RANGEL v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA

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Court of Appeal, Second District, Division 3, California.

Alice Casarez RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent.

No. B047799.

Decided: August 28, 1991

Shernoff, Scott & Bidart, Robert K. Scott and Marian H. Tully, Claremont, for plaintiff and appellant. Gilbert, Kelly, Crowley & Jennett, James B. Crowley, Clifford H. Woosley and Michael I.D. Mercy, Los Angeles, for defendant and respondent.

Alice Casarez Rangel (plaintiff) appeals from a judgment in favor of Interinsurance Exchange of the Automobile Club of Southern California (defendant) based on the grant of the latter's motion for judgment on the pleadings.

We reverse the judgment.

ISSUE PRESENTED

The pivotal issue presented by this appeal is whether Insurance Code section 11580.2 (section 11580.2) authorizes an insurer, at its option, to await the final resolution of its insured's workers' compensation claim before carrying out its duties to investigate and to settle the insured's claim for uninsured motorist benefits.

We decide this issue adversely to the insurer.

PROCEDURAL AND FACTUAL STATEMENT

On September 5, 1985, plaintiff 1 filed a complaint for tortious breach of insurance contract against defendant, pleading two causes of action, for (1) breach of the duty of fair dealing and good faith, and (2) breach of its statutory duties by knowingly committing or performing specified unfair claims settlement practices prohibited by Insurance Code section 790.03, subdivision (h).2

The complaint alleged:  On or about December 5, 1977, defendant issued plaintiff an automobile insurance policy, number J22021 34 (policy);  a copy of which was attached as Exhibit “A”.   On or about February 11, 1978, plaintiff sustained severe injuries as the result of a hit and run accident caused by an uninsured motorist.   On or after February 11, 1978, plaintiff filed a claim for uninsured motorist coverage benefits under the policy, based on her injuries.

It further alleged:  Defendant initially refused to pay the uninsured motorist benefits on the ground that her employer's workers' compensation carrier was liable for her medical expenses.   On September 6, 1984, more than six years after notice of that claim, defendant admitted its liability to plaintiff under the policy and issued a draft payable to plaintiff in the sum of $15,000 contingent upon her execution of a release in full settlement and agreement for a lien to be filed in plaintiff's workers' compensation action.

The essence of the complaint is defendant's alleged failure promptly to investigate plaintiff's claim under the policy and its alleged delay of about six years before settling and paying her claim in the amount of $15,000, the policy limits, despite the fact that liability was reasonably clear as early as February, 1978.

In its answer, filed October 8, 1985, defendant generally denied the material allegations of the complaint and asserted eight affirmative defenses, including one based on the contention that the validity of plaintiff's claim for uninsured motorist coverage could not have been determined while plaintiff was pursuing her workers' compensation claim.

The Motion for Summary Judgment

On January 27, 1988, defendant filed a motion for summary judgment, which was accompanied by a separate statement of undisputed facts, on the ground, inter alia, that, as a matter of law, it had no duty to pay plaintiff any uninsured motorist benefits until after her workers' compensation claim was determined.   Defendant argued that under section 11580.2, subdivision (h), and the contract between them, which essentially paralleled the language of section 11580.2, defendant was entitled to deduct the amount of the workers' compensation benefits to be paid plaintiff from any uninsured motorist benefits it might owe her.

Mark E. Benson, defendant's attorney, pointed out in his declaration that in her January 25, 1979, demand for arbitration under the rules of the American Arbitration Association plaintiff declared under penalty of perjury that her workers' compensation claim had not proceeded to Findings and an award because her medical condition was not yet stationary and permanent.

In his declaration Jerry Hendricks (Hendricks), defendant's claim adjuster, stated:  On or about April 20, 1979, plaintiff's then attorneys told him that plaintiff was prosecuting a claim for workers' compensation benefits concurrent with her claim for uninsured motorist benefits.   On February 8, 1984, plaintiff's new attorney, Mr. Koszdin, informed Hendricks that plaintiff's appeal of the workers' compensation decision was progressing very slowly.

Based on the fact that there could be “a possible excessive delay” before the workers' compensation case could be resolved, defendant decided to issue plaintiff uninsured motorist benefits for the policy limit, less the lien amount her original attorneys had imposed.   A draft in the sum of $10,000 was issued to plaintiff on September 6, 1984, and a draft in the sum of $5,000 was issued payable to plaintiff and her original attorneys, Sroloff and Biren.

Hendricks further stated:  Defendant executed a request and claim for a lien in the workers' compensation action on July 19, 1984.3  The reason given for such request and claim for lien was:  “Payment of uninsured motorist claim for which offset pursuant to [Insurance Code section] 11580.26 is claimed.”

