Fann v. McGuffey

534 S.W.2d 770

• Court: Court of Appeals of Kentucky (pre-1976)
• Decided: November 26, 1975
• Status: Published

Opinions

PALMORE, Justice.

The plaintiffs in an action challenging the validity of a “no-fault” automobile insurance law¹ enacted by the 1974 General Assembly appeal from a judgment of the Franklin Circuit Court holding it “valid and constitutional in all respects.” Except for the standing of the original and intervening plaintiffs to raise some of the issues presented, we concur in the judgment.

After much controversy and parliamentary difficulties the act was put together and adopted in the very last hours of the 1974 session. Understandably, it is not free of ambiguities which must (and can) be ironed out by judicial construction to the extent that they are critical to this or any later judicial inquiry and by legislative amendment otherwise. We express this prefatory caveat to make it clear that our initial construction of what the law in its various aspects means or should mean need not be taken as final and binding unless within the context of this opinion such a construction is necessary to its constitutional survival.

The basic framework of the law is as follows:

1. Compulsory insurance.2

Except for governmental agencies, every owner of an automobile³ registered in Kentucky or operated by him in Kentucky⁴ must carry or provide insurance covering the payment of (a) tort liabilities for personal injuries (minimum $10,000 per person, $20,000 per accident) and property damage (minimum $5,000) and (b) no-fault “basic reparation benefits” (hereinafter called BRB).⁵ An owner or registrant who operates or permits his vehicle to be operated in this state without the required tort liability coverage commits a misdemeanor punishable by fine of not less than $50 nor more than $500.⁶

2. Benefits and liabilities.

Regardless of fault, every person suffering economic loss from a personal injury⁷ arising out of the maintenance or use of an automobile is entitled to BRB⁸ unless he has exercised the option to reject limitation of his tort rights.⁹ On the other side of the ledger, every person who registers, operates, maintains or uses an automobile on the public roadways of Kentucky is deemed, as a condition thereof, to have accepted certain limitations upon his tort rights unless he has filed with the Department of Insurance a written rejection.¹⁰ This is the heart of the no-fault plan.

A rejection of the tort limitations retains undiminished both liability and the right of recovery under tort principles, without affecting the right of one who has not submitted a rejection to recover BRB. That is to say, there is no restriction on the right of an injured claimant who collects BRB to recover the balance of his damages from a culpable defendant who has submitted an unrevoked rejection (the claimant’s insurer being subrogated to the extent of BRB paid). On the other hand, one who has rejected the tort limitations has the right to purchase from his insurer, for his own benefit, the same first-party benefits available to those who have not rejected the tort limitations.¹¹ Though he must in any event carry BRB coverage for the protection of third parties, his rejection does not prevent the purchase of no-fault benefits payable to himself.

As may be seen, the act limits rather than abolishes tort liability, and is a “modified” no-fault law.

8.Limitations upon benefits and liability•

BRB is¹² confined to “economic” loss consisting of medical expense, loss of work income, expense for assistance and, in the event of death, funeral expenses not exceeding $1,000 and certain other incidental losses to the survivors.¹³ Except for the item of medical expense it is limited¹⁴ to $200 per week and an over-all maximum of $10,000.¹⁵

Losses of this category in excess of the injured party’s BRB are recoverable from the tortfeasor free of any limitation imposed by the no-fault law.¹⁶ Though KRS 304.39-060(2)(a) speaks in terms of “abolishing” tort liability, it is an abolition only in the most technical sense, because in practicality the injured party’s right of recovery is enhanced by his entitlement to BRB without proof of fault. From his standpoint, it is only the necessity of proving fault that is abolished, and from the standpoint of the alleged tortfeasor, of course, whatever is abolished in the way of liability is all to the good. Therefore, KRS 304.39-060(2)(a) confers a positive benefit on both parties at no disadvantage at all to either of them.

The rub comes with KRS 304.39-060(2)(b), the next subsection, which is aimed at eliminating the main brunt of small personal-injury claims but undoubtedly will in some instances abolish claims for pain and suffering that are not so small.

