[334]*334ARMSTRONG, J.
Defendants Bonnie and Donald Hamilton appeal a grant of summary judgment in favor of plaintiff North Pacific Insurance Co. We affirm in part and reverse in part.
The facts are undisputed. Defendants are a wife and husband who owned a 1992 Mercury automobile. They were insured under a motor vehicle insurance policy issued by North Pacific. The policy had a $60,000 limit on liability coverage for one person in any one accident. It further provided, however, that it did
“not provide Liability Coverage for any person:
"* * * *
“10. For bodily injury or property damage to you or any family member to the extent that the limits of liability for this coverage exceed the limits of liability required by the Oregon financial responsibility law.”
(Emphasis in original.) The relevant Oregon financial responsibility law is ORS 806.070(2)(a), which sets the minimum liability coverage for bodily injury to one person in any one accident at $25,000.
The policy also provided $25,000 in personal injury protection (PIP). It went on to provide, however, that
“[r]egardless of the number of persons or organizations insured, policies or bonds applicable, claims made or insured motor vehicles to which this insurance applies, our liability for Personal Injury Protection benefits with respect to bodily injury sustained by any one insured in any one motor vehicle accident is limited as follows:
"* * * * *
«g * if:
“Any payments made by us under this insurance to an insured shall be applied in reduction of the amount of damages which, because of bodily injury sustained in the same accident, the insured may be entitled to recover from us for bodily injury liability insurance.”
(Boldface emphasis in original; italic emphasis supplied.)
[335]*335On July 13, 1994, Bonnie was involved in a single-car accident while driving the couple’s Mercury. Donald was a passenger in the car at the time. He sustained significant injuries in the accident, incurring economic damages in excess of $60,000. North Pacific paid $25,000 in PIP benefits to Donald or on his behalf. As North Pacific interpreted the policy, Bonnie’s liability coverage for the accident was $25,000, not $60,000, because Donald, who was both a family member and insured under the policy, was the person injured in the accident. Therefore, although Bonnie caused the accident and Donald’s economic damages were over $60,000, Donald was entitled to receive only $25,000 under the policy’s liability coverage. Moreover, North Pacific contended that Donald was not entitled to any further payments because, according to the policy, the $25,000 in PIP benefits was “to be applied in reduction of the amount of damages” due on the liability coverage. North Pacific argued, as a result, that the total amount of money that it was required to pay to Donald or on his behalf was $25,000. North Pacific filed an action for a declaration to that effect.
Defendants filed an answer and a counterclaim in the action. They argued that the declaration page for the policy stated that the maximum liability coverage was $60,000 and that any policy provision that purported to reduce that figure was ambiguous and unenforceable. They also argued that “[t]o the extent that the policy * * * provides for reimbursement of PIP payments, that provision is unenforceable as contrary to the provisions of ORS 742.544.” ORS 742.544 provides that PIP providers can be reimbursed for money that they have paid in PIP benefits only to the extent that the “total amount of benefits paid” to an insured “exceeds the economic damages as defined in ORS 18.560 suffered by that person.” Thus, according to defendants, even if the liability provisions of the policy were interpreted to provide a maximum of $25,000 in coverage, the PIP benefits paid to Donald could not be applied to reduce the amount owed on the liability coverage, because the reduction would cause Donald to receive less than the full amount of his economic damages, which exceeded $60,000. Both parties moved for summary judgment.
[336]*336The trial court granted summary judgment to North Pacific, declaring that the policy provisions were enforceable and that North Pacific’s interpretation of them was correct. Although the policy limited liability coverage for one person in any one accident to $60,000, the trial court noted that
“[a]n insurance company can legally exclude a specific category of persons from the higher coverage limits of a policy as long as it provides the minimum liability coverage required by the financial responsibility law. Collins v. Farmers [Ins. Co., 312 Or 337, 346, 822 P2d 1146] (1991).”
The trial court concluded that the policy unambiguously limited the payment of liability damages to people insured under it to $25,000, the minimum amount required by the Oregon financial responsibility law. See ORS 806.070(2)(a). Because Donald was insured under the policy, his coverage was so limited. The trial court also concluded that ORS 742.544 did not apply to the reduction of PIP benefits to Donald because the statute spoke of “reimbursement” rather than “reduction.” As a result, the policy provision that reduced the liability damages by the amount of PIP benefits paid to or on behalf of Donald was enforceable. Thus, the $25,000 in liability damages otherwise payable to Donald was reduced by the $25,000 in PIP benefits that had already been paid.
