American Postal Workers Union, Afl-Cio Health v. Yolanda Tippett

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

11-881

AMERICAN POSTAL WORKERS UNION,
AFL-CIO HEALTH PLAN

VERSUS

YOLANDA TIPPETT, RONALD TIPPETT,
BROUSSARD & HART, LLC

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APPEAL FROM THE
THIRTY-SIXTH JUDICIAL DISTRICT COURT
PARISH OF BEAUREGARD, NO. C2008-0585 A
HONORABLE MARTHA O’NEAL, DISTRICT JUDGE
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JAMES T. GENOVESE
JUDGE

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Court composed of Oswald A. Decuir, James T. Genovese, and Phyllis M. Keaty,
Judges.

AFFIRMED AS AMENDED.

Brian W. Arabie
Arabie Law Firm
1011 Lakeshore Drive, Ste. 208
Post Office Box 3004
Lake Charles, Louisiana 70601
(337) 493-2000
COUNSEL FOR PLAINTIFF/APPELLEE:
American Postal Workers Union,
AFL-CIO Health Plan

Steven Broussard
Broussard & Hart, LLC
1301 Common Street
Lake Charles, Louisiana 70601
(337) 439-2450
COUNSEL FOR DEFENDANTS/APPELLANTS:
Yolanda Tippett and Ronald Tippett

GENOVESE, Judge.

Defendants, Yolanda Tippett and Ronald Tippett,1 appeal the trial court’s

judgment in favor of Plaintiff, American Postal Workers Union, AFL-CIO Health

Plan (Health Plan), awarding Plaintiff $48,610.86, representing reimbursement for

medical expenses paid by the Health Plan for medical treatment received by

Mr. Tippett as a result of an automobile accident. For the following reasons, we

affirm as amended.

FACTS AND PROCEDURAL HISTORY

Ronald Tippett was involved in an automobile accident on April 15, 2003,

which resulted in a lawsuit being filed against the tortfeasor and his insurer. As a

result of the injuries sustained in the accident, Mr. Tippett incurred medical

expenses in the amount of $48,610.86 which were paid by the Health Plan pursuant

to a health insurance policy issued through his wife’s employment as a postal

worker. The Tippetts elected to settle their claims against the tortfeasor and his

insurer for $653,712.25, and that lawsuit was dismissed. The Health Plan made

demand upon the Tippetts for reimbursement of all the medical expenses it paid on

behalf of Mr. Tippett. The Tippetts maintained that the Health Plan was not

entitled to any reimbursement. Consequently, the Health Plan instituted the instant

litigation, seeking reimbursement of the $48,610.86 it paid on behalf of

Mr. Tippett.

The Health Plan filed a Motion for Summary Judgment, asserting that there

were no disputed material issues of fact and that the Health Plan was entitled to

judgment for $48,610.86 as a matter of law. Following a hearing on April 11,

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Broussard & Hart, LLC was also named as a Defendant in the instant matter. Although
judgment was rendered only against the Tippetts, the appeal filed with this court included
Broussard & Hart, LLC. However, that entity acknowledges in brief that it was “inadvertently”
included in the motion for appeal, and, “since no judgment was rendered against Broussard &
Hart, LLC, [it] should not be considered as a party to this appeal.”

2011, the trial court rendered judgment in favor of the Health Plan. The Tippetts

appeal.

ASSIGNMENTS OF ERROR

The Tippetts present the following assignments of error for our review:

1. The trial court erred in finding that Ronald Tippett had been “made
whole” as a result of the settlement of his tort claim, and[,]
therefore, [the] Health Plan was entitled to reimbursement under its
contract.

2. Alternatively, should this [c]ourt affirm the trial court’s decision
ordering reimbursement, then it is submitted the trial court was in
error for not reducing the reimbursement for [Mr.] Tippett’s
attorney fees and litigation expenses in connection with obtaining
the recovery for [the] Health Plan.

LAW AND DISCUSSION

In their first assignment of error, the Tippetts contend that the trial court

erred in ordering reimbursement to the Health Plan because they have not been

“made whole” from the settlement of their claims with the tortfeasor. To the

contrary, the Health Plan asserts that the Tippetts are contractually obligated to

reimburse it for the medical expenses which it paid on behalf of Mr. Tippett

stemming from the accident with the tortfeasor.

An insurance policy is a contract between the parties. Innovative Hospitality

Sys., LLC v. Abraham, 10-217 (La.App. 3 Cir. 4/6/11), 61 So.3d 740, writ denied,

11-845 (La. 6/17/11), 63 So.3d 1036. While the parties are generally free to agree

to whatever terms and conditions they wish to contractually oblige themselves, any

provisions which are against public policy are not enforceable. Id.

In this instance, the provisions of the insurance policy included a

reimbursement provision which states as follows (emphasis added):

When others are responsible
for injuries If you or your dependent’s injury is
caused by another person or entity,
the Health Plan will pay benefits for
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that injury or illness according to the
terms of the Brochure in effect at the
time services are provided. If the
Health Plan pays any benefits for that
injury or illness, when you or your
dependent receive money or have a
right to receive money from any
source, including underinsured and
uninsured automobile coverage, as a
result of this injury or illness, you or
your dependent must reimburse the
Health Plan for any expenses we
paid for that injury or illness. The
amount owed to the Health Plan
will not be reduced for attorney’s
fees or costs nor because you or
your dependent was not fully
compensated for the injury or
illness unless the Plan agrees in
writing to a reduction.