KRS 304.39-060(2)(b) provides in substance that in any tort action against the owner, registrant, operator or occupant of an automobile for which the required liability and BRB coverage has been provided, or against a defendant who is responsible for the acts or omissions of such a party, the plaintiff may recover “for pain, suffering, mental anguish and inconvenience because of bodily injury, sickness or disease . only in the event” he meets one or more of the following “threshold” conditions:

(1) His reasonable medical expenses¹⁷ exceed $1,000 (disregarding exclusions and deductions) or, if he was entitled to and received free medical or surgical treatment, the value of such treatment was at least $1,000;

(2) The injury or disease includes one or more of the following:

(a) Permanent disfigurement;

(b) Fracture of a weight-bearing bone;

(c) A compound, comminuted, displaced or compressed fracture;

(d) Loss of a body member;

(e) Permanent injury within reasonable medical probability;

(f) Permanent loss of bodily function; or

(3) The injury results in death.

This limitation upon recovery for pain, suffering, mental anguish and “inconvenience” ¹⁸ does not apply if the plaintiff was not an “owner, operator, maintainer or user” of an automobile. Hence it does not apply to an injured pedestrian unless at the time of the accident he owns or maintains an automobile, or is an operator or user in the sense that upon occasion he drives, uses, or has driven or used an automobile on the roadways of this state.¹⁹ In this special respect, one who “uses” an automobile (e. g., a passenger) is not a “user” unless he is a named insured in a policy with BRB coverage or is covered as a member of the named insured’s household.²⁰ Nor does it apply if either the injured claimant or the person against whom his claim is asserted has rejected it.²¹

KRS 304.39-060(2)(a) and (b) lack some degree of clarity, partially because, it is said, subsection (b) was lifted out of context from the Florida statute.²² Apparently there has been some thought that KRS 304.39-060(2)(b) not only restricts recovery for pain, suffering, mental anguish and “inconvenience” but also limits it to those items of damage, thus eliminating, for example, the element of destruction or permanent impairment of earning capacity. But we see nothing to call for such a construction. Read carefully in this aspect, the statute says only that unless the threshold requirement is satisfied there can be no recovery of these particular, enumerated elements of damage. • If the threshold is met, there is no limitation on the kind or amount of damages recoverable over and above the BRB paid or payable to the plaintiff.²³

Factual questions vital to a determination of whether and to what extent tort limitations apply in any given litigation must, of course, be raised by the pleadings, and presumably are subject to trial by jury. Which party must plead what, and bear the burden of proving it, is a mundane detail of importance, we suppose, only to judges and practitioners of the art of litigation, since it appears thus far to have escaped attention all around. In the absence of legislative amendment to supply the deficiency it will just have to be hammered out on a case-by-case basis.

4. Option to reject.

Any person may reject the limitation of his tort rights and liabilities on a written form prescribed by the Department of Insurance. The natural parent or official guardian may exercise this option for a person under legal disability, but in no event is the person under disability deemed to have accepted the limitation until the expiration of six months from the time the no-fault law would otherwise have become applicable to him.²⁴ Once filed, a rejection is good for five years from date of its execution but may be revoked at any time.²⁵ The owner or operator of a motorcycle may separately reject for that particular vehicle, while otherwise accepting the benefits and limitations of the no-fault law.²⁶

A person involved in an accident who does not have BRB insurance but does have the required amount of tort liability coverage (KRS 304.39-110) is deemed to have rejected limitation of his tort rights and liabilities for that particular accident.²⁷

Provision is made for notice and explanation of the rejection option to all holders of automobile insurance.²⁸

5. Exceptions.

A person whose injuries arise out of the use or maintenance of an automobile he has converted is disentitled to BRB or added reparation benefits from any source other than an insurance policy under which he has such coverage as an insured.²⁹ A person injured in the course of attempting intentionally to injure either himself or another person is disentitled to such benefits from any source, as are his survivors if he dies.³⁰

6. Statute of limitations.

An action for tort recovery not foreclosed by KRS 304.39-060 must be commenced within two years after the injury or death or after the last payment of no-fault benefits, whichever is later.³¹ This provision remains subject to KRS 413.170(1), which extends the limitation period for infants and persons of unsound mind. Limitations on actions for no-fault benefits vary from one to four years after the accident or after the last payment of benefits, but are not pertinent to this inquiry except for KRS 304.39-230(5), which provides as follows:

“If a person entitled to basic or added reparation benefits is under legal disability when the right to bring an action for the benefits first accrues, the period of his disability is a part of the time limited for commencement of the action.”

