Court Opinion

ID: 9660152
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:06:34.177737+00
Date Added: 2024-06-11T18:14:13.617700
License: Public Domain

Robert L. Brown, Justice, dissenting. I dissent because I disagree that Higginbotham v. Arkansas Blue Cross and Blue Shield, 312 Ark. 199, 849 S.W.2d 464 (1993), should be overruled under the facts of this case. The majority adopts an absolute full-recovery rule which is at odds with the trend. Most recent cases hold that the clear and unambiguous terms of an insurance contract can modify the common law principle of full recovery, as discussed below. Indeed, the majority opinion cites no caselaw to the effect that a clear and unambiguous contract cannot alter full recovery. I further dissent because the majority misstates my concurring opinion in Higginbotham in an effort to designate Higginbotham a plurality decision. I clearly joined the majority in Higginbotham on the issue of whether the contract controlled when third-party benefits paid to the insured were for the same risk. I. Conventional Subrogation That an express contract can ultimately control the subrogation issue, even when an insured has not fully recovered from his loss, is obvious based on recent cases. See, e.g., Fields v. Farmers Ins. Co., Inc., 18 F.3d 831 (10th Cir. 1994); Wine v. Globe Am. Cas. Co., 917 S.W.2d 558 (Ky. 1996); Hershey v. Physicians Health Plan of Minn., Inc., 498 N.W.2d 519 (Minn. App. 1993), following Westendorf v. Stasson, 330 N.W.2d 699 (Minn. 1983) (requiring full recovery in absence of express contract terms to the contrary); Unified School Dist. No. 259 v. Sloan, 19 Kan. App. 2d 445, 871 P.2d 861 (1994) (following Higginbotham). In Fields v. Farmers Ins. Co., Inc., supra, the Tenth Circuit Court of Appeals cited the general rule that an insurer is not entitled to subrogation until the insured has been fully compensated but then went on in no uncertain terms to state that the clear and unambiguous terms of an insurance contract can modify that common law principle: Of those jurisdictions following the rule, many allow the rule to be overridden by provisions in an insurance contract. See, e.g., Shelter Ins. Co., 498 N.W.2d at 79; Higginbotham v. Arkansas Blue Cross & Blue Shield, 312 Ark. 199, 849 S.W.2d 464, 466-67 (Ark. 1993); Culver v. Insurance Co. of N. Am., 115 N.J. 451, 559 A.2d 400, 402-04 (1989); Hill v. State Farm Mut. Auto. Ins. Co., 765 P.2d 864, 868 (Utah 1988); Garrity, 253 N.W.2d at 515-16; Peterson v. Ohio Farmers Ins. Co., 175 Ohio St. 34, 191 N.E.2d 157, 159 (1963); but see Powell v. Blue Cross & Blue Shield, 581 So.2d 772, 111 (Ala. 1990) (“[A] prerequisite to the right of subrogation is the full compensation of the insured. In effect, an attempt to contract away this prerequisite . . . would defeat the right itself.”).1 As the Arkansas Supreme Court stated, “Without discounting the equitable properties of subrogation, we can conceive of no sound reason why broad principles of equity should be imbued with dominance over clear and specific provisions of a contract agreed to by the parties, at least where public policy considerations are wanting.” Higginbotham, 849 S.W.2d at 466. Here, the clear language of the insurance contract provides that GEHA shall be subrogated to any recovery that plaintiff receives from the negligent third party or its insurer. Plaintiff has not identified, nor have we discerned, public policies that would compel the Oklahoma court to disregard the clear and unambiguous subrogation provisions of this insurance contract. We conclude that if faced with this issue, the Oklahoma Supreme Court would enforce the subrogation provisions on grounds that parties to an insurance contract are free to modify general common law principles that would apply absent express contractual provisions. Fields, 18 F.3d at 835-36. The Courts of Appeal in Hershey v. Physicians Health Plan of Minn., Inc., supra, and Unified School Dist. No. 259 v. Sloan, supra, and the Kentucky Supreme Court in Wine v. Globe Am. Cas. Co., supra, employ the same reasoning — clear and unambiguous language of an insurance contract may modify the full-recovery rule. In addition, Couch on Insurance contains the following statement on the effect of express policy provisions on the full-discovery rule: “Where the right of an insurer to subrogation is expressly provided for in the policy, its rights must be measured by, and depend solely on, the terms of such provisions.” 