He pointed out that on August 7, 1985, the Workers' Compensation Appeals Board issued its opinion and finding of fact that plaintiff's injury arose in the course of her employment.4

On February 11, 1988, plaintiff filed a separate statement of undisputed fact and opposition to the motion.   In sum, plaintiff argued that under Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452, 113 Cal.Rptr. 711, 521 P.2d 1103 an insurer owes its insured a duty of good faith and fair dealing not to merely sit back and await the outcome of the insured's workers' compensation claim before deciding whether or not it owes the insured benefits under the policy.

In his declaration Robert K. Scott, plaintiff's attorney, stated that defendant had continually delayed the processing and arbitration of plaintiff's uninsured motorist claim on the basis that she was seeking workers' compensation benefits for the accident.   He pointed out that although plaintiff still had not obtained a workers' compensation award six years after the accident, defendant nonetheless paid the uninsured motorist policy limits.

On February 26, 1988, Judge Deering found certain facts to be undisputed but denied defendant's motion for summary judgment on the ground that there was a triable issue of fact as to whether defendant's delay in paying plaintiff uninsured motorist benefits breached its duty of good faith to plaintiff.   The court pointed out that, as in Silberg, supra, defendant could have paid plaintiff's uninsured motorist claim and obtained a lien on any workers' compensation benefits award to plaintiff.

On March 18, 1988, Judge Deering granted defendant's motion for leave through April 1, 1988 to file a petition for a writ of mandate regarding the denial of its motion for summary judgment.5  Defendant never filed the petition.

Appointment of All–Purpose Judge

On August 9, 1989, Judge Henry W. Shatford, a retired judge, was appointed as of that date to act as a temporary judge in all pre-trial issues and motions and to preside over the trial of the matter.

Plaintiff's Trial Brief

On August 14, 1989, plaintiff filed her trial brief.   She took position that defendant acted in bad faith by retaining her uninsured motorist benefits for many years during which time plaintiff “desperately needed those monies for her medical care and treatment.”

The Motion for Judgment on the Pleadings

Prior to trial, defendant filed a document entitled “NOTICE OF SECOND MOTION FOR JUDGMENT ON THE PLEADINGS․” 6

Defendant asserted that it was entitled to judgment because plaintiff could not establish that defendant breached any duty to pay plaintiff uninsured motorist benefits since such duty did not arise until after the workers' compensation claim had been resolved.

Defendant further argued that Judge Shatford should grant the motion, for the reason that Judge Deering's “reliance on [Silberg, supra,] was erroneous as a matter of law, because that case did not involve any uninsured motorist coverage question․”

In its opposition plaintiff argued that the substance of the motion had already been determined by the court's prior ruling on the motion for summary judgment and that no new evidence, argument, or issues were presented which would justify reexamination of such ruling.

Plaintiff further argued that at trial she would prove that defendant had all the information necessary to enable it to pay plaintiff uninsured motorist benefits in 1978 rather than six years later, which was a fact defendant's own in-house counsel, Annette Mann (Mann), had acknowledged.   In support plaintiff attached as Exhibit B a copy of Mann's memorandum to Hendricks dated April 2, 1984.

In the memorandum Mann stated:  “Our documentation regarding claimant's injury is incomplete in that we only have information through 1980, but even up to that date, it appears she received extensive medical care, including neurologists, orthopedists, psychiatrists and she claims she had not been able to work since the accident.   Her testimony regarding her injuries, disabilities and ongoing problem is set forth in my deposition review dated December 11, 1979․”

Mann further stated:  “In the instant situation, it appears that [plaintiff] could possibly establish good cause for proceeding with the uninsured motorist claim if her contention that her Worker's [sic ] Compensation appeal could take years to resolve is correct.”

She also stated that if defendant paid plaintiff, it “could file a lien on the Worker's Compensation action and thereby recoup monies paid to [plaintiff] by [defendant] if and when there are monies paid to [plaintiff] by the Worker's Compensation carrier.   In discussing this aspect with John Cobb, [she was] advised that [defendant] has done just that in the past in the appropriate situation.   An agreement is reached between [defendant] and the claimant that such a lien be filed and a stipulation to that effect is prepared.”

Mann concluded that if plaintiff's workers' compensation claim and her action against the city for negligent design were still pending, then defendant “should pay her UM claim at this time with her agreement that a lien be filed in her Worker's [sic ] Compensation action.”

On August 14, 1989, following a hearing, Judge Shatford granted the motion for judgment on the pleadings.