7. Mandatory rate reduction.

A showcase feature of the act is that for at least one year beginning on July 1, 1975, the rates for minimum bodily injury liability coverage plus BRB and uninsured motorist coverage must be decreased by not less than 10% from the pre-existing rates for the same bodily injury coverage plus uninsured motorist and $1,000 per person medical expense coverage.³² It is of interest here only because it does not apply to any policy under which a person who would otherwise be entitled to BRB³³ has rejected the limitations on his tort rights and liabilities.³⁴

Almost half the states have enacted no-fault insurance laws of one kind or another. Five courts of last resort have decided constitutional challenges.³⁵ The Illinois act was declared invalid on grounds not applicable to this case. The personal injury portion of the Florida act was found valid in all respects except for the threshold criteria based on bone fractures, which were held discriminatory.³⁶ This background information has significance to the controversy now before us only because most of the main issues raised here were discussed and decided in one or more of the other cases.³⁷ None of them, however, involved the precise question presented by Sec. 54 of the Kentucky Constitution, which reads as follows:

“The General Assembly shall have no power to limit the amount to be recovered for injuries resulting in death, or for injuries to person or property.”

If the act meets the test of that provision (and we think it does), there can be no serious doubt that Secs. 7 (right of trial by jury), 14 (access to the courts) and 241 (recovery for wrongful death)³⁸ also are satisfied. If one has no right of action the guaranties of Secs. 7 and 14 can have no application. If, moreover, the Sec. 54 argument is overcome on the theory of implied consent, which obviously is the keystone of the act’s validity, then it would seem that the due process and equal protection arguments should fall by the same sword, because a public policy sufficient to justify an implied waiver of one constitutional protection ought to provide ah equally reliable basis for the implied waiver of other constitutional protections that are of no higher value in the context of the given circumstances. Hence the focus of our analysis in this case is directed mainly at the Sec. 54 question.

At the outset, the implied-consent theory must be recognized for what it is. As in the instance of contracts implied in law vis-a-vis contracts implied in fact, it necessarily stands on fiction rather than fact. But it is not thereby degraded or denigrated, because the venerated fictions of the law have been deliberately created to achieve what is right. The law simply declares that as done which ought to have been done. If implied-consent laws (or, for that matter, any other laws) had to depend on actual notice they could not exist. It seems to us, therefore, that the proper test of such a law is whether under all the circumstances, considering the public purpose sought to be accomplished and the nature and extent of detriment to the individual, it is reasonable for it to presume a consent where none exists in fact.

The argument of amicus curiae that the waiver of a constitutional right must be “knowing, voluntary and intelligent”³⁹ rests, of course, on the premise that the acceptance of no-fault limitations depends on consent implied in fact. As we have said, however, no implied-consent law could survive on that fare. That the right “waived” under an implied-consent law is a constitutional right does not of itself conjure any special magic.⁴⁰ Ordinarily, indeed, consent need be implied only because it is a constitutional right. Counsel’s notion that the familiar statutes under which a nonresident motorist is deemed to have appointed the secretary of state as his agent for service of process⁴¹ do not involve the loss of constitutional protections might, we suggest, be quickly dispelled by a review of Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877), and its subsequent history. Certainly the protection of an absent nonresident from a personal judgment rests upon the fundamental right of due process guaranteed by the 14th Amendment. If it were not so it would be unnecessary for the law to imply his acquiescence.

