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Silas v. Allstate Insurance Co.

Decided: June 14, 1974.

LOUISE SILAS, PLAINTIFF-APPELLANT,
v.
ALLSTATE INSURANCE COMPANY, DEFENDANT-RESPONDENT



Conford, Handler and Meanor. The opinion of the court was delivered by Meanor, J.A.D.

Meanor

On November 19, 1970 plaintiff was a passenger in an automobile insured by defendant under a policy which provided uninsured motorists (UM) coverage. N.J.S.A. 17:28-1.1. The policy also provided medical payments insurance. Plaintiff, injured by the negligence of an uninsured motorist, went to arbitration pursuant to the terms of the policy and received an award of $1,750. Medical expenses of $611 were proven in arbitration and were included within the award.

Following the award plaintiff brought this action seeking to recover $611 under the medical payments coverage. Defendant was successful below in contending that the policy precludes double recovery of medical benefits.

The UM coverage portion of the policy provides in pertinent part:

The company shall not be obligated to pay under this insurance that part of the damages which the insured may be entitled to recover from the owner or operator of an uninsured highway vehicle which represents expenses for medical services paid or payable under the medical payments or medical expense coverage of the policy * * *.

We are asked to hold the clause void as contrary to this State's public policy. Cases pro and con are collected and discussed in Annotation, "Uninsured Motorist Insurance: Reduction Of Coverage By Amounts Payable Under Medical Expense Insurance," 24 A.L.R. 3d 1353 (1969).

The cases that have invalidated such clauses have done so on the ground of conflict between the clause and statutory

requirements for UM coverage. This was the rationale of, for example, Tuggle v. Government Employees Ins. Company, 207 So. 2d 674, 24 A.L.R. 3d 1343 (Fla. Sup. Ct. 1968), criticized in Note, "Uninsured Motorist Coverage -- Setoff Of Amounts Payable Under Medical Payments Coverage," 23 U. of Miami L. Rev. 249 (1968) and Phillips v. State Farm Mut. Automobile Ins. Co., 437 F. 2d 365, 370 (5 Cir. 1971) (Under Georgia law). Phillips involved a clause different in form from the one present here, while Tuggle concerned one essentially identical. The various clauses attempting to exclude medical payments under medical payments coverage from awards under UM coverage are discussed along with many of the pertinent cases in Note, "Uninsured Motorist Coverage -- Validity Of Medical Setoff Clause," 38 Mo. L. Rev. 346 (1973). It appears that the clause here is the "standard" clause. Id. at 351. See also Risjord & Austin, Automobile Liability Insurance Cases, Standard Provisions and Appendix, at 289 (Supp. 1970), where the standard provisions for UM coverage are printed in full.

We cannot hold that the medical payments exclusion is contrary to statute on the ground advanced in some cases -- that there is a statutory requirement that UM coverage provide tort damages in full up to policy limits. This rationale is unavailable because our statute, N.J.S.A. 17:28-1.1, permits the Commissioner of Insurance to approve UM coverage provisions which provide "for payment of all or part of the sums which the insured or his legal representative shall be legally entitled to recover as damages from the operator or owner of an uninsured automobile." (Emphasis supplied).

The other major reason for rejection of the clause lies in the conclusion that it requires the UM award to be reduced by the amount of medical payments and, thus, may lead to a violation of statutorily mandated minimum coverage. As was said in Tuggle, supra ;

The clause on its face is one to decrease uninsured motorist coverage beneath the statutory minimum, and one which means that under certain conditions (medical benefits in excess of $10,000) there will be no ...


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