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Scheel v. Guideone Mutual Insurance Company

United States District Court, D. Oregon, Portland Division

August 15, 2017

GUIDEONE MUTUAL INSURANCE COMPANY, an Iowa corporation, Defendant.




         Plaintiff Gerald Scheel (“Scheel”) was injured in an automobile collision in British Columbia, Canada (“the Collision”). At the time of the Collision, Scheel had an insurance policy (“the Policy”) with GuideOne Mutual Insurance Company (“GuideOne”). The Policy's Personal Injury Protection (“PIP”) coverage obligated GuideOne to pay Scheel's reasonable and necessary medical expenses after an automobile collision. Scheel had surgery on his lower back following the collision to treat a herniated disc between the L2 and L3 vertebrae (“the Surgery”). Scheel incurred $98.832.78 in medical, surgical, and hospital expenses because of the Surgery. Scheel's medical providers state that the Surgery was necessary because of the Collision.

         GuideOne did not believe the Surgery was related to the Collision, based on an oral representation from an employee of Moda, Scheel's primary medical insurer, despite having medical records indicating the Collision caused Scheel's back injury. Although GuideOne paid some of Scheel's medical expenses related to the Surgery, GuideOne did not pay most other expenses related to the Surgery. Moda later satisfied Scheel's outstanding expenses for $16, 158.09, and requested reimbursement from Scheel. Scheel reimbursed Moda $12, 500, which Moda accepted as full repayment. After GuideOne did not pay Scheel's provider or medical insurer, Scheel initiated this lawsuit, alleging GuideOne's failure to pay the expenses related to the Surgery breached the Policy.

         The court previously granted partial summary judgment to Scheel, finding that the higher PIP coverage limit required under British Columbia law applied to GuideOne's obligations in this case. (ECF No. 28.) The Court also denied GuideOne's motion for summary judgment regarding the relatedness of the Surgery to the collision, finding that Scheel presented a genuine issue of material fact by providing evidence suggesting the back surgery was necessary because of the collision. (Id. at 19.) Based on the evidence of relatedness that Scheel presented at summary judgment, GuideOne now concedes the Surgery was necessary because of the Collision.

         Scheel contends GuideOne breached the Contract by not paying all of the Surgery-related expenses which he incurred. He seeks monetary damages equal to the amount of his Surgery-related expenses that GuideOne should have paid under the Policy, less the amount GuideOne has already paid. GuideOne argues it was not obligated to pay until Scheel provided sufficient proof that the Surgery was related to the Collision, and that Scheel breached the Policy by filing suit before providing proof of relatedness. In the alternative, GuideOne seeks to limit Scheel's recovery to the $12, 500 he paid out-of-pocket for the Surgery. GuideOne also argues Scheel is not entitled to attorney fees.

         On March 22, 2017, Scheel's case was tried to the court. Upon review and consideration of the pleadings, trial memoranda, sworn declarations, exhibits, and final arguments, the court makes the following Findings of Fact and Conclusions of Law pursuant to Rule 52(a)(1) of the Federal Rules of Civil Procedure.[1]

         Findings of Fact

         1. Scheel was involved in an automobile collision (“the Collision”) in British Columbia, Canada, on July 25, 2013. (Jt. Stipulated Facts (ECF No. 45) ¶ 5.)

         2. Scheel sustained physical injuries because of the collision. (Id. ¶ 6.)

         3. Scheel and GuideOne were parties to an insurance policy, (“the Policy”) which was in effect on July 25, 2013. (Id. ¶ 3.)

         4. The Policy provided Personal Injury Protection (“PIP”) coverage for bodily injuries arising from automobile collisions. (Decl. of James D. Vick, ECF No. 8, Ex. 1 (“Policy”), at 47-51.)

         5. The Policy specifically covered: “All reasonable and necessary expenses incurred within one year from the date of the accident for medical, hospital, dental, surgical, ambulance and prosthetic services.” (Id. at 47.)

         6. Scheel began experiencing pain in his back, neck, and buttocks, loss of bladder control, and stiffness after the Collision. (Decl. of Christine Olson (“Olson MSJ Decl.”) (ECF No. 18), Exs.1-3.) Scheel had a history of back problems. (Id.) His new symptoms were in a different location than his prior injuries. (Id.) Scheel had two back surgeries several years prior to the Collision. (Id. Ex. 2 at 2.)

         7. Scheel's primary-care physician observed a new disc herniation between the L2 and L3 vertebrae, and concluded that the herniation was “reasonably attributed to the [Collision].” (Olson MSJ Decl., Ex. 1 at 2.) Scheel's primary-care physician referred him to a neurosurgeon. (Id.) The neurosurgeon, Dr. Hubbard, confirmed the disc-herniation observation, noting that the Collision preceded Scheel's symptoms but stating that it is unclear whether the Collision caused the herniation. (Id. Ex. 2 at 2-3.) Dr. Hubbard told Scheel that surgery was an available option. (Id. at 3.) In a chart note from a follow-up visit with Scheel, Dr. Hubbard suggests that the L2-L3 herniation is “more likely due to degen[arative] disease than from his trauma.” (Decl. of Laurie Alt (ECF No. 14), Ex. 2 at 3. Scheel sought a second opinion to avoid additional back surgeries. (Olson MSJ Decl., Ex. 3.)

         8. Dr. Obukhoff, a neurosurgeon practicing in California, provided Scheel a second opinion. (Olson MSJ Decl., Ex. 4.) In his notes, Dr. Obukhoff stated that the pain began after the Collision. (Id. at 1.) Dr. Obukhoff recommended surgery to address Scheel's back injury. (Id. at 3.)

         9. In February, 2014, Dr. Obukhoff performed the recommended surgery (“the Surgery”) on Scheel at Monrovia Memorial Hospital (“Monrovia”). (Olson MSJ Decl., Ex. 6; Jt. Stip. Facts ¶ 8.)

         10. On April 30, 2014, GuideOne adjuster Laurie Alt (“Alt”) spoke with a Moda adjuster. (Olson MSJ Decl., Ex. 2 (“Alt Dep.”), at 36:13-20.) When asked at deposition about this conversation, Alt did not recall it. (Id. at 35:20.) Alt's notes from the conversation state “GERALDD (sic) HAD BACK SURGERY 2/14 DEGENERATIVE 70K PLUS, SHE WILL PAY THAT.” (Id. Ex. 6 (capitalization in original).) Alt understood her note to mean that the Moda adjuster told her that the Surgery was unrelated to the Collision and that Moda would pay expenses related to the Surgery. (Id. 37:17; 38:18-39:1.)

         11. After the Surgery, but before May 1, 2014, Dr. Obukhoff and Monrovia submitted to Moda bills for medical expenses related to the Surgery. (Olson MSJ Decl., Ex. 7 at 2.) Moda left both bills pending without payment because they believed GuideOne should pay the benefits under the PIP coverage. (Id. at 1.) Moda's attorney ...

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