“Motor vehicles are dangerous machines, and, even when skillfully and carefully operated, their use is attended by serious dangers to persons and property. In the public interest the state may make and enforce regulations reasonably calculated to promote care on the part of all, residents and non-residents alike, who use its highways. . And, in advance of the operation of a motor vehicle on its highway by a non-resident, the state may require him to appoint one of its officials as his agent on whom process may be served in proceedings growing out of such use. . . . The difference between the formal and implied appointment is not substantial, so far as concerns the application of the due process clause of the Fourteenth Amendment.” Hess v. Pawlowski, 274 U.S. 352, 356-357, 47 S.Ct. 632, 633, 71 L.Ed. 1091 (1927).

Our views in this respect do not reflect a diminished conception of Sec. 54 as applied in Saylor v. Hall, Ky., 497 S.W.2d 218 (1973), Happy v. Erwin, Ky., 330 S.W.2d 412 (1959), and the earlier opinions they affirm. The statutes considered in those cases did not purport to imply consent of the persons whose rights were affected, and we do not say here that they could validly have done so.

In Wells v. Jefferson County, Ky., 255 S.W.2d 462 (1953), this court held valid, against the contention that it violated Sec. 54, an amendment of our Workmen’s Compensation Act⁴² providing that an employe is deemed to have accepted the act unless and until he files a written notice of rejection with his employer. There are differences, of course, between that case and this, but the fundamental similarities far outweigh the differences. Those of us who join in this opinion cannot fairly distinguish it or avoid it by declaring it unsound. There is no doubt that much reliance was placed upon its integrity as a guiding precedent by the members of the General Assembly in drafting and enacting the no-fault law.

The responsibility of pronouncing life-or-death judgment on a piece of legislation so important as this cannot be discharged by any exercise of legal virtuosity. It would be all too easy to tear it down and look brilliant in the execution, but it is the duty of the court to save it if possible, and not to condemn it if there is a reasonable doubt of its unconstitutionality. Cf. Harbison v. George, 228 Ky. 168, 14 S.W.2d 405, 406 (1929). We resolve any such doubt in its favor.

As one of the briefs suggested, the arguments have tended to obscure the fact that from the standpoint of what the individual gives up, this really is a rather innocuous law. The compulsory insurance aspect, about which there seems to be no legal question, is likely to rip off more skin than the limitation of tort rights. Considering the modest extent to which the scope of tort recovery is constricted, the no-fault law gives much more to the many than it takes from the few.

The object of our sharpest concern is the impact of the law upon infants and other persons under disability, but in this respect a misplaced emphasis has been placed on the right of rejection. The argument that a parent waives his child’s right to sue by failing to exercise the right of rejection for him misses the point that it is the child’s act in using an automobile, or the parent’s act in causing or permitting him to do so, that subjects him to the limitations imposed by the no-fault law. As expressly stated in KRS 304.39-060(1), implied consent to the law hangs on one’s use of the highways, not on the failure to reject, which really is in the nature of an added attraction.

Parents and custodians of persons under disability necessarily have the liberty to exercise or forego many options affecting the rights and welfare of the child or ward. A next friend may file suit for an infant, waive trial by jury, and lose the case, all without let or hindrance.⁴³ What he can or cannot do depends very largely on the gravity and likelihood of harm to which the child is thereby exposed. In the field of criminal law much protection has been thrown about the juvenile, but the policy considerations there cannot reasonably be equated with those involved in this ease. Usually, parents can be depended upon to do what they think best for their children, that being the generally reliable instinct of mankind. Considering the no-fault benefits that are disclaimed by a rejection, who is to say whether its exercise in a child’s behalf gives him more or takes more from him?

This point was settled in the context of the workmen’s compensation law by Greene v. Caldwell, 170 Ky. 571, 186 S.W. 648, 653 (1916). Since that time the rights of children have come to be regarded with far greater solicitude, but it is still a prerogative of the state to define the authority of a parent to act for a child.

