Schmidt, Sethi & Akmajian Blog

Insurance: Medpay Exclusion Providing No Coverage Where Workmen’s Compensation Benefits Required

Posted by Ted A. Schmidt | Oct 15, 2018 | 0 Comments

Insurance: Medpay Exclusion Providing No Coverage Where Workmen's Compensation Benefits Required

Doneson v. Farmers Ins. Exch., __Ariz. App.__,No. 2 CA-CV2017-0174 (App. Div. II, October 3, 2018) (J. Ekerstrom)


Plaintiff was injured in an auto accident incurring roughly $22,000 in medical expenses, a portion of which was paid by workers' compensation. After recovering $15,000 from a third-party tortfeasor, he reimbursed the comp carrier to the tune of $8,750 as required by A.R.S. § 23-1023(D). He then sought to recover the $5,000 medpay coverage on his own auto insurance policy. (Medpay coverage pays for insured medical expenses without regard to fault up to a policy limit.)His insurer rejected the claim based upon a policy exclusion  for “bodily injury” that “[o]ccurr[ed] during the course of employment if workers' or workmen's compensation benefits are required.” He sued for breach of contract, declaratory relief and insurance bad faith. The trial court granted the insurer's motion to dismiss and the Arizona Court of Appeals affirmed the trial court.

Plaintiff's argument was that the court was required to apply the parol evidence rule and in so doing consider the intent of the parties, public policy, and extrinsic evidence to void the exclusion under these facts. In order to require the court to consider parol evidence it is incumbent upon the plaintiff to demonstrate that the contract language in question is “reasonably susceptible” to plaintiff's proposed meaning. Plaintiff's proposed meaning here was that when an insured party reimburses a workers' compensation insurer for the benefits received, the insured has taken nothing, and therefore benefits were essentially not “required.” The court of appeals found the language of the exclusion unambiguous and not reasonably susceptible to this meaning.

 We must “interpret an insurance policy according to its plain and ordinary meaning, examining it from the viewpoint of an individual untrained in law or business,” [plaintiff] has not explained why the average insurance consumer would attribute any other than the facially plain meaning of the provision at issue, or how the language of the contract could support his interpretation.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Our team works together - for you!

Our award-winning lawyers are backed by a talented, caring team of legal professionals, paralegals, bilingual assistants, notaries, and others - all dedicated to you, your case, and the compensation you deserve.

No fees and no costs until we win.

As such we always have your case and your best interest in mind. When you win, we win too by providing the best legal care possible.

Thorough investigation and preparation.

We tirelessly and thoughtfully prepare every case we represent as though it was going to trial. This lets insurance companies know that we are a force to be reckoned with. As such, we settle successfully 98% of the time.