In his statement of decision filed February 6, 1990, Judge Shatford stated that he had taken judicial notice of the facts found to be undisputed by Judge Deering at the hearing on the motion for summary judgment.7

Based on those facts Judge Shatford disagreed with and rejected Judge Deering's reliance on Silberg, supra, which case Judge Shatford expressly found was the reason Judge Deering had denied defendant's prior motion for summary judgment.

In sum, Judge Shatford found that the following factors distinguished this case from Silberg :  Unlike Silberg, section 11580.2 is a specific statute which governs uninsured motorist coverage.   Judge Shatford construed that section and the uninsured motorist insurance policy as imposing “no obligation to pay uninsured motorist coverage benefits until the worker's [sic ] compensation claim has been concluded.”   He further reasoned that “[t]he uninsured motorist coverage carrier has no control over the insured claimant's prosecution of the worker's [sic ] compensation case, nor does that carrier have any control over the worker's [sic ] compensation carrier.”   Judge Shatford then decided that judgment should be granted in favor of defendant, which was contrary to the decision of Judge Deering.

The statement of decision and the judgment were signed by Judge Shatford and filed on February 6, 1990.

DISCUSSION

I. The Procedural Posture of this AppealA. Jurisdiction of Judge to Rule on Motion for Judgment on the Pleadings After Different Judge Denied Motion for Summary Judgment

 Initially, we must determine the jurisdiction of Judge Shatford to rule on the motion for judgment on the pleadings.   As a general rule, the ruling of one judge of the Superior Court cannot be ignored, overlooked, or overturned by another judge of that court, “because the state Constitution, article VI, section 4 vests jurisdiction in the court, ‘․ and not in any particular judge or department ․;   and ․ whether sitting separately or together, the judges hold but one and the same court.  [Citation.]   It follows, ․ where a proceeding has been ․ assigned for hearing and determination to one department of the superior court by the presiding judge ․ and the proceeding ․ has not been finally disposed of ․ it is beyond the jurisdictional authority of another department of the same court to interfere with the exercise of the power of the department to which the proceeding has been so assigned․   If such were not the law, conflicting adjudications of the same subject-matter by different departments of the one court would bring about an anomalous situation and doubtless lead to much confusion.  [Citation.]’  (Williams v. Superior Court [1939] 14 Cal.2d 656, 662 [96 P.2d 334].)”  (In re Kowalski (1971) 21 Cal.App.3d 67, 70, 98 Cal.Rptr. 444 (emphasis in original);  accord, Ford v. Superior Court (1986) 188 Cal.App.3d 737, 741–742, 233 Cal.Rptr. 607.)

“Appellate jurisdiction to review, revise, or reverse decisions of the superior courts is vested by our Constitution only in the Supreme Court and the Courts of Appeal.  (Cal. Const., art. VI, § 11.)”  (Ford, supra, at p. 742, 233 Cal.Rptr. 607.)

 On the other hand, “[a]n established exception to the general rule limiting reconsideration is that where the judge who made the initial ruling is unavailable to reconsider the motion, a different judge may entertain the reconsideration motion.  [Citation.]   This exception reconciles the jurisdiction of a trial court to reconsider and correct its erroneous interim rulings to achieve justice [citation] with the general rule's recognition of the comity between judges of a trial court.   The proper procedure upon a motion for reconsideration or a renewed motion is for the second judge to direct the moving party to the judge who ruled on the first motion.   If the original judge is unavailable ․, the second judge may hear the reconsideration motion.”  (Ziller Electronics Lab GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1232, 254 Cal.Rptr. 410.)

 Mindful of the above principles, we address the issue in this case of whether Judge Shatford had jurisdiction to grant judgment in favor of defendant based on his interpretation of Silberg after Judge Deering had already denied judgment based on his construction of that same case.

The record before us contains no evidence that any attempt had been made by Judge Shatford to tender the “(second)” motion for judgment on the pleadings to Judge Deering or that Judge Deering was otherwise unavailable to entertain that motion.   However, such evidence would be significant to our analysis only if the motion before Judge Shatford were the same kind of motion that Judge Deering had ruled upon previously.   We conclude that the motions were not the same.   Judge Shatford was therefore not remiss in failing to tender the motion for judgment on the pleadings to Judge Deering, who had ruled upon the prior motion for summary judgment.

 It is not the function of a motion for summary judgment to test the sufficiency of the pleadings.  (Cornelison v. Kornbluth (1975) 15 Cal.3d 590, 596, 125 Cal.Rptr. 557, 542 P.2d 981.)

“The motion for summary judgment assumes the sufficiency of the pleadings, and calls for evidentiary affidavits to show whether there is any substantial proof to support the allegations․   The motion for judgment on the pleadings attacks fundamental defects in the pleadings, and, like a demurrer, is ordinarily confined to the pleadings.”  (6 Witkin, Cal. Procedure (3d ed., 1985) Proceedings Without Trial, § 280, p. 580.)   As in the case of a general demurrer, a motion for judgment on the pleadings attacks the complaint as failing to state a cause of action.  (Id. at §§ 262–263, pp. 563–565.)

