assignment of medical expense benefits contained in Parkway s automobile insurance policies was enforceable against New Jersey Neck & Back without the written consent of Parkway. The Parkway Insurance court concluded that New Jersey Neck & Back, the medical providers who had treated the insureds, lacked standing to recover PIP benefits. The providers were only incidental beneficiaries, not parties to the policies. The assignment of benefits was invalid without Parkway’s prior written consent. 330 N.J. Super. at 89.
Dr. Bolz invites our attention to Marvin v. State Farm Mutual Automobile Insurance Co., 894 S.W.2d 712 (Mo. App. 1995). Relying on Patrons State Bank & Trust Co. v. Shapiro, 215 Kan. 856, 528 P.2d 1198 (1974), the Missouri Court of Appeals in Marvin said that an assignment passes all the assignor’s title or interest in the subject matter to the assignee and divests the assignor of all right of control over the subject matter. 894 S.W.2d at 713. In Marvin, State Farm paid medical benefits to its insured. The insured had assigned the benefits to Midtown Chiropractic Clinic. State Farm had to pay twice. Marvin held that State Farm should have paid the clinic since its insured had assigned her rights to the clinic. 894 S.W.2d at 713. Marvin is not helpful to Dr. Bolz because the State Farm policy in Marvin apparently did not contain a non-assignment clause. The applicability of such a clause, which is our issue here, was not an issue in Marvin.
I disagree with the majority’s conclusion that K.S.A. 40-439 and K.S.A. 40-440 support Dr. Bolz’ position. Both statutes relate to life and accident insurance. The relevant statutory language of K.S.A. 40-439 is:
“No provision in K.S.A. 40-434 and 40-435 or any other law shall be construed as prohibiting a person whose life is insured under a policy of group life or accident and health insurance or the policyowner of an individual life or accident and health policy from, making an assignment of all or any part of his rights and privileges under such policy . . . (Emphasis added.)
K.S.A. 40-440 says:
*438“This act acknowledges, declares and codifies the existing right of assignment of interests under individual and group life and accident and health insurance policies.” (Emphasis added.)
No similar provision authorizing assignment of a policy interest is found in the KAIRA. See K.S.A. 40-3101 et seq. The detailed no-fault insurance provisions of the KAIRA, including PIP benefits, were created by the legislature. See Manzanares v. Bell, 214 Kan. 589, Syl. ¶ 16, 522 P.2d 1291 (1974) (upholding the constitutionality of the no-fault insurance act). K.S.A. 40-3107, the key statute here, relates to motor vehicle liability insurance. By enacting the KAIRA, the legislature created a statutory scheme that replaced, at least in part, traditional common-law principles of tort liability. For example: (1) Under the KAIRA every policy of insurance issued by an insurer to a Kansas resident must include PIP benefits, K.S.A. 40-3107(f); (2) the KAIRA contains a prompt payment requirement, K.S.A. 40-3110(a) (PIP benefits are “due and payable as loss accrues, upon receipt of reasonable proof of such loss.”); (3) under K.S.A. 40-3110(b), PIP benefits are overdue if not paid within 30 days after the insurer receives written notice of a covered loss, unless the insured has “reasonable proof to establish that it is not responsible for the payment”; (4) overdue payments accumulate simple interest at the rate of 18% per annum, K.S.A. 40-3110(b); and (5) reasonable attorney fees are provided “if the court finds that the insurer . . . unreasonably refused to pay the claim or unreasonably delayed in making proper payment.” K.S.A. 40-3111(b); DiBassie v. American Standard Ins. Co. of Wisconsin, 8 Kan. App. 2d 515, 522, 661 P.2d 812 (1983).
I do not take issue with the general proposition of contract law relating to the assignment of a chose in action relied on by Dr. Bolz. As I have noted, the legislature has addressed assignments in group and individual life and accident policies. See K.S.A. 40-439; K.S.A. 40-440. However, the legislative prerogative should trump the majority’s broad application of the chose-in-action public policy argument.
The majority has advanced Brenner v. Oppenheimer & Co., Inc., 273 Kan. 525, 44 P.3d 364 (2002), as a reason for reversing the district court here. Brenner was decided 3 months after this case *439was argued and submitted. Brenner is a choice of law case testing “the strength of Kansas public policy in the area of securities regulation.” 44 P.3d at 377. In Brenner, investors brought an action against Oppenheimer, a clearing broker, and employees of the introducing broker for violation of K.S.A. 17-1255 of the Kansas Securities Act in the sale of unregistered nonexempt securities.
Brenner concluded:
“Because Kansas’ public policy strongly favors the regulation of securities transactions for the protection of Kansas investors, we hold the choice of law provision to be invalid on public policy grounds. Thus, we overturn the district court’s decision and hold the choice of law provision in Oppenheimer’s standard form agreement invalid.” 44 P.3d at 380.
Although the facts in Brenner disqualify it as an apt precedential candidate for resolution of the KAIRA/PIP issue here, I find nothing in Brenner that is incompatible with affirmance of the district court. Brenner acknowledged and followed the legislative policy established by K.S.A. 17-1255 (unlawful to offer or sell certain unregistered securities).
I conclude that as a matter of policy the legislature, not this court, is the proper body to authorize the assignment of post-loss PIP benefits to a health care provider in face of a nonassignment clause in a KAIRA no-fault policy. A sampling of legislative treatment of assignments in other states shows that traditionally legislatures, not courts, have spoken specifically to the question of no-fault PIP benefit assignments.
The Uniform Motor Vehicle Accident Reparations Act (UMVARA) authorizes the assignment of benefits. Under the UMVARA, allowable expense benefits may be paid directly to persons supplying services. The claimant-insured may also assign any right to benefits accruing in the future to the extent the benefits are for the cost of services. UMVARA §§ 23(a), 29(2) (1972); 14 U.L.A. 90, 101 (1990).
Kentucky: “Medical expense benefits may be paid by the reparation obligor directly to persons supplying products, services, or accommodations to the claimant, if the claimant so designates.” Ky. Rev. Stat. Ann. § 304.39-210 (Mitchie/Bobbs-Merrill 1998).
*440Michigan: “An agreement for assignment of a right to benefits payable in the future is void.” Mich. Comp. Laws § 500.3143 (1993). The statute serves only to ban the assignment of benefits payable in the future and not those that are past due or presently due. Pro. Rehab. Associates v. State Farm, 228 Mich. App. 167, 172, 577 N.W.2d 909 (1998).
New Jersey: Personal injury protection benefits shall “[n]ot be assignable, except to a provider of service benefits under this section in accordance with policy terms approved by the commissioners, nor subject to levy, execution, attachment or other process for satisfaction of debts.” N.J. Stat. Ann. § 39:6A-4 (e)(2) (West 2002).

Colorado:

“A policy of motor vehicle insurance which provides coverage pursuant to [the No-Fault Act] shall allow, but not require, an insured under the policy to assign, in writing, payments due under the policy to a licensed hospital or other licensed health care provider for services provided to the insured which are covered under the policy.” Colo. Rev. Stat. (1993 Supp.) § 10-4-708.4(l)(a).
Florida: Florida’s no-fault law, Fla. Stat. § 627.736(5)(a) (1999), provides that an insurer may pay for services directly to the provider rendering the treatment if the insured receiving the treatment has countersigned the invoice, bill, or claim form approved by the Florida Department of Insurance. See Hartford Ins. Co. v. St. Mary’s Hosp., Inc., 771 So. 2d 1210, 1212 (Fla. App. 2000) (plaintiff hospital had no right to benefits in absence of assignment from insured).
McFarland, C.J., and Larson, J., join in the foregoing dissent.