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State Farm Mutual Automobile Insurance Co. v. Conway

United States District Court, W.D. Kentucky, Louisville

June 12, 2014

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff,
v.
JACK CONWAY, ATTORNEY GENERAL of the COMMONWEALTH OF KENTUCKY, ET AL., Defendants.

MEMORANDUM OPINON

CHARLES R. SIMPSON, III, District Judge.

This matter is before the Court on the following motions:

1) a motion for judgment on the pleadings (DN 36) filed by Defendant Nakisha Murray ("Murray")
2) a motion for reconsideration (DN 37) filed by Defendant Metro Pain Relief Center ("MPRC"); and
3) a motion for leave to file a surreply (DN 43) to the motion for judgment on the pleadings filed by Plaintiff State Farm Mutual Automobile Insurance Company ("State Farm").

For the reasons set forth below, the Court will:

1) deny the motion for judgment on the pleadings (DN 36);
2) grant the motion for reconsideration (DN 37); and
3) deny as moot the motion for leave to file a surreply (DN 43) to the motion for judgment on the pleadings.

BACKGROUND

This case arises from State Farm's refusal to pay MPRC motor vehicle reparation benefits to which MPRC claims it is entitled. On August 31, 2012, a motor vehicle operated by Brittany Harris ("Harris") collided with another vehicle at the intersection of 18th Street and Saint Louis Street in Louisville, Kentucky. Defendants Gayle Spence ("Spence") and Nakisha Murray ("Murray") were passengers in Harris' vehicle and allegedly sustained injuries as a result of the collision. Shortly after the accident, a representative from the legal financing company "1-866-GET-PAID" arrived on scene and distributed information about the company and its services. Later, Spence and Murray visited the business offices of "1-866-GET-PAID, " where they were ultimately referred to MPRC for treatment.

In accordance with its customary practice, MPRC treated Spence and Murray's injuries and then sought to obtain payment from Harris's insurer State Farm. However, upon MPRC's request, State Farm refused payment on the basis of KRS 367.409(4)(b)'s provision that "any charges owed by or on behalf of an individual involved in a motor vehicle accident for services rendered by or on behalf of a person who violates [KRS 367.409(1)] shall be void." KRS 367.409(1), more commonly known as Kentucky's "anti-solicitation" statute, provides that in the thirty days following a motor vehicle accident "a person... shall not directly solicit or knowingly permit another person to directly solicit an individual... involved in a motor vehicle accident for the provision of any service related to a motor vehicle accident." Importantly, however, the term "solicit" as used in the statute does not include "advertising directed to the general public, communications by fire, police, or emergency medical personnel..., and communications by an insurer..." KRS 367.409(2)(b). According to State Farm, MPRC "knowingly requested or permitted 1-866-GET-PAID to solicit... Spence and... Murray..." within thirty days of their motor vehicle accident and is therefore precluded from obtaining reparation benefits under KRS 367.409(4)(b). (Complaint, DN 1, at ¶ 21).

PROCEDURAL HISTORY

On February 25, 2013, State Farm filed the present action requesting a declaration that KRS 367.409 is constitutional and that the charges claimed by MPRC are therefore void under KRS 367.409(4)(b). (Complaint, DN 1, at ¶ 25). In response, MPRC counterclaimed for damages based on State Farm's refusal to reimburse them for Spence and Murray's medical expenses, (Answer, DN 15, at ¶¶ 41-47), in addition to requesting a declaration that KRS 367.409 is unconstitutional. On April 17, 2013, State Farm moved to dismiss MPRC's counterclaim on the grounds that Kentucky's Motor Vehicle Reparations Act (the "MVRA") precludes medical service providers from maintaining a direct cause of action against reparation obligors. On May 16, 2013, MPRC moved for judgment on the pleadings with respect to State Farm's request for a declaratory judgment, arguing that KRS 367.409 is unconstitutional and that State Farm's action must therefore be dismissed.