B. Issuance of Statement of Decision In Proceeding for Judgment on the Pleadings Harmless Error

 In ruling on the motion for judgment on the pleadings Judge Shatford issued a statement of decision setting forth the factual and legal bases of his ruling.   In so doing the judge erred.   We hold that a statement of decision is inappropriate where the judgment is based on the grant of a motion for judgment on the pleadings, which, by its nature, cannot involve the determination of factual issues.

Code of Civil Procedure section 632 provides in pertinent part that “upon the trial of a question of fact by the court ․ [t]he court shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial.”  (See also, Healdsburg Police Officers Assn. v. City of Healdsburg (1976) 57 Cal.App.3d 444, 456, 129 Cal.Rptr. 216.)

“A motion for judgment on the pleadings is in the nature of a demurrer.  [Citation.]”  (Songer v. Cooney (1989) 214 Cal.App.3d 387, 390, 264 Cal.Rptr. 1.)  “A demurrer is simply not the appropriate procedure for determining the truth of disputed facts.”  (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879, 138 Cal.Rptr. 426.)  “In deciding a motion for judgment on the pleadings, a court must accept the allegations of the complaint as true.”  (Hejmadi v. AMFAC, Inc. (1988) 202 Cal.App.3d 525, 536, 249 Cal.Rptr. 5.)

Nonetheless, we find that the error was harmless since the foundation for Judge Shatford's ruling was his interpretation of the applicability of Silberg v. California Life Ins. Co., supra, 11 Cal.3d 452, 113 Cal.Rptr. 711, 521 P.2d 1103 to a claim for uninsured motorist benefits, which merely presents a legal issue.

C. Judicial Notice Permissible in Ruling On Motion for Judgment on Pleadings

A motion for judgment on the pleadings or “[a] demurrer lies only for defects appearing on the face of the complaint or from matters of which the court must or may take judicial notice.”  (Ramsden v. Western Union, supra, 71 Cal.App.3d 873, 879, 138 Cal.Rptr. 426.)

 In ruling on a demurrer, or motion for judgment on the pleadings, court may take judicial notice of its own records or the files in other judicial proceedings.  (Evid.Code § 452, subd. (e);  Ramsden v. Western Union, supra, 71 Cal.App.3d at p. 879, 138 Cal.Rptr. 426;  Megeff v. Doland (1981) 123 Cal.App.3d 251, 257–259, 176 Cal.Rptr. 467.)   However, “this does not mean that they can take judicial notice of the truth of factual matters asserted therein.  [Citations.]”  (Ramsden v. Western Union, supra, 71 Cal.App.3d 873, 879, 138 Cal.Rptr. 426.)  “ ‘A court may take judicial notice of the existence of each document in a court file, but can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments.’ ”  (Day v. Sharp (1975) 50 Cal.App.3d 904, 914, 123 Cal.Rptr. 918 (citation omitted);  accord, Ramsden v. Western Union, supra, 71 Cal.App.3d 873, 879, 138 Cal.Rptr. 426;  Garcia v. Sterling (1985) 176 Cal.App.3d 17, 21–22, 221 Cal.Rptr. 349;  see also, Cote v. Henderson (1990) 218 Cal.App.3d 796, 801, 267 Cal.Rptr. 274;  cf. Megeff v. Doland, supra, 123 Cal.App.3d 251, 258–259, 176 Cal.Rptr. 467;  Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374–375, 228 Cal.Rptr. 878.)

 We hold that in ruling on a motion for judgment on the pleadings the court may properly take judicial notice of the truth of the matters previously adjudicated summarily by the court to be without substantial controversy.  (Cf. Hejmadi v. AMFAC, Inc., supra, 202 Cal.App.3d 525, 536, 249 Cal.Rptr. 5;  see also, Koehrer v. Superior Court (1986) 181 Cal.App.3d 1155, 1171, 226 Cal.Rptr. 820.)   Accordingly, we conclude Judge Shatford correctly took judicial notice of the matters summarily adjudicated to be without substantial controversy by Judge Deering.

