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Government Employees Insurance Co. v. Sanders

Supreme Court of Kentucky

November 1, 2018

GOVERNMENT EMPLOYEES INSURANCE COMPANY APPELLANT
v.
JORDAN SANDERS AND ANITA HOUCHENS, INDIVIDUALLY AND AS CLASS REPRESENTATIVES APPELLEES

          ON REVIEW FROM COURT OF APPEALS CASE NO. 2014-CA-002017-DG JEFFERSON CIRCUIT COURT NO. 13-CI-000176

          COUNSEL FOR APPELLANT: Edward H. Stopher Boehl, Stopher & Graves, LLP Todd Patrick Greer Boehl, Stopher & Graves, LLP

          COUNSEL FOR APPELLEES: Kevin Crosby Burke Burke Neal PLLC C. David Ewing Ewing & Willis, PLLC Jamie Kristin Neal Burke Neal PLLC Damon Blake Willis Ewing & Willis, PLLC

          AMICUS CURIAE, KENTUCKY DEFENSE COUNSEL, INC.: Darrin W. Banks Porter, Banks, Baldwin & Shaw, PLLC

          AMICUS CURIAE, KENTUCKY JUSTICE ASSOCIATION: Matthew Marston McGill Lowder & McGill, PLLC

          AMICUS CURIAE, PROPERTY CASUALTY INSURERS ASSOCIATION OF AMERICA: William D. Kirkland McBrayer, McGinnis, Leslie & Kirkland, PLLC

          AMICUS CURIAE, INSURANCE INSTITUTE OF KENTUCKY: William Clifton Travis Travis & Herbert & Stempien, PLLC

          OPINION

          WRIGHT, JUSTICE.

         AFFIRMING

         Appellees, Anita Houchens and Jordan Sanders, were injured in an automobile accident in Louisville, Kentucky, on July 28, 2011. Both sought chiropractic treatment for injuries sustained in the accident. The bills were submitted to Appellant, Government Employees Insurance Company (GEICO), for payment under their basic reparations benefits (BRB). Basic reparations benefits provide "reimbursement for net loss suffered through injury arising out of the operation, maintenance, or use of a motor vehicle, subject, where applicable, to the limits, deductibles, exclusions, disqualifications, and other conditions provided in" the Motor Vehicle Reparations Act (MVRA). KRS 304.39-020(2). The maximum amount of basic reparation benefits payable for all economic loss resulting from injury to any one (1) person as the result of one (1) accident shall be ten thousand dollars ($10, 000) . . . ." Id. Basic reparation benefits are often referred to alternatively as personal injury protection ("PIP") benefits or "no-fault" benefits.

         GEICO later denied coverage and refused to pay for certain medical treatments which Appellees had already received, some of which had been incurred more than 30 days prior to the notification of denial. Appellees filed suit alleging that GEICO improperly denied coverage under their BRB based upon a medical records review and requested the trial court to certify the case as a class action. The court granted the motion to certify the case as a class action. Appellees argue KRS 304.39-270 requires an independent medical examination before GEICO can deny them basic reparations benefits (BRB). The trial court ruled that KRS 304.39-270 was permissive and entered summary judgment against Appellees. The Court of Appeals reversed the summary judgment and remanded the case to the trial court for further proceedings. We now affirm the Court of Appeals on different grounds.

         When hunting raccoons at night with dogs, the hunters listen to the baying and barking of the dogs as they track the raccoon through the hills and forests. When the raccoon (coon) climbs a tree to avoid the dogs, the dogs are supposed to remain at the base of the tree barking until the hunter arrives. Unfortunately, the dog sometimes mistakes the tree or the coon climbs from one tree to another. The hunter's frustration is then expressed as the dogs are "barking up the wrong tree." To quote Davy Crockett "I told him that he reminded me of the meanest thing on God's earth, an old coon dog barking up the wrong tree." Sketches and Eccentricities of Col. David Crockett of West Tennessee 58 (J. & J. Harper 1833).

         In the current case, the attorneys argued the case based on KRS 304.39-270(1), a statute that says GEICO "may petition the circuit court for an order directing the person to submit to a mental or physical examination by a physician." Use of the word "may" makes it clear that GEICO's decision of whether to seek the examination is permissive. The statute fails to address when and how GEICO could deny basic reparations benefits. The trial court based its decision to grant summary judgment on the implications of that statute rather than examining the remaining parts of the MVRA. Unfortunately, by focusing solely upon KRS 304.39-270, the attorneys and trial court were barking up the wrong tree.

         KRS 304.39-270 is a discovery statute which allows the reparations obligor (GEICO) to request a mental or physical examination by the physician of their choice. If the claimant refuses, the statute makes provisions for the reparations obligor to petition the court to order an examination. It addresses discovery rights of the parties, when these issues can be taken to court, and the impact of refusal. The issue before us is whether the reparations obligor can deny a claim for BRB based on an examination of the medical records.

         The trial court ruled that the word "may" in KRS 304.39-270(1) is permissive. As noted, the statute states that "the reparations obligor may petition the circuit court for an order directing the person to submit to a mental or physical examination by a physician." This provides the option and the circumstances under which a reparations obligor may seek discovery regarding any claim "for past or future basic or added reparation benefits . . . ." The statute uses the permissive word "may" rather than the obligatory "shall." Therefore, it is clear that the reparations obligor is not required to seek an examination under this discovery statute. What is not clear is whether this allows GEICO to deny BRB in the manner it did in the present case.

         Appellees argue KRS 304.39-270 requires an independent medical examination before GEICO can deny them BRB. Based on the determination that GEICO was permitted to request a medical examination-but did not have to do so-the trial court found that Appellees' "claim with regard to KRS 304.39-270 fails." The trial court then granted GEICO's motion for summary judgment. While the trial court's interpretation of this statute is accurate insofar as it found that the medical examination under the KRS 304.39-270 is permissive, its interpretation of this statute did not adequately address the issues presented in this case. Therefore, the matter was not ripe for summary judgment and the trial court erred in granting GEICO's motion.

         This case turns on statutory interpretation, which is a matter of law that we review de novo. Bob Hook Chevrolet Isuzu, Inc. v. Com. Transp. Cabinet, 983 S.W.2d 488, 490 (Ky. 1998). In interpreting the statute, we must determine whether GEICO had to obtain an examination before denying BRB or if it could deny BRB with a paper review of the claimant's medical records. KRS 304.39-270 provides for discovery and fails to address the issue of denial of BRB. Therefore, it fails to address whether GEICO may deny BRB based on a paper review or whether GEICO is prohibited said denial. Thus, the issue was unresolved and it was improper of the trial court to grant summary judgment without further review of the statutes.

         The Court of Appeals did a good job of analyzing the cases addressing related issues. In reversing the trial court's grant of summary judgment, the Court of Appeals stated "[w]e discern a distinct difference between the use of a medical records review by a reparations obligor for the purpose of establishing good cause for a court-ordered IME and the use of a medical records review by that obligor for the purpose of unilaterally denying or terminating an insured's benefits." We agree and hold the Court of Appeals was correct in reversing and and remanding the case. However, the Court of Appeals failed to address the flip-side of the question: whether the provisions of KRS 304.39-270 that state a reparations obligor "may petition the court" would constitute a prohibition of GEICO denying BRB without having procured an examination. As we have stated above, it would be improper to construe the word "may" as being compulsory in a statute which provides for discovery. Since the ...


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