Tom Lewis v. Allstate Insurance Company

• Court: Court of Appeals of Texas
• Decided: March 16, 2006
• Docket: 09-05-00225-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-05-225 CV ____________________

TOM LEWIS, Appellant

V.

ALLSTATE INSURANCE COMPANY, Appellee

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On Appeal from the County Court at Law No. 2 Montgomery County, Texas Trial Cause No. 04-01-00178-CV

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MEMORANDUM OPINION

Appellant Tom Lewis appeals from the granting of appellee Allstate Insurance Company's ( hereinafter "Allstate") traditional motions for partial summary judgment and summary judgment. We affirm.

Background

Lewis, who was insured under an automobile liability policy issued by Allstate Indemnity Company ("AIC"), made a claim for uninsured motorist benefits after being injured in an automobile accident. After corresponding for several months with AIC about his claim, Lewis retained counsel. Lewis's counsel sent a demand letter to AIC for full uninsured motorist benefits under the policy. A representative of Allstate Insurance Company responded, indicating she would be responsible for handling the claim and requesting additional information. Allstate's representative subsequently sent a letter to counsel which stated, in pertinent part:

You have asked us to make payment to you and your client without protecting the federal government's right of subrogation in this claim. We have information that Medicare has made payments for treatment rendered as a result of this accident and we do not feel that we can safely send a check to you and your client without protecting their interest.

. . . .

If you are convinced in your belief that the government has no valid subrogation right, we ask that you write to the federal agency involved and get a written response from them that tells us that they are not going to seek subrogation in this particular case so that we may safely pay you and your client without the possibility of having later to reimburse them for their interest.

AIC proposed to pay $20,000 to settle Lewis's claim and forwarded a check for that amount naming Lewis, Lewis's counsel, and Medicare as co-payees. Lewis's counsel rejected the check, and Lewis subsequently sued Allstate Insurance Company. In his lawsuit, Lewis alleged Allstate breached its contract by naming Medicare as a co-payee on the settlement check, and he also sought damages under article 21.55 of the Texas Insurance Code for failure to promptly pay his claim. See Act of May 27, 1991, 72nd Leg., R.S., ch. 242, § 11.03, 1991 Tex. Gen. Laws 939, 1043, repealed by Act of May 22, 2003, 78th Leg., R.S., ch. 1274, § 26(a)(1), 2003 Tex. Gen. Laws 3611, 4138.

Allstate filed a traditional motion for summary judgment, in which it alleged it did not breach its contract with Lewis because no express agreement existed as to how the settlement check would be issued, and it was not liable to Lewis under article 21.55 of the Texas Insurance Code because AIC, not Allstate, issued Lewis's insurance policy. Allstate also filed a traditional motion for partial summary judgment, in which it asserted it properly included Medicare as a co-payee on the settlement check because it was obligated to protect Medicare's interest. The trial court entered an order granting Allstate's motion for partial summary judgment. In its order, the trial court found that

[t]he inclusion of Medicare as a payee on a check tendered to pay policy benefits is proper in this matter. At the time the check was issued the amount of the Medicare claim was unknown by Plaintiff and remains unknown today. There is no requirement pursuant to law for an insurance company to independently obtain the amount of Medicare's lien prior to issuing a draft for policy benefits.

On the same date, the trial court entered an order that granted Allstate's Motion for Summary Judgment and ordered that Lewis take nothing.

Standard of Review

We review the trial court's summary judgment orders de novo. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). With a traditional motion for summary judgment, the movant bears the burden of establishing that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995). A defendant moving for summary judgment must negate at least one element of each of the plaintiff's theories of recovery or plead and conclusively establish each element of an affirmative defense. Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). If the moving party produces evidence entitling it to summary judgment, the burden shifts to the nonmovant to present evidence that raises a material fact issue. Walker v. Harris, 924 S.W.2d 375, 377 (Tex.1996). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in his favor. Id at 549.

Lewis's Issues

In two issues, Lewis asserts the summary judgments are erroneous because (1) Allstate breached its contract by including Medicare as a co-payee on the settlement check issued to Lewis and (2) Allstate has a duty to investigate the amount of Medicare's interest. ⁽¹⁾ As Lewis concedes, Medicare may seek reimbursement from an insurance company that knew or should have known about payments made by Medicare but failed to protect Medicare's rights. See 42 U.S.C.A. § 1395y(b)(2)(B)(ii) (West Supp. 2005). Citing our opinion in Texas Farmers Ins. Co. v. Fruge, 13 S.W.3d 509, 511 (Tex. App.--Beaumont 2000, pet. denied), Lewis correctly asserts "that it is a breach of contract for an insurer to include Medicare on a benefit check where the insurer had no reason to suspect that Medicare had any entitlement to a portion of the benefits paid." As Lewis notes, we also held in Fruge that the insurer "may have been correct in not making an unconditional payment to [the claimant] reimbursing her for expenses it should have known had already been paid by Medicare." Id.

Relying solely upon Fruge, Lewis argues that Allstate breached its contract and its alleged duty to determine the amount paid by Medicare. Lewis maintains that in Fruge, this Court "clearly place[d] the burden of determining Medicare's right of recovery . . . with the insurer obligated to Medicare." We reject this interpretation of Fruge. In Fruge, the insurer knew Medicare had made a payment of $168.56, yet the insurer included Medicare as a co-payee on checks totaling $1,352. Id. In this case, although the precise amount of the payments made by Medicare was unknown during settlement negotiations, both parties knew Medicare had issued payments for Lewis's medical treatment. ⁽²⁾ Furthermore, Lewis produced no evidence raising a genuine issue of material fact as to any agreement regarding how the settlement check was to be issued. Therefore, Allstate did not breach its contract with Lewis by including Medicare as a co-payee on the settlement check. See id.

Nothing in Fruge suggests that insurers must independently investigate the amount of Medicare benefits paid to claimants before issuing a settlement check, and we decline Lewis's invitation to impose such a duty. See id. Although we held in Fruge that the insurer wrongly named Medicare as a co-payee for the full amount of the benefits when the precise amount Medicare paid was known, we merely reformed the trial court's judgment to allow the insurer to show Medicare as a co-payee for the amount actually paid by Medicare; the remainder of the funds were to be paid directly to the claimant. Id. The trial court did not err in granting Allstate's motions for partial summary judgment and summary judgment. Lewis's first and second issues are overruled, and the judgments of the trial court are affirmed.

AFFIRMED.

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CHARLES KREGER

Justice

Submitted on January 2, 2006

Opinion Delivered March 16, 2006

Before McKeithen, C.J., Gaultney and Kreger, JJ.

1. Allstate's motion for summary judgment also asserted Allstate Insurance Company is not liable to Lewis under article 21.55 of the Texas Insurance Code because a separate entity, Allstate Indemnity Company, issued Lewis's policy. See Act of May 27, 1991, 72nd Leg., R.S., ch. 242, § 11.03, 1991 Tex. Gen. Laws 939, 1043, repealed by Act of May 22, 2003, 78^th Leg., R.S., ch. 1274, § 26(a)(1), 2003 Tex. Gen. Laws 3611, 4138. However, Lewis does not assert an issue on appeal as to this basis for summary judgment. Therefore, we do not consider the propriety of the summary judgment as to this cause of action. See Tex. R. App. P. 38.1(h); Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970).

2.

After Lewis sued Allstate, Lewis's counsel received correspondence from Medicare's representative indicating Medicare had paid $3,312.88.