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Dowell v. Oregon Mutual Insurance Co.

Supreme Court of Oregon, En Banc

February 16, 2017

Stephanie M. DOWELL, individually and on behalf of others similarly situated, Petitioner on Review,
v.
OREGON MUTUAL INSURANCE COMPANY, an Oregon corporation, Respondent on Review.

          Argued and submitted March 8, 2016

         On review from the Court of Appeals.[*] CC 1205-06486; CA A153170

          Charles Robinowitz, Law Offces of Charles Robinowitz, Portland, argued the cause and fled the briefs for petitioner on review. Also on the briefs was Genavee Stokes-Avery.

          Thomas M. Christ, Cosgrave Vergeer Kester LLP, Portland, argued the cause and fled the briefs for respondent on review.

          Hadley Van Vactor, Portland, fled the brief for amicus curiae Oregon Trial Lawyers Association.

         The decision of the Court of Appeals and the judgment of the circuit court are affrmed.

          Walters, J., dissented and fled an opinion, in which Baldwin, J., and Brewer, J., joined.

         Case Summary: In 2008, plaintiff was injured in a motor vehicle accident. Among the costs she incurred as a result were $430.67 in transportation expenses accrued in the course of traveling to various medical appointments and picking up medications. Plaintiff applied for PIP medical benefts under her Oregon automobile insurance policy, and defendant insurance company paid for the medical care she had received from her healthcare providers. Defendant, however, declined to pay for the transportation costs associated with obtaining that care. Plaintiff subsequently fled an action against defendant, arguing that medical expenses under ORS 742.524(1)(a) included, as a statutory matter, transportation costs and that as a result, defendant had breached its contract with her by failing to reimburse her for those expenses. On defendant's motion for summary judgment, however, the trial court dismissed plaintiff's action and the Court of Appeals went on to affrm that judgment in a written decision. In scrutinizing the statutory phrase "expenses of medical * * * services" as it was used in ORS 742.524(1), the Court of Appeals examined the text and context of the statute, opining that the phrase meant "something that is expended to secure a beneft relating to work that is performed by another, when that work involves the practice of medicine[.]" After thus narrowing the meaning of that phrase, the Court of Appeals concluded that it could not be read to include transportation expenses related obtaining medical services. Held: The decision of the Court of Appeals and the judgment of the circuit court are affrmed. After examining the text, context, and legislative history of ORS 742.524(1) the Court concludes that the legislature intended the phrase "expenses of medical * * * services" to encompass costs that originate with, or arise by virtue of, the rendering of medical treatment or the work performed by a physician. Such costs would include the medications, medical supplies, and equipment prescribed by a physician for treatment of the injured person. The legislature did not intend, however, for ordinary transportation expenses incurred in the course of obtaining medical treatment or medications to qualify as a covered PIP beneft.

         The decision of the Court of Appeals and the judgment of the circuit court are affrmed.

          NAKAMOTO, J.

         Auto insurers in Oregon must provide personal injury protection (PIP) benefits to their insureds for certain automotive injury-related expenses, regardless of who is at fault in an accident. ORS 742.520(1). The PIP medical benefits at issue in this case "consist of the following payments for the injury or death of each person" covered: "All reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetic services incurred within one year after the date of the person's injury, but not more than $15, 000 in the aggregate for all such expenses of the person." ORS 742.524(1)(a) (2007).[1] On behalf of herself and others similarly situated, plaintiff contended in her action against defendant Oregon Mutual Insurance Company that insurers must pay transportation costs incurred to obtain medical care as part of PIP medical benefits. The trial court concluded that the PIP statutes, ORS 742.518 to 742.542, do not require insurers to pay for transportation costs and granted summary judgment for defendant. Plaintiff appealed, and the Court of Appeals affirmed. Powell v. Oregon Mutual Ins. Ca, 268 Or.App. 672, 343 P.3d 283 (2015).

         The question on review is whether the PIP medical benefit in ORS 742.524(1)(a) includes the insured plaintiff's transportation costs to receive medical care. We hold that PIP benefits for the "expenses of medical * * * services" do not include an insured's transportation costs for traveling to receive medical care. Therefore, we affirm the decision of the Court of Appeals and the judgment of the trial court.

         I. BACKGROUND

         The relevant facts are not in dispute. Plaintiff had an Oregon auto insurance policy issued by defendant. In 2008, plaintiff was injured in a motor vehicle accident. Among other expenses, plaintiff incurred $430.67 in transportation costs to attend medical appointments and to obtain medication. She then applied for PIP medical benefits under her insurance policy. Defendant paid for plaintiff's medical care, but it declined to pay for her transportation expenses to obtain her medical care.