Defendants assign error on appeal to both of the trial court’s conclusions. Because we agree with the trial court’s analysis, we affirm without discussion its conclusion that the provision limiting liability coverage to $25,000 for those insured under the policy is both enforceable and applicable to Donald.
Turning to the second assignment of error, the issue is whether ORS 742.544 applies to the policy provision that provides that any PIP benefits paid to, or on behalf of, an insured “shall be applied in reduction of the amount of damages which, because of bodily injury sustained in the same accident, the insured may be entitled to recover from us for bodily injury liability insurance.” (Emphasis in original.) To resolve that issue, we must determine the legislature’s intent in passing ORS 742.544. We do that by examining the text of the statute in context, turning to legislative history only if we cannot determine the meaning of the statute from that [337]*337review. PGE v. Bureau of Labor and Industries,
Free access — add to your briefcase to read the full text and ask questions with AI
[334]*334ARMSTRONG, J.
Defendants Bonnie and Donald Hamilton appeal a grant of summary judgment in favor of plaintiff North Pacific Insurance Co. We affirm in part and reverse in part.
The facts are undisputed. Defendants are a wife and husband who owned a 1992 Mercury automobile. They were insured under a motor vehicle insurance policy issued by North Pacific. The policy had a $60,000 limit on liability coverage for one person in any one accident. It further provided, however, that it did
“not provide Liability Coverage for any person:
"* * * *
“10. For bodily injury or property damage to you or any family member to the extent that the limits of liability for this coverage exceed the limits of liability required by the Oregon financial responsibility law.”
(Emphasis in original.) The relevant Oregon financial responsibility law is ORS 806.070(2)(a), which sets the minimum liability coverage for bodily injury to one person in any one accident at $25,000.
The policy also provided $25,000 in personal injury protection (PIP). It went on to provide, however, that
“[r]egardless of the number of persons or organizations insured, policies or bonds applicable, claims made or insured motor vehicles to which this insurance applies, our liability for Personal Injury Protection benefits with respect to bodily injury sustained by any one insured in any one motor vehicle accident is limited as follows:
"* * * * *
«g * if:
“Any payments made by us under this insurance to an insured shall be applied in reduction of the amount of damages which, because of bodily injury sustained in the same accident, the insured may be entitled to recover from us for bodily injury liability insurance.”
(Boldface emphasis in original; italic emphasis supplied.)
[335]*335On July 13, 1994, Bonnie was involved in a single-car accident while driving the couple’s Mercury. Donald was a passenger in the car at the time. He sustained significant injuries in the accident, incurring economic damages in excess of $60,000. North Pacific paid $25,000 in PIP benefits to Donald or on his behalf. As North Pacific interpreted the policy, Bonnie’s liability coverage for the accident was $25,000, not $60,000, because Donald, who was both a family member and insured under the policy, was the person injured in the accident. Therefore, although Bonnie caused the accident and Donald’s economic damages were over $60,000, Donald was entitled to receive only $25,000 under the policy’s liability coverage. Moreover, North Pacific contended that Donald was not entitled to any further payments because, according to the policy, the $25,000 in PIP benefits was “to be applied in reduction of the amount of damages” due on the liability coverage. North Pacific argued, as a result, that the total amount of money that it was required to pay to Donald or on his behalf was $25,000. North Pacific filed an action for a declaration to that effect.
Defendants filed an answer and a counterclaim in the action. They argued that the declaration page for the policy stated that the maximum liability coverage was $60,000 and that any policy provision that purported to reduce that figure was ambiguous and unenforceable. They also argued that “[t]o the extent that the policy * * * provides for reimbursement of PIP payments, that provision is unenforceable as contrary to the provisions of ORS 742.544.” ORS 742.544 provides that PIP providers can be reimbursed for money that they have paid in PIP benefits only to the extent that the “total amount of benefits paid” to an insured “exceeds the economic damages as defined in ORS 18.560 suffered by that person.” Thus, according to defendants, even if the liability provisions of the policy were interpreted to provide a maximum of $25,000 in coverage, the PIP benefits paid to Donald could not be applied to reduce the amount owed on the liability coverage, because the reduction would cause Donald to receive less than the full amount of his economic damages, which exceeded $60,000. Both parties moved for summary judgment.