Being of the opinion that a state’s undoubted authority to place conditions upon the use of its highways includes the power to require liability insurance and the acceptance of a no-fault system of loss distribution, we do not regard the option to reject as indispensable to the legal presumption that any person, sui juris or not, who uses the highways accepts those conditions, particularly in view of the obvious benefits to himself. Whether the option to reject is exercised does not involve the waiver of a constitutional right. If, on the other hand, the law did not provide for its exercise in some manner for a person under disability there might be real cause for a claim of discrimination.

Heretofore our statutes of limitation have been extended to permit one who is a minor when a right of action accrues in his behalf to bring suit within the same period of time after he reaches his majority.⁴⁴ To the extent that KRS 304.39-230(5) may provide otherwise it is claimed to be invalid. There is no authority, however, for a conclusion that such a saving provision is a constitutional necessity. It is a matter of legislative choice.

Aside from the Sec. 54 question, enough has been written by other courts on the due process and equal protection issues raised by this type of legislation to obviate any need for further extension here. We could add nothing to the fine opinions of Mr. Justice Reardon in Pennick v. Cleary, 360 Mass. 1, 271 N.E.2d 592 (1971), and Chief Justice Fatzer in Manzanares v. Bell, 214 Kan. 589, 522 P.2d 1291 (1974). Suffice it to say that in our opinion these constitutional protections are not violated.

The brief for appellee Kentucky Association of Trial Attorneys contends that the act does not apply to motor vehicles engaged in the transportation of persons for hire, and thereby violates Const. Sec. 59, which forbids special legislation where a general law can be made applicable. This argument is based on the exclusion contained in KRS 186.020. Such vehicles are, however, covered by KRS 186.050,⁴⁵ so in fact they are not excluded. The same constitutional point is made with reference to KRS 304.39-080(4), which excludes governmental agencies from the compulsory insurance requirement. This is not an unreasonable classification and therefore does not offend Sec. 59.

The brief for amicus curiae American Insurance Association suggests that none of the complaining parties had standing to litigate the rights of nonresident motorists and workmen’s compensation carriers. We agree.

In conclusion, it should not escape the attention of any of the litigants and other persons and parties interested in this case that essentially, much of the argument has amounted to little more than a questioning of the public policy on which the General Assembly based its action. It is elementary that the legislative branch of government has the prerogative of declaring public policy and that the mere wisdom of its choice in that respect is not subject to the judgment of a court. To those who may think, for example, that this law does not rest on considerations of policy comparable with those underlying the workmen’s compensation law, the answer is that the question has been settled by the only body having the legal right to make that judgment.

Nothing we have said here is intended to leave an inference that those of us joining in this opinion actually doubt the wisdom or soundness of the legislative action. The General Assembly has faced up to the responsibility, never easy under a constitution adopted before the day of carnage on the highways, of adapting the law to the exigencies of the 20th century. It is difficult for us to believe that those great men, conservative as they were, who labored so diligently in bringing forth that constitution, but nevertheless misjudged the efficacy of the amendment process, would really have it otherwise.

To the extent that it resolves issues the parties had no standing to raise, the judgment should be modified. As so modified it is affirmed.

All concur except for JONES, LUKOW-SKY and STERNBERG, JJ., who dissent.

1 . Ch. 385 (HB 314), Acts of 1974, carried into the statutes as KRS 304.39-010 to 304.-39-340, incl., and KRS 304.99-050. It becomes effective on July 1, 1975.

2 . According to the record in this case some 35% of the motor vehicles now being operated in Kentucky are uninsured.

3 . The statutory term is “motor vehicle,” defined as a vehicle required to be registered under KRS Ch. 186. KRS 304.39-080(5) and 304.39-020(7). We use “automobile” in that sense throughout this opinion.

4 . (Including operation by another with his permission.)

5 . KRS 304.39-080, 304.39-090, 304.39-110. Insurance companies doing business in this state are required to include both coverages in all policies (wherever issued) covering liability arising out of ownership, maintenance or use of an automobile while in this state. KRS 304.39-100(2).

6 . KRS 304.99-050.

7 . Property damage is not covered.