         Plaintiff then filed a complaint for breach of contract, both for herself and on behalf of others similarly situated. She alleged that her claim for medical expenses under ORS 742.524(1)(a) included her transportation costs and that defendant had breached its contract by failing to reimburse her for those expenses. Defendant responded by moving for summary judgment, arguing that ORS 742.524(1)(a) did not require it to pay for transportation costs. After a hearing, the trial court granted defendant's motion and entered a judgment in defendant's favor.

         On appeal, the Court of Appeals narrowed the case to a single question: Does the phrase "expenses of medical * * * services" in ORS 742.524(1)(a) require an insurer to pay an insured's expenses for transportation to attend medical appointments and to obtain medication? Dowell, 268 Or.App. at 675.[2] The Court of Appeals answered that question by considering the statute's text and context.[3] After examining dictionary definitions of the four words in the phrase "expenses of medical * * * services, " the Court of Appeals concluded that, considered as a whole, the phrase meant "something that is expended to secure a benefit relating to work that is performed by another, when that work involves the practice of medicine (the maintenance of health, and the prevention, alleviation, or cure of disease)." Id. at 677. After considering the phrase's context, particularly the remaining text of the statute and other PIP provisions pertaining to payments to "providers" of medical services, the Court of Appeals concluded that the legislature had not intended the statute to include expenses of transportation to obtain medical services. 268 Or.App. at 677-78.

         We allowed plaintiff's petition for review to address the interpretation of ORS 742.524(1)(a). On review, plaintiff contends that two statutes, ORS 731.008 and ORS 731.016, serve as the starting point for construing the phrase "expenses of medical * * * services." According to plaintiff, the legislature's declarations in those two statutes require us to liberally construe ORS 742.524(1)(a), and, read in that light, the phrase at issue should be understood as a reference to "the costs to obtain medical services, " including the costs for transportation to a doctor's office or hospital to obtain medical advice and treatment. Consequently, plaintiff asserts that transportation costs to obtain medical services qualify as PIP benefits.

         Second, plaintiff argues that the Court of Appeals decision conflicts with the purpose and policy of the PIP statutes, which is to reduce litigation and to ensure prompt payment of claims. Because health care is not available without traveling to a doctor or hospital, plaintiff argues, those travel costs are especially burdensome to rural residents who may have to travel a significant distance. Plaintiff also asserts that the reasoning of the Court of Appeals will encourage insurance companies to deny injured persons payment for medication, medical supplies, and medical equipment.

         Finally, plaintiff contends that sources of law outside the PIP statutes are persuasive authority in favor of her interpretation of the statute. She relies on decisions from courts in other jurisdictions that have held that the PIP benefits in those jurisdictions include the reasonable cost of travel to a health care provider.

         Defendant responds that the text and context of the statute limit payment to the cost of services expressly listed in ORS 742.524(1)(a) that are performed by a "provider, " that is, a licensed healthcare provider. Noting that the statute refers only to ambulance services and not to other transportation, and that it contains a presumption concerning payments for healthcare providers, defendant argues that PIP benefits are not meant to cover "providers of n.on.-health care services, " such as a taxicab or bus service, or services that insureds perform for themselves, such as driving to the doctor's office. (Emphasis in original.) Defendant also contends that the out-of-state authorities cited by plaintiff are not helpful because of differences in the relevant statutes and case law.

         Our measure of legislative intent takes into account the legislative history of the PIP benefit statute, in addition to its text and context. As explained below, we ultimately conclude that the Oregon Legislative Assembly did not intend to include the expenses of transportation to obtain medical services as a PIP medical benefit in ORS 742.524(1)(a), but we arrive at that conclusion after rejecting both parties' rationales for their divergent readings of ORS 742.524(1)(a).

         II. ANALYSIS

         The issue presented involves statutory construction, which we resolve by applying familiar principles set out in PGE v. Bureau of Labor and Industries, 317 Or 606, 610-12, 859 P.2d 1143 (1993), and State v. Gaines. 346 Or 160, 171-72, 206 P.3d 1042 (2009). To discern the meaning of the statute most likely intended by the legislature that enacted it, we examine the text and context of the statute and, where appropriate, legislative history and pertinent canons of construction. State v. Walker. 356 Or 4, 13, 333 P.3d 316 (2014); Gaines, 346 Or at 171-72.