[336]*336The trial court granted summary judgment to North Pacific, declaring that the policy provisions were enforceable and that North Pacific’s interpretation of them was correct. Although the policy limited liability coverage for one person in any one accident to $60,000, the trial court noted that
“[a]n insurance company can legally exclude a specific category of persons from the higher coverage limits of a policy as long as it provides the minimum liability coverage required by the financial responsibility law. Collins v. Farmers [Ins. Co., 312 Or 337, 346, 822 P2d 1146] (1991).”
The trial court concluded that the policy unambiguously limited the payment of liability damages to people insured under it to $25,000, the minimum amount required by the Oregon financial responsibility law. See ORS 806.070(2)(a). Because Donald was insured under the policy, his coverage was so limited. The trial court also concluded that ORS 742.544 did not apply to the reduction of PIP benefits to Donald because the statute spoke of “reimbursement” rather than “reduction.” As a result, the policy provision that reduced the liability damages by the amount of PIP benefits paid to or on behalf of Donald was enforceable. Thus, the $25,000 in liability damages otherwise payable to Donald was reduced by the $25,000 in PIP benefits that had already been paid.
Defendants assign error on appeal to both of the trial court’s conclusions. Because we agree with the trial court’s analysis, we affirm without discussion its conclusion that the provision limiting liability coverage to $25,000 for those insured under the policy is both enforceable and applicable to Donald.
Turning to the second assignment of error, the issue is whether ORS 742.544 applies to the policy provision that provides that any PIP benefits paid to, or on behalf of, an insured “shall be applied in reduction of the amount of damages which, because of bodily injury sustained in the same accident, the insured may be entitled to recover from us for bodily injury liability insurance.” (Emphasis in original.) To resolve that issue, we must determine the legislature’s intent in passing ORS 742.544. We do that by examining the text of the statute in context, turning to legislative history only if we cannot determine the meaning of the statute from that [337]*337review. PGE v. Bureau of Labor and Industries, 317 Or 606, 610-11, 859 P2d 1143 (1993).
ORS 742.544 provides:
“(1) A provider of personal injury protection benefits shall be reimbursed for personal injury protection payments made on behalf of any person only to the extent that the total amount of benefits paid exceeds the economic damages as defined in ORS 18.560 suffered by that person. As used in this section, ‘total amount of benefits’ means the amount of money recovered by a person from:
“(a) Applicable underinsured motorist benefits described in ORS 742.502(2);
“(b) Liability insurance coverage available to the person receiving the personal injury protection benefits from other parties to the accident;
“(c) Personal injury protection payments; and
“(d) Any other payments by or on behalf of the party whose fault caused the damages;
“(2) Nothing in this section requires a person to repay more than the amount of personal injury protection benefits actually received.”
(Emphasis supplied.) Defendants argue that the trial court erred when it concluded that the statute does not apply to situations in which the insurance company that pays the PIP benefits also pays the liability damages. We agree. The statute refers to “[a] provider of personal injury protection benefits” and outlines precisely when and to what extent that provider can recover PIP benefits it pays to, or on behalf of, an injured insured. It does not distinguish between PIP providers that provide the relevant liability insurance coverage and those that do not. In this case, North Pacific is a PIP provider that provided PIP benefits to Donald. ORS 742.544 identifies the factors relevant to the determination whether North Pacific will be able to recover those payments.
That reading of the statute is consistent -with its apparent purpose, which is to reverse the priority between injured insureds and their PIP providers. Before the enactment of ORS 742.544, a PIP provider was entitled to recover the amount of money that it paid in PIP benefits to an injured [338]*338insured before the insured received any benefits from the relevant liability insurance. See Babb v. Mid-Century Ins. Co., 110 Or App 67, 71, 821 P2d 424 (1991), rev den 313 Or 209 (1992). By enacting ORS 742.544, the legislature reversed the order of recovery in an attempt to protect, to the extent possible, an injured insured’s ability to recover his or her economic damages. Under the statute, the PIP provider is entitled to recover money it has paid in PIP benefits “only to the extent that the total amount of benefits paid exceeds the economic damages as defined in ORS 18.560” suffered by the insured. ORS 742.544. Thus, an injured insured’s right to retain benefits prevails over the PIP provider’s right to recover money paid in the form of PIP benefits. Given that the intent of the statute is to protect injured insureds and that the statute refers very broadly to “[a] provider of [PIP] benefits,” it makes sense that it protect all injured insureds and apply to all PIP providers.