16 Couch on Insurance 2d § 61:23, p. 101 (1983). We are hampered in the instant case by not knowing what the subrogation clause in the Healthsource policy provides. The policy is not part of the record in this case. Nevertheless, Health-source hangs its hat on the language of the assignment agreement, and that language reads: ASSIGNMENT OF BENEFITS I HEREBY ASSIGN TO HEALTHSOURCE ANY AND ALL BENEFITS PAYABLE BY ANY INSURANCE, INCLUDING BUT NOT LIMITED TO LIABILITY INSURANCE AND UNINSURED MOTORIST INSURANCE RELATING TO MY ACCIDENT/INJURY ON 3-31-94, TO THE EXTENT NECESSARY TO COVER ALL SERVICES RENDERED BY AND BENEFIT PROVIDED BY HEALTHSOURCE. I DO THIS WITH FULL UNDERSTANDING OF HEALTHSOURCE’S CONTRACTUAL RIGHTS OF RECOVERY/SUBROGATION AND COORDINATION OF BENEFITS. I AUTHORIZE HEALTH-SOURCE TO RELEASE INFORMATION NECESSARY TO PURSUE THIS CASE. Here, though the first sentence of the assignment is clear, the second sentence appears to premise the assignment on Healthsource’s contractual rights in the insurance policy. Without knowing how the policy provides for subrogation rights in the carrier, we are left without an essential piece of the puzzle. This in itself is sufficient reason not to overrule Higginbotham. We do not know the full agreement of the parties. • In short, the majority errs in adopting an absolute full-recovery rule which eliminates any possibility of an insured’s agreeing to subrogation or assignment with the carrier. There are ways to assure that the insured is fully apprised of an agreement and what benefits are being relinquished. Moreover, by eliminating subrogation, assignment, and indemnification across the board absent full recovery, insurance rates in Arkansas may well increase for all insureds. Should the insured be entitled to opt for a subrogation clause and lower premiums on the one hand or full recovery on the other? Perhaps not, but such a policy decision is better addressed by the General Assembly. II. Holding in Higginbotham Finally, Higginbotham was not a plurality opinion on the issue of whether an express contract can control subrogation for benefits paid out for the same risk. A contract can control that facet. My complete concurring opinion in Higginbotham follows: I agree that Blue Cross should be subrogated under its insurance policy to benefits paid for the same risk that it covered which is medical care due to personal injury. Based on the record before us, it is impossible to tell what State Farm’s liability benefit of $25,000 involved. Presumably it was liability coverage for bodily injury only. Blue Cross should only recover by subrogation to the extent that there has been double recovery by the insured for the same damages covered by Blue Cross. Had the appellant shown that part of the State Farm benefits were for damages other than for medical treatment, I would disallow subrogation for the non-medical portion of the benefits paid for public policy reasons. However, that was not done, perhaps because the parties understood that the liability coverage only went to bodily injury. For that reason I concur with the opinion. To summarize, the salient points of my concurring opinion were: (1) the insurance policy controlled the subrogation issue for benefits paid by a third-party carrier for the same risk; (2) Blue Cross should only recover under subrogation if the insured had recovered both from Blue Cross and the third-party carrier for the same risk (double-recovery); and (3) if benefits were paid in by the third-party carrier for a different risk, public policy should prevent Blue Cross from enforcing its subrogation rights. Subrogation after full recovery by the insured was not the issue in Higginbotham, as it is not the issue in the instant case. Thus, the term “double recovery” was used only in the sense of the insured receiving benefits from two carriers for the same risk. I respectfully dissent.   This was a plurality decision.