II. Pendency of Workers' Compensation Claim Does Not Necessarily Absolve Insurer of Duty to Settle Uninsured Motorist Claim

A. Applicability of Silberg to A Claim for Uninsured Motorist Benefits

 The thrust of plaintiff's position on appeal is that our Supreme Court's decision in Silberg v. California Life Ins., supra, 11 Cal.3d 452, 113 Cal.Rptr. 711, 521 P.2d 1103 controls.   In Silberg the court held that defendant insurer's failure to pay the medical bills incurred by plaintiff insured until resolution of the workers' compensation proceeding violated the insurer's duty of good faith and fair dealing, which is implied in every insurance policy, since the insurer could have recovered the payments, which it was entitled to under the policy, by asserting a lien in the workers' compensation proceeding.  (Id. at pp. 457, 461–462, 113 Cal.Rptr. 711, 521 P.2d 1103.)   Plaintiff urges that although the Silberg case involved an insurance policy which covered medical charges (id. at p. 456, 113 Cal.Rptr. 711, 521 P.2d 1103), the analysis and holding of Silberg are broad enough to encompass a policy for an uninsured motorist insurance benefits.

We find plaintiff's reliance on Silberg to be justified under the facts in this case.   Plaintiff allegedly sought the uninsured motorist benefits to pay medical expenses.   The complaint alleged that defendant refused to pay such benefits on the ground her employer's workers' compensation carrier was liable for her medical expenses.   As shown, post, defendant could have in the first instance paid the uninsured motorist benefits, which it ultimately did, and at the same time protected its right to an offset by asserting a lien in the workers' compensation proceeding therefor.   We therefore conclude that Judge Shatford's interpretation of Silberg was erroneous.

We further conclude that the judge therefore committed reversible error by ruling that the complaint failed to state a cause of action.

 An insurer has a duty not to unreasonably and in bad faith withhold payment of its insured's claim.  “For the insurer to fulfill its obligation not to impair the right of the insured to receive the benefits of the agreement, it ․ must give at least as much consideration to the latter's interests as it does to its own.”  (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 818–819, 169 Cal.Rptr. 691, 620 P.2d 141.)   A lengthy delay in resolving a claim for insurance benefits has the identical consequence for the insured as an outright denial of benefits, i.e., exposure to the very risk which he purchased insurance to guard against.  (McCormick v. Sentinel Life Ins. Co. (1984) 153 Cal.App.3d 1030, 1050, 200 Cal.Rptr. 732.)

The refusal of an insurer to deal fairly and in good faith with its insured by failing promptly to investigate and “by refusing, without proper cause, to compensate its insured for a loss covered by the policy, including a loss under an uninsured motorist's endorsement, may give rise to a cause of action in tort for breach of the implied covenant of good faith and fair dealing.  [Citation.]”  (Fleming v. Safeco Ins. Co. (1984) 160 Cal.App.3d 31, 38, 206 Cal.Rptr. 313.)

B. Uninsured Motorist Insurer Is Expressly Authorized to File Lien Claim in Workers' Compensation Proceeding for Reimbursement of Medical Expenses

 We hold that an uninsured motorist insurer is entitled to file a lien claim in a workers' compensation proceeding for reimbursement of medical expenses pursuant to Labor Code section 4903, subdivision (b),8 and under authority of our Supreme Court's decision in Silberg.

Moreover, we observe that at least one other court has concluded, albeit via dicta, that such a lien for medical expenses is available in the uninsured motorist context.   In Coltherd v. Workers' Comp. Appeals Bd. (1990) 225 Cal.App.3d 455, 275 Cal.Rptr. 130 the court annulled the decision of the Workers' Compensation Appeals Board (WCAB) which allowed a $10,000 lien on a workers' compensation death benefits award where the lien claim merely stated that it was for “Uninsured motorist benefits policy overpayment.”  (Id. at pp. 457–458, 275 Cal.Rptr. 130.)

The Coltherd court reasoned:  “The WCAB [in Beverly v. WCAB (1969) 34 Cal.Comp.Cases 156] concluded that it had jurisdiction to allow a lien for medical treatment provided by reason of an industrial injury.   This conclusion appears to us to be supported by the specific provision of Labor Code section 4903, subdivision (b) and related case law holding that any person, including a medical insurer, who incurs medical and hospital expenses on behalf of an injured employee who has sustained industrial injuries, is entitled to a lien on any workers' compensation benefits for the reasonable value of such services.  (Silberg v. California Life Ins. Co. [, supra,] 11 Cal.3d 452, 461, 113 Cal.Rptr. 711, 521 P.2d 1103 ․;  Dept. of Employment v. Ind. Acc. Com. (1964) 227 Cal.App.2d 532, 544–545, 38 Cal.Rptr. 739․)   Here, on the other hand, there was no evidence that the benefits paid by St. Paul [apparently under a combined homeowners and automobile liability policy] to [the claimant] were for reasonable medical expenses.”  (225 Cal.App.3d at pp. 462–463, 275 Cal.Rptr. 130;  emphasis added.)