Despite that, North Pacific argues that the legislature’s use of the term “reimbursement” in ORS 742.544 requires that an injured insured whose PIP provider, coincidently, provides the relevant liability insurance be denied the protection afforded by ORS 742.544 because one provider cannot reimburse itself. North Pacific’s analysis is flawed in two respects. First, even if we were to agree that, under the statute, the liability provider reimburses the PIP provider, we disagree with the premise that one provider cannot reimburse itself. Reimburse means “to make restoration or payment of an equivalent to.” Webster’s Third New International Dictionary 1914 (unabridged ed 1993) (emphasis supplied). Thus, ORS 742.544 can be understood to specify when and to what extent the amount of money paid in PIP benefits to the injured insured will be restored to the PIP provider. Whether the funds are restored by an offset, reduction or payment is irrelevant. The focus of the statute is on when the funds will be restored, not on how they will be restored or by whom. One provider can restore funds that it has paid out in PIP benefits by offsetting the appropriate amount from the funds it provides under a liability policy.1
[339]*339Second, we disagree with North Pacific’s premise that the liability provider “reimburses” the PIP provider. The statute does not explicitly state who will reimburse the PIP provider; it merely states that the PIP provider will be reimbursed when the “total amount of benefits paid” by the injured insured exceed the injured insured’s economic damages. In calculating the total amount of benefits, four different sources of benefits for the insured are considered. ORS 742.544(1). Technically, the injured insured has “recovered” those benefits and it is from those benefits that the PIP provider is reimbursed. Thus, technically, it is the injured insured who reimburses the PIP provider. As a practical matter, the liability provider may actually reimburse the PIP provider, but that practical reality is unimportant in understanding the legislature’s intent in drafting the statute. 2 We conclude that the use of the word “reimbursed” in the statute does not change our understanding of it.3 ORS 742.544 [340]*340applies to the present case. To the extent that the policy conflicts with the statute, it is unenforceable.
[341]*341Applying the statute to this case, we conclude that North Pacific cannot offset the PIP payments made to Donald from the liability payments it owes him. Under ORS 742.544, North Pacific, as a PIP provider, is entitled to be reimbursed for the PIP payments it made to or on behalf of Donald “to the extent that the total amount of benefits paid exceeds the economic damages as defined in ORS 18.560 suffered by” Donald. See ORS 742.544. It is undisputed that Donald’s economic damages exceed $60,000. Therefore, North Pacific is entitled to reimbursement of the $25,000 in PIP payments only if the total amount of benefits paid to Donald exceeds $60,000. In calculating the benefits paid, we note that there is no indication in the record that Donald had underinsured motorist benefits or that there were any “other payments by or on behalf of the party whose fault caused the damages.” See ORS 742.544(l)(a), (d). Thus, the total amount of benefits in this case equals $50,000: $25,000 in PIP benefits and $25,000 in liability insurance coverage available to Donald from other parties to the accident, namely Bonnie.4 See ORS 742.544(b), (c). Because, in this case, the total amount of benefits does not exceed Donald’s economic damages, North Pacific is not entitled to reimbursement of the PIP benefits that it paid to Donald or on his behalf. The trial court erred, [342]*342therefore, in granting plaintiffs motion for summary judgment on that issue and in denying defendants’ cross-motion on it.
The concurrence agrees that the trial court erred in granting plaintiffs motion for summary judgment on the application of the PIP benefits, but for different reasons. It concludes that the effect of the provision that purports to limit North Pacific’s liability for PIP benefits is to “reduce liability limits below the minimum, $25,000, required by the financial responsibility law, ORS 806.070(2)(a).” 153 Or App at 345. The concurrence’s position contradicts the express provisions of the insurance policy. The section of the policy on liability coverage provides liability coverage of $60,000 for one person in any one accident unless the injured person is insured under the policy, in which case the liability coverage is limited to the minimum required by the financial responsibility law. On its face, that section complies with ORS 806.070(2)(a). The provision in dispute addresses the PIP benefits provided under the policy. It states that an insured has $25,000 in PIP unless North Pacific provides the relevant liability coverage, in which case North Pacific limits its “liability for [PIP] benefits” by reducing the amount of damages the insured “may be entitled to recover from us for bodily injury liability insurance.” Placed in context, it is evident that, although it achieves it by reducing the amount paid to the insured after liability is established, the provision is intended to reduce the amount of PIP provided. It does not have any effect on North Pacific’s compliance with ORS 806.070(2)(a).