8 . BRB is paid by the insurer of the vehicle occupied by the injured person, or, if he was a pedestrian, by the insurer of the vehicle by which he was struck, or, if neither vehicle had such coverage, by the issuer of any policy under which the injured person is entitled to BRB. KRS 304.39-050. If there is no applicable BRB coverage, payment is made through an “assigned claims plan.” KRS 304.39-160.

9 . KRS 304.39-030.

10 . KRS 304.39-060.

11 . KRS 304.39-060(6) and (7), 304.39-140(5).

12 . It is less awkward to refer to it in the singular rather than plural.

13 . KRS 304.39-020(2) and (5).

14 . (Per person, per accident.)

15 . KRS 304.39-130, 304.39-020(2). Increased coverage can be purchased. Such coverage over and above BRB is called “added reparation benefits.” KRS 304.39-140, 304.39-020(1).

16 . KRS 304.39-060(2)(a) “abolishes” tort liability only to the extent that BRB is payable (or would be payable in the absence of a policy deduction).

17 . These are defined in KRS 304.39-020(5)(a).

18 . We shall not undertake to discuss whether or to what extent “inconvenience” is a permissible element of damages.

19 . We leave open the question of how much operation or use will suffice to make one an operator or user who is fully subject to no-fault limitations on his rights of recovery, except to say that a person who has not operated or used an automobile after July 1, 1975, the effective date of the act, could not constitutionally be deemed to have accepted such limitations.

20 . See KRS 304.39-020(3)(b) and (4) and KRS 304.39-050(1) for the provisions leading us to this construction.

21 . KRS 304.39-060(7) and (8).

22 . Fla.Stat. § 627.737(2).

23 . The words, “except to the extent noneco-nomic detriment qualifies under subsection (2)(b) hereof,” at the end of KRS 304.39-060(2)(a) are a meaningless appendage, since subsec. (2)(a) does not purport to affect recovery for noneconomic detriment anyway.

24 . KRS 304.39-060(4).

25 . KRS 304.39-060(5).

26 . KRS 304.39-060(9).

27 . KRS 304.39-060(4). Whether a carload of completely uninsured nonresidents can constitutionally be deemed to accept the no-fault limitations by crossing into this state on one of its highways is a question none of the parties had standing to raise. We leave it to abide the event.

28 . KRS 304.39-060(6).

29 . KRS 304.39-190.

30 . KRS 304.39-200.

31 . KRS 304.39-230(6).

32 . KRS 304.39-330(1).

33 . Since BRB coverage extends to certain members of the named insured’s household, cf. KRS 304.39-020(3), this means that the reduction will not apply if any one or more of the persons so covered exercises his option to reject.

34 . KRS 304.39-330(2).

35 . See Pinnick v. Cleary, 360 Mass. 1, 271 N.E.2d 592 (1971); Grace v. Howlett, 51 IU.2d 478, 283 N.E.2d 474 (1972); Opinion of the Justices, 113 N.H. 205, 304 A.2d 881 (1973); Lasky v. State Farm Insurance Company, Fla., 296 So.2d 9 (1974); and Manzanares v. Beii, 214 Kan. 589, 522 P.2d 1291 (1974).

36 . 296 So.2d at pp. 20, 21. The Florida law, however, is not based on implied consent.

37 . (For example, due process, equal protection, access to the courts, and the right to jury trial.)

38 . Whatever may be the involvement of Sec. 241 in this controversy, it is extremely tenuous.

39 . Cf. Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938); Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).

40 .That the scope of any specific constitutional privilege is defined by the values it was intended to protect is made clear in Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966).

41 . Cf. KRS 188.020.

42 . Ch. 82, Acts of 1952, now KRS 342.395.

43 . So may an infant’s personal injury claim against a city be lost by failure of someone to give the notice required by KRS 413.170. Galloway v. City of Winchester, 299 Ky. 87, 184 S.W.2d 890 (1944).

44 . KRS 413.170(1).

45 . Cf. Reeves v. Deisenroth, 288 Ky. 724, 157 S.W.2d 331, 138 A.L.R. 1493 (1941).