C. Neither the Provisions Nor the Purpose of the Uninsured Motorist Law Give Insurer Unqualified Right to Await Resolution of Workers' Compensation Claim Prior to Paying Uninsured Motorist Benefits

 Defendant here acknowledges that it filed a lien in the workers' compensation proceeding for reimbursement of the uninsured motorist benefits it paid plaintiff prior to resolution of that proceeding.   It urges that its payment of such benefits was voluntary on its part and that it had the unqualified right to await final resolution of the pendency of the workers' compensation proceeding prior to paying any uninsured motorist benefits.

We disagree.

Neither the provisions nor the purpose of the Uninsured Motorist Law give an insurer the unqualified right to await resolution of the insured's workers' compensation claim prior to paying uninsured motorist benefits.9

In 1961 the Legislature enacted the Uninsured Motorist Law.  (Ins.Code, § 11580.2 et seq.)   It is “a remedial statute enacted for the purpose of forcing insurers to make available coverage by which insureds can protect themselves from the menace of uninsured motorists.”   Ambiguous language in the statute must be given a construction that advances, not thwarts, its remedial purpose.  (National Auto. & Casualty Ins. Co. v. Frankel (1988) 203 Cal.App.3d 830, 836, fn. 2, 250 Cal.Rptr. 236;  accord, Hefner v. Farmers Ins. Exchange (1989) 211 Cal.App.3d 1527, 1530–1531, 260 Cal.Rptr. 221.)

“Insurance Code section 11580.2 must be liberally construed to carry out its objective of providing financial protection for injuries caused by uninsured motorists and, as a corollary, an exception or exclusion from uninsured motorist coverage must be strictly construed.  [Citation.]”   (State Farm Mut. Auto. Ins. Co. v. Lykouresis (1977) 72 Cal.App.3d 57, 61, 139 Cal.Rptr. 827;  see also, Interinsurance Exchange v. Ohio Cas. Ins. Co. (1962) 58 Cal.2d 142, 153–154, 23 Cal.Rptr. 592, 373 P.2d 640.)

The workers' compensation setoff for uninsured motorist benefits is set forth in subdivision (h)(1) of section 11580.2, which provides in pertinent part:  “Any loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced․   By the amount paid and the present value of all amounts payable to him or her ․ under any workers' compensation law, exclusive of nonoccupational disability benefits.”

 The effect of this statutory provision is to preclude double recovery when the insurer and insured agree that any loss payable under the uninsured motorist contract is to be reduced by the amount paid and the present value of all amounts payable under the workers' compensation law.  (Waggaman v. Northwestern Security Ins. Co. (1971) 16 Cal.App.3d 571, 579, 94 Cal.Rptr. 170;  accord, Interinsurance Exchange v. Marquez (1981) 116 Cal.App.3d 652, 656–657, 172 Cal.Rptr. 263.)

Our Supreme Court announced that “its purpose is clearly to shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workmen's compensation carrier.   In other words, the uninsured motorist coverage, the cost of which is borne by holders of automobile liability policies, is withheld and the burden of liability falls on the employer or his carrier at least to the extent of compensation provided under workmen's compensation law.”  (California State Auto. Assn. Inter–Ins. Bureau v. Jackson (1973) 9 Cal.3d 859, 869, 109 Cal.Rptr. 297, 512 P.2d 1201.)

Subdivision (f) of section 11580.2 sets forth the requirements for mandatory arbitration of uninsured motorist issues with regard to “whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof.”   That subdivision further provides:  “If the insured has or may have rights to benefits, other than nonoccupational disability benefits, under any workers' compensation law, the arbitrator shall not proceed with the arbitration until the insured's physical condition is stationary and ratable.   In those cases in which the insured claims a permanent disability, the claims shall, unless good cause be shown, be adjudicated by award or settled by compromise and release before the arbitration may proceed.   Any demand or petition for arbitration shall contain a declaration, under penalty of perjury, stating whether (i) the insured has a workers' compensation claim;  (ii) the claim has proceeded to findings and award or settlement on all issues reasonably contemplated to be determined in that claim;  and (iii) if not, what reasons amounting to good cause are grounds for the arbitration to proceed immediately.”

The purpose of the above provision requiring the stay of arbitration until the workers' compensation claim is resolved is to enable the insurer to determine the amount of its setoff.   It should be noted, however, that although arbitration under subdivision (f) involves the determination of the amount of the insured's damages vis-a-vis the uninsured motorist, it does not encompass the issue of the amount of money the insurer is obligated to pay the insured, unless the contract between them so provides.  (Furlough v. Transamerica Ins. Co. (1988) 203 Cal.App.3d 40, 45–46, 249 Cal.Rptr. 703.)