Faced with nearly identical facts, the Supreme Court reached the same conclusion in Edwards v. Bonneville Auto. Ins. Co., 299 Or 119, 121, 699 P2d 670 (1985). The defendant in Edwards had issued a motor vehicle insurance policy to a third party, Nilson. That policy provided for PIP coverage and for $15,000 of liability coverage, which was the minimum then required under Oregon law. It also had a provision that stated that
“ ‘[a]ny payments made by the Company under this insurance either as [PIP] benefits to or on behalf of [any] injured person or as reimbursement, pursuant to ORS 743.800 to [343]*343743.835 inclusive, to any other insurer or organization for such benefits paid by it shall be applied in reduction of the amount of damages which, because of bodily injury sustained in the same accident, such injured person may be entitled to recover from the Company or any other insurer under insurance afforded for either bodily injury liability or protection against uninsured motorists.’ ”
Id. at 121 (emphasis supplied). While that policy was in force, Nilson was in a single-car accident. The plaintiff was a passenger in the car and was injured. Because the plaintiff was a passenger in the car, the defendant was both the PIP provider and the liability insurer. The defendant paid the plaintiff $15,000 under the policy. It took the legal position that it was
“entitled to set off personal injury protection payments against bodily injury liability coverage so that the payment of $15,000 in this case represents all of the personal injury protection payments requested by the plaintiff and the remainder of the bodily injury liability coverage available under Mr. Nilson’s policy.”
Id. at 122. The trial court ruled in favor of the defendant and the plaintiff appealed.
The Supreme Court stated that the issue in the case was whether, “because of a provision in the policy, the defendant motor vehicle liability insurer is entitled to an offset against its liability policy limits for the sum it has paid to an injured person as [PIP] benefits.” Id. at 121 (footnotes omitted). It summarized the relevant provision as follows:
“Any PIP benefits payments made by the company to any insured person shall be applied to reduce the amount of damages which, because of bodily injury, the injured person may be entitled to recover from the company under insurance afforded for bodily injury.”
Id. at 125. It continued:
“The parties agree that plaintiff was an insured person and that the company was obligated to pay to him PIP benefits. They agree that he was entitled to recover damages for the bodily injury from Nilson and thereby, although indirectly, from the company. If we assume, for the sake of argument, that plaintiff was entitled to recover damages from Nilson [344]*344in an amount greater than the sum of $26,000 [the amount of PIP benefits + amount of liability coverage], nevertheless, he was entitled at the most to have the company pay only $15,000 under its liability coverage. The policy provision gives the company the right to apply PIP benefits payments in reduction of that amount, even though the company charged a premium for each coverage. It follows that the policy requires the company to pay $11,000 for PIP benefits and allows the company to reduce the amount payable under its liability coverage in that amount. That means that the payment of $15,000 exhausts the company’s obligation under the policy.”
Id. at 125-26.
In substance, the policy provision in Edwards is identical to the provision addressed in this case, and the Supreme Court viewed the provision the same way that we do today. Although the court spoke of reducing “the amount payable under its liability coverage” by the amount of PIP benefits paid to the plaintiff, it understood that the plaintiff was entitled “at the most to have the company pay” the limit of its liability coverage. Id. at 126. In other words, although the provision spoke of reducing liability coverage, the court understood that the provision had the effect of reducing PIP coverage.
Ultimately, the court in Edwards concluded that the insurance company could reduce PIP in that manner. However, as we have already explained, that conclusion is no longer tenable under ORS 742.544. Under ORS 742.544, a PIP provider can be reimbursed “only to the extent that the total amount of benefits paid exceeds the economic damages as defined in ORS 18.560 suffered by” the injured insured. Because, in this case, the total amount of benefits does not exceed Donald’s economic damages, North Pacific is not entitled to reimbursement of the PIP benefits that it paid to Donald or on his behalf. The trial court erred, therefore, in granting plaintiffs motion for summary judgment on that issue and in denying defendants’ cross-motion on it.
Summary judgment on reimbursement of PIP benefits reversed and remanded; otherwise affirmed.