On January 3, 2014, we granted State Farm's Motion to Dismiss on the grounds that the MVRA did not provide MPRC with an independent cause of action against State Farm. (Order, DN 34). Having granted the motion to dismiss, we held that MPRC's Motion for Judgment on the Pleadings was moot to the extent it sought to declare KRS 367.409 unconstitutional, explaining that "Because the statute merely voids charges owed by or on behalf of an individual involved in a motor vehicle accident, and because we have already concluded that State Farm is not directly liable to MPRC, there is no charge or other obligation to which the statute might apply." (Memorandum Opinion, DN 33, at 10) (internal quotation marks omitted).

On January 31, 2014, MPRC filed a motion for reconsideration (DN 37) requesting that the Court revisit its decision to deny MPRC's Motion for Judgment on the Pleadings as moot. According to MPRC, despite its ruling on the motion to dismiss, the Court should have nevertheless addressed the constitutionality of KRS 367.409 because MPRC specifically requested a declaration that the statute was unconstitutional and was therefore entitled to a decision thereon.

Also on January 31, 2014, Defendant Murray filed a motion for judgment on the pleadings (DN 36), arguing that KRS 367.409 is unconstitutional such that any charges owed by State Farm would not be voided by operation of KRS 367.409(4)(b). After briefing, on March 17, 2013, State Farm filed a motion for leave to file a surreply (DN 43) to the motion for judgment on the pleadings.

Having reviewed the parties' briefs and being otherwise sufficiently advised, the Court will now address the motion for reconsideration and the motion for judgment on the pleadings.

DISCUSSION

i. Murray's Motion for Judgment on the Pleadings

In her motion for judgment on the pleadings, Murray argues that judgment on the pleadings is warranted because KRS 367.409(1) is unconstitutional such that any charges owed by State Farm would not be voided by operation of KRS 367.409(4)(b). Presumably, Murray seeks to establish that the statute is unconstitutional in order to ensure that State Farm-rather than her-will be obligated to pay MPRC. In reality, however, Murray will not be obligated to pay MPRC regardless of whether the statute is declared unconstitutional. If the statute were upheld, any charged owed by Murray would be voided pursuant to KRS 367.409(4)(b). If the statute were declared unconstitutional, Murray would still not have to pay because State Farm's obligation to pay MPRC on Murray's behalf would not be voided pursuant to KRS 367.409(4)(b).

Because a person cannot challenge a statute as unconstitutional unless she has suffered an "injury in fact, " the Court concludes that Murray cannot base her motion for judgment on the pleadings on the alleged unconstitutionality of the statute. As explained by the U.S. Supreme Court in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), "no plaintiff can litigate a case in federal court without establishing constitutional standing, which requires a showing that the plaintiff has suffered (1) an injury that is (2) fairly traceable to the defendant's allegedly unlawful conduct and that is (3) likely to be redressed by the requested relief." Id. at 560 (internal quotation marks omitted). In the case at bar, Murray has failed to demonstrate that she has suffered or will likely suffer an injury in fact as a result of the operation of the statute. Moreover, unlike MPRC, Murray's freedom of speech rights are unaffected by the statute. For these reasons, the Court concludes that Murray lacks standing to challenge the statute and will therefore deny the motion for judgment on the pleadings. Accordingly, the Court will likewise deny the motion for leave to file a surreply to the motion for judgment on the pleadings.

ii. MPRC's Motion for Reconsideration

In its motion for reconsideration, MPRC requests that we revisit our previous ruling (DN 33) that its motion for judgment on the pleadings (DN 23) was mooted by our decision to grant State Farm's Motion to Dismiss MPRC's counterclaim. According to MPRC, regardless of our dismissal of MPRC's counterclaim, we should have reached the issue of whether KRS 367.409 was constitutional because, in addition to asserting a counterclaim, MPRC requested a declaration that the statute was unconstitutional. Because the statute directly affects MPRC's business as well as the exercise of its First Amendment right to freedom of speech, MPRC asserts that it has standing to challenge the statute and that the Court should therefore rule on its request for a declaration that the statute is unconstitutional.

After careful consideration, the Court agrees agrees that MPRC's declaration of rights counterclaim regarding the constitutionality of KRS 367.409(1) should be entertained, especially considering that the same issue is likewise raised by State Farm's own declaration of rights claim (albeit from the opposite perspective). Given that the issue has been fully briefed by both parties, and that Kentucky's Attorney General Jack Conway has refused to defend the ...


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