On the other hand, the purpose of allowing the arbitration to proceed upon a showing of good cause where there has not yet been a final resolution of the workers' compensation proceeding is to enable the insured to obtain a determination as to entitlement of uninsured motorist benefits where resolution of the workers' compensation claim is not reasonably foreseeable.

The above provisions of the Uninsured Motorist Law do not by their express terms or by implication, usurp the insurer's concomitant duty promptly to investigate and to settle the insured's claim for uninsured motorist benefits.   The Uninsured Motorist Law does not mandate the suspension of investigation of an uninsured motorist claim until the resolution of the insured's workers' compensation claim.   Neither that law nor the Workers' Compensation Act precludes the imposition of a lien in the workers' compensation proceeding for recoupment of medical expenses paid by the insurer under the uninsured motorist endorsement or policy.

III. Duty to Pay Uninsured Motorist Benefits May Arise Where Lien In Workers' Compensation Proceeding Is Available

 Based on the foregoing we hold that the final resolution of the insured's workers' compensation claim is not necessarily a condition precedent to an insured's duty to pay uninsured motorist benefits.   For instance, the Uninsured Motorist Law itself expressly provides that arbitration may proceed upon a showing of good cause where there has been no adjudication or compromise and settlement of the workers' compensation claim.  (See, e.g., Spear v. California State Automobile Assn. (1991) 232 Cal.App.3d 1617, 284 Cal.Rptr. 364.)   Moreover, the mere availability of such arbitration procedure does not insulate an insurer from liability for bad faith failure to pay benefits where the facts of a particular case reveal there is no arguable dispute as to the insurer's duty to pay benefits and the insurer is entitled to file a lien therefor in the workers' compensation proceeding.  (See, e.g., Richardson v. Employers Liab. Assur. Corp. (1972) 25 Cal.App.3d 232, 239, 102 Cal.Rptr. 547;  see also, Vacnin v. 20th Century Ins. Co. (1991) 233 Cal.App.3d 69, 284 Cal.Rptr. 400.)

 We further hold that the duty to pay benefits for medical expenses arises even if the workers' compensation claim has not been resolved where liability for uninsured motorist benefits is reasonably clear, the insured suffered injuries requiring medical treatment, and the employer or its carrier has denied responsibility therefor.

This holding does not abrogate the right of the insurer under its contract to offset the amount which the insured recovers in the workers' compensation proceeding, against the amount it must pay to its insured.   The insurer may file a lien in the workers' compensation proceeding for reimbursement of the uninsured benefits it has paid for medical expenses.  (Lab.Code, § 4903, subd. (b);  Silberg v. California Ins. Co., supra, 11 Cal.3d 452, 461–462, 113 Cal.Rptr. 711, 521 P.2d 1103;  see also, Coltherd, supra, 225 Cal.App.3d 455, 462–463, 275 Cal.Rptr. 130.)

CONCLUSION

In the present case plaintiff allegedly sought the uninsured motorist benefits to pay medical expenses.   The complaint alleged that defendant refused to pay such benefits on the ground her employer's workers' compensation carrier was liable for her medical expenses.   Defendant here could have paid the uninsured motorist benefits and asserted a lien in the workers' compensation proceeding for reimbursement.   The undisputed facts establish that, after a delay of about six years, this is precisely what defendant did.   Whether such delay in the payment of benefits amounts to bad faith is a factual question which cannot be resolved on a motion for judgment on the pleadings.   We therefore conclude that the complaint, as viewed in light of the matters judicially noticed, states a cause of action against defendant for bad faith breach of the covenant of good faith and fair dealing and for violation of its statutory duties under section 790.03, subdivision (h).

DECISION

The judgment is reversed.   Appellant to recover costs on this appeal.

FOOTNOTES

1.   Juan Rangel was also named as a plaintiff, however, he is not a party to this appeal.

2.   All further section references are to the Insurance Code, unless otherwise specified.

3.   $15,000 was the amount originally typed on the lien claim.  $10,000 was the amount subsequently substituted therefor by interlineation.   The record is silent as to who made this change and for what reason.   The record is also silent as to whether the claim was denied, partially paid or paid in full.

4.   The record contains no evidence of what monetary award, if any, was made to plaintiff in the workers' compensation proceeding or when her claim was finally resolved.

5.   This court has augmented the record with the superior court file.  (Cal. Rules of Court, rule 12(a).)

6.   The copy of the motion in the record bears no filing stamp.   The record contains no other pertinent motion for judgment on the pleadings;  however, in a declaration in support of the request to augment the clerk's transcript, defendant's counsel stated there was another motion for judgment on the pleadings, which had been made on other grounds.