         A. Oregon's PIP Statutory Scheme

         To aid our discussion, we begin with a brief overview of the PIP statutory scheme. PIP is a form of no-fault insurance mandated by Oregon law to be included in any motor vehicle liability policy. ORS 742.520(1). PIP coverage is governed by ORS 742.518 to 742.544. PIP benefits "consist of payments for expenses, loss of income and loss of essential services as provided in ORS 742.524." ORS 742.520(3).

         An insurer must pay PIP benefits "promptly after proof of loss has been submitted to the insurer." ORS 742.520(4). We have explained that "the obvious purpose of [the PIP statutes] is to provide, promptly and without regard to fault, reimbursement for some out-of-pocket losses resulting from motor vehicle accidents." Perez v. State Farm Mutual Ins. Co., 289 Or 295, 300, 613 P.2d 32 (1980) (emphasis added). Indeed, since their creation, in general, PIP benefits have consisted of payments for "medical expenses and loss of income." Kessler v. Weigandt, 299 Or 38, 40 n 3, 699 P.2d 183 (1985) (discussing the predecessors of ORS 742.520 and ORS 742.524, namely, former ORS 743.800, renumbered as ORS 742.520 (1989), and former ORS 743.805, renumbered as ORS 742.524 (1989)).

         This case involves the PIP medical benefit in ORS 742.524(1)(a), which requires payment for

"[a]ll reasonable and necessary expenses of medical, hospital, dental, surgical, ambulance and prosthetic services incurred within one year after the date of the person's injury, but not more than $15, 000 in the aggregate for all such expenses of the person."

         That statute also contains a presumption that expenses of medical and other listed services claimed by a "provider" on behalf of an insured are reasonable and necessary, unless the insurer timely denies the claim:

"Expenses of medical * * * services shall be presumed to be reasonable and necessary unless the provider is given notice of denial of the charges not more than 60 calendar days after the insurer receives from the provider notice of the claim for the services."

Id.

         The term "provider" is statutorily defined. ORS 742.518(10) (stating that "provider" has the meaning given to that term in ORS 743.801). As used in the presumption described in ORS 742.524(1)(a), a "provider" is "a person licensed, certified or otherwise authorized or permitted by laws of this state to administer medical or mental health services in the ordinary course of business or practice of a profession." ORS 743.801(13). A number of other provisions in the PIP statutes refer to payments to providers. See, e.g., ORS 742.525, ORS 742.528.

         An insurer may deny a PIP claim for medical expenses; however, the "potential existence of a cause of action in tort does not relieve an insurer from the duty to pay [PIP] benefits." ORS 742.520(5). Disputes over PIP payments may be adjudicated in either of two forums. If the parties mutually agree, they can use binding arbitration. ORS 742.520(6).[4] Or, like plaintiff, an insured who contends that the insurer wrongly denied PIP benefits may choose to file a civil action against the insurer.

         B. Text and Context of ORS 742.524(1)(a)

         With that overview, we turn to construe ORS 742.524(1)(a). We begin with the text of the statute. Sanders v. Oregon Pacific States Ins. Co., 314 Or 521, 527, 840 P.2d 87 (1992). The phrase directly at issue contains four terms: "expenses, " "of, " "medical, " and "services." In construing those terms, we pay careful attention to "the exact wording of the statute." State v. Vasquez-Rubio, 323 Or 275, 280, 917 P.2d 494 (1996). That is because the text provides the best evidence of the legislature's intent and the starting point for our analysis. PGE, 317 Or at 611; see also Whipple v. Howser, 291 Or 475, 480, 632 P.2d 782 (1981) (stating that there is "no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes").

         None of the statutory terms set out above are defined by statute, nor are they legal terms of art. Therefore, our task is to determine the intended meaning of those words, applying the ordinary tools of statutory construction. When the legislature has not defined a word or a phrase, we assume, at least initially, that the word or phrase has its "plain, natural, and ordinary" meaning. PGE, 317 Or at 611; accord Wrisht v. Turner. 354 Or 815, 827, 322 P.3d 476 (2014). This court frequently consults dictionary definitions in such cases on the assumption that, if the legislature did not provide a specialized definition for a term, the dictionary will help to shed light on its meaning as intended by the legislature. State v. Murray. 340 Or 599, 604, 136 P.3d 10 (2006).