Following Mr. Tippett’s injury, Mrs. Tippett completed a Health Plan

questionnaire about Mr. Tippett’s accident and signed the following statement:

I have read and understand that the subrogation and workers’
compensation provisions of the American Postal Workers Union
Health Plan Brochure. I understand that the Health Plan, by operation
of law and contract, has a right to full reimbursement for medical bills
paid as a result of an accident, injury, or illness if any recovery from
any source is made on account of that accident, injury, or illness.

The provisions of the insurance policy unambiguously mandate

reimbursement of the medical expenses paid on behalf of Mr. Tippett regardless of

whether the insured was “fully compensated” or “made whole.” However, these

provisions do not end the inquiry. Next, we must determine if the contractual

provisions are violative of public policy.

The Louisiana Commissioner of Insurance issued Directive 1752 (emphasis

added) on January 8, 2003, which sets forth, in pertinent part, as follows:

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The Louisiana Commissioner of Insurance has the authority to make rules and
regulations in order to make effective the implementation of the Insurance Code. These
directives have the force and effect of law. See La.R.S. 22:2(E); La.R.S. 22:11(A).
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While insurers are free to include whatever provisions they
choose in their policies, the provisions must be consistent with the
laws and public policy of Louisiana. It has long been the public
policy of this state, as expressed in Louisiana jurisprudence, that
subrogation provisions in insurance contracts cannot harm the
insured. This same rule of public policy applies to reimbursement
provisions in insurance contracts. Further, an insurer invoking a
subrogation or reimbursement provision is required by the public
policy of this state to contribute to the attorney’s fees incurred in
obtaining a recovery from the third party.

The provisions of the insurance policy whereby the contract requires that an

insured reimburse the Health Plan for medical expenses it paid on his/her behalf,

regardless of whether the insured is “fully compensated,” runs afoul of Directive

175 since no consideration is given as to whether enforcement of same would

necessarily result in harm to the insured. If there is a determination that

enforcement of the contractual reimbursement provisions results in harm to the

insured, then the insurance policy would be inconsistent with the public policy

provisions set forth in Directive 175.

Despite the Tippetts’ contention that they had not been made whole via

settlement, the trial court concluded that they owed full reimbursement to the

Health Plan, reasoning as follows:

[I]f you’ve settled a case or the case is [sic] gone to trial and it has
been taken care of throughout all of the appeal’s process in that
manner then you have been made whole whether or not your client
believes they [should have] received more money or not.

....

The made-whole doctrine applies and based on the fact that you
settled the case, you were satisfied that your clients were made whole
and therefore they have to honor their contract.

In this case, the Tippets filed a lawsuit against the tortfeasor. The Tippetts

were aware that Mr. Tippett’s medical expenses had been paid by the Health Plan.

Following the accident, Mrs. Tippett signed the Health Plan questionnaire

expressly acknowledging the Health Plan’s right of reimbursement for the medical
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expenses that it paid. Additionally, there was correspondence between the Health

Plan and counsel for the Tippetts advising them of the amounts paid out and the

Health Plan’s right of reimbursement. When the Tippetts reached their settlement

with the tortfeasor for $653,712.25, they were aware of their contractual obligation

to reimburse the Health Plan. The Tippetts voluntarily agreed to a settlement

amount with full knowledge of their contractual obligation of reimbursement and

the amount thereof; therefore, they cannot evade that obligation by subsequently

asserting that the amount of settlement was insufficient for them to have been

made whole.

For the foregoing reasons, notwithstanding the issue of attorney fees, we

find no error in the judgment of the trial court ordering the Tippetts to reimburse

the Health Plan for the medical expenses it paid.

In their second assignment of error, the Tippetts contend that should this

court affirm the trial court’s decision relative to reimbursement, then the amount of

the award must be reduced for attorney fees and litigation expenses that they

incurred in obtaining recovery of the medical expenses incurred. We agree as to

attorney fees.

As quoted above, Directive 175 negates any policy provision which results

in harm to the insured. Moreover, the directive expressly provides that “an insurer

invoking a subrogation or reimbursement provision is required by the public policy

of this state to contribute to the attorney[] fees incurred in obtaining a recovery

from a third party.” In this instance, it was only through the expenditure of time,

effort, and resources of counsel for the Tippetts that any recovery was obtained

from the tortfeasor. The amount of that recovery undisputedly includes an amount

for medical expenses which enures to the benefit of the Health Plan. Directive 175

specifically states that an insurer is required by public policy to contribute to the
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attorney fees incurred in obtaining a recovery from a third party. The trial court

failed to award the Tippetts any contribution toward attorney fees in violation of

Directive 175. The judgment of the trial court must, therefore, be amended to

provide for such contribution.

The record indicates that the Tippetts paid their attorney one-third of the

settlement amount less the amount designated for property damage. We find that

the Health Plan’s contribution toward attorney fees should likewise be one-third of

the amount that it is to receive. Accordingly, the $48,610.86 in reimbursement

owed by the Tippetts to the Health Plan must be reduced by $16,203.62 (one-third

of $48,610.86) for attorney fees.

DECREE

For the reasons assigned, the judgment of the trial court in favor of

American Postal Workers Union, AFL-CIO Health Plan, in the amount of

$48,610.86 is reduced and amended to $32,207.24. As amended, the judgment of

the trial court is affirmed. Costs of this appeal are assessed equally among the

parties.

AFFIRMED AS AMENDED.

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