7.   Those facts were:“1. Plaintiff ․ made a claim for uninsured motorist coverage benefits as a result of her involvement in an automobile accident on February 11, 1978․“2. Plaintiff ․ was in the course and scope of her employment at the time of her February 11, 1978 accident․“3. Plaintiff ․ pursued a claim for worker's [sic] compensation benefits as a result of her accident of February 11, 1978․“4. Plaintiff ․ filed a demand for arbitration of her claim for uninsured motorist coverage benefits as a result of her accident of February 11, 1978․“5. On August 7, 1985, a worker's [sic ] compensation judge ruled that plaintiff ․ was in the course and scope of her employment at the time of her February 11, 1978 accident․“6. In September of 1984, [defendant] issued 2 drafts in the total amount of $15,000 to plaintiff ․ and to her attorney under the uninsured motorist provision of the insurance policy issued by [defendant]․“7. [Defendant] issued settlement drafts under the uninsured motorist provision of [the] policy of insurance before a decision had been handed down in the worker's [sic ] compensation case concurrently filed by plaintiff․“8. [Defendant] issued settlement drafts under the uninsured motorist provision of [the] policy of insurance before [plaintiff's workers' compensation] benefits had been paid or had vested․“9. [Such] benefits did not vest until after the August 7, 1985 decision holding her in the course and scope of her employment at the time of the accident․“10.  Plaintiff ․ signed a release in full settlement of her uninsured motorist claim arising out of the February 11, 1978 accident․“11.  Plaintiff ․ signed a release in full settlement of her uninsured motorist claim arising out of the February 11, 1978 accident before a decision had been handed down in her worker's [sic ] compensation claim also arising out of the February 11, 1978 accident․“12.  Policy number J2202135 under which plaintiff ․ made her demand for uninsured motorist benefits includes the following language in the ‘Exclusions' section:  ‘Under Part IV [Uninsured Motorist], this policy does not apply:  (b) so as to inure directly or undirectly [sic ] to the benefits of any worker's [sic ] compensation carrier․“13. [That policy also] includes the following language:  ‘Under the terms of Part IV [Uninsured Motorist]:  (1) any loss payable to or for any person shall be reduced by the amount paid and the present value of all amounts payable to such person under any worker's [sic ] compensation law․“14.  The Release in full settlement executed by plaintiff ․ does not contain language wherein [defendant] admitted that the alleged hit and run driver's negligence proximately caused [plaintiff's] injuries arising out of the February 11, 1978 accident․“15. [Plaintiff's] demand for uninsured motorist benefits was never adjudicated by arbitration or by trial․

8.   Section 4903 provides in pertinent part:“The appeals board may determine, and allow as liens against any sum to be paid as compensation, any amount determined as hereinafter set forth in subdivision (a) through (i)․   The liens which may be allowed hereunder are as follows:  ․ [¶ ] (b) The reasonable expense incurred by or on behalf of the injured employee, as provided by Article 2 (commencing with Section 4600) and, to the extent the employee is entitled to reimbursement under Section 4621, medical-legal expenses as provided by Article 2.5 (commencing with Section 4620) of Chapter 2 of Part 2.”Section 4600 provides in pertinent part:“Medical, surgical, chiropractic, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including artificial members, which is reasonably required to cure or relieve from the effects of the injury shall be provided by the employer.   In the case of his or her neglect or refusal seasonably to do so, the employer is liable for the reasonable expenses incurred by or on behalf of the employee in providing treatment.”

9.   We find to be misplaced defendant's reliance on the following policy exclusion to buttress its position that it is entitled to await the outcome of the workers' compensation proceeding before proceeding with the uninsured motorist claim:  “[T]his policy does not apply ․ so as to inure, directly or indirectly to the benefit of any worker's [sic ] compensation or workmen's compensation or disability benefits carrier, or any person or organization qualifying as a self-insurer under any worker's [sic ] compensation law or workmen's compensation law or disability benefits law or any similar law․”  (CT 15, 55)  That provision, which paraphrases § 11580.2, subd. (c)(4), addresses the lack of any subrogation or lien rights in favor of the workers' compensation carrier as against any recovery from the uninsured motorist carrier, and thus, is irrelevant to the issue here.  (See, e.g., Fireman's Fund etc. Co. v. Ind. Acc. Com. (1964) 226 Cal.App.2d 676, 677–678, 38 Cal.Rptr. 336;  Eisler, California Uninsured Motorist Law, (4th ed., 1990), Statutory Exclusions, §§ 13.40, pp. 13–21 to 13–22, 17.93, p. 17–35;  19.20, p. 19–11.)

DANIELSON, Associate Justice.

KLEIN, P.J., and CROSKEY, J., concur.

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