         The dictionary definition of "expense" is straightforward. "Expense" means "2 a: something that is expended in order to secure a benefit or bring about a result" or "b: the financial burden involved typically in a course of action or manner of living: cost." Webster's Third Int'l Dictionary 800 (unabridged ed 2002) (boldface in original). Thus, in ordinary usage, the word "expenses" means something that is expended, a cost, to secure a benefit or bring about a result.

         In part, Webster's defines "of to mean "5 b: from as the place of birth, production, or distribution: having as its base of operation, point of initiation, or source of issuance or derivation." Id. at 1565. That definition appears to suggest a derivation that is not necessarily geographical, but, if the dissent is correct that the definition has only a "locational meaning." Dowell, 361 Or at(Walters, J., dissenting), other definitions point in a similar direction. For example, "of is also defined as being "6-used as a function word to indicate the cause, motive, or reason by which a person or thing is actuated or impelled" or "15-used as a function word to indicate a quality or possession characterizing or distinguishing a subject." Id. More broadly, though, "of" is defined as "11: relating to: with reference to: as regards: ABOUT." Id. Although there are many other definitions, none comes as close as the foregoing to address the problem before us.

         The word "medical" has two possible definitions in this context. "Medical" means "1: of, relating to, or concerned with physicians or with the practice of medicine often as distinguished from surgery" or "2: requiring or devoted to medical treatment *** - distinguished from surgical." Webster's at 1402 (emphasis in original).

         Finally, the noun "service" also is defined in many ways. But in this case, the applicable definitions of "service" are either "2: the performance of work commanded or paid for by another" or "9 a: action or use that furthers some end or purpose: conduct or performance that assists or benefits someone or something: deeds useful or instrumental toward some object." Webster's at 2075.

         In light of those definitions, the phrase "expenses of medical * * * services" can, as a textual matter, plausibly be read in different ways. Each of the parties offers a different understanding of the phrase, but we conclude that there is a third plausible reading.

         In the strictest reading, which defendant urges, the PIP expenses authorized for "medical * * * services" are the costs for the professional work performed by a physician or other person who renders medical care. Plaintiff objects that defendant and the Court of Appeals have focused too narrowly on "services, " which omits from PIP benefits a variety of nonservice medical costs that are necessary adjuncts of medical treatment, including medications and other medical supplies and equipment, such as bandages and crutches.

         By relying on the broader meaning of the word "of, " plaintiff offers the most expansive view of the phrase "expenses of medical * * * services." In plaintiff's view, that phrase refers to a cost that is related in some way to work that involves medical care or the practice of medicine. In accordance with that view, plaintiff contends that transportation to receive medical care is "related" to the benefit of work performed by a healthcare provider because, as a practical matter, transportation usually is needed for the injured person to obtain medical treatment. Defendant disagrees, arguing that transportation costs-other than ambulance services-are not "related" to medical care and instead are ancillary.

         In our view, however, there is a third reading of the phrase that neither party proffers. In it, the dictionary definitions point to costs that have as their source or derivation an action or use that is devoted or instrumental to medical treatment. In other words, "expenses of medical * * * services, " ORS 742.524(1)(a), can refer to costs that originate with the rendered medical treatment or the physician's performance of work. That meaning of the phrase is consistent with PIP benefit coverage for items such as medications or crutches that injured individuals use as part of their medical treatment.

         In light of those alternatives, the text alone does not provide a definitive answer regarding what the legislature intended in ORS 742.524(1)(a). But of course, we do not interpret a statutory phrase solely on the basis of dictionary definitions. State v. Cloutier. 351 Or 68, 96, 261 P.3d 1234 (2011). Statutory construction in Oregon requires an examination of word usage in context to determine what the legislature most likely intended. See, e.g., State v. Fries. 344 Or 541, 546-50, 185 P.3d 453 (2008) (considering context to determine which of multiple definitions was intended by the legislature).

         We begin with plaintiff's contextual argument. She argues that we are required by general provisions in the Insurance Code to liberally interpret insurance law in favor of insureds. Plaintiff relies on ORS 731.016, which provides:

"The Insurance Code shall be liberally construed and shall be administered and enforced by the Director of the Department of Consumer and Business Services to give effect to the policy stated in ORS 731.008."

         The policy referred to in ORS 731.016 states that "the Insurance Code is for the protection of the insurance-buying public." ORS 731.008. Plaintiff and amicus curiae Oregon Trial Lawyers Association further contend that, under Carrigan v. State Farm Mutual Auto. Ins. Co., 326 Or 97, 104-05, 949 P.2d 705 (1997), the ...


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