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Release Does Not Bar Medical Expense Claim

An auto accident victim’s release of the tortfeasor does not release his insurance company from having to make medical payments under the insurance policy, the Supreme Court of Virginia has ruled in a case of first impression.

The court reversed a Fairfax County circuit judge who allowed broad language in the tort-claim release to bar the policyholder’s later request for medical expenses under his policy.

The court said that the critical point of the case was determination of the “intention of the parties to the document,” and the court found as a matter of law that the victim and the other driver did not intend to let the carrier off the hook.

The case is Berczek v. Erie Insurance Group (VLW 000-6-079). Senior Justice A. Christian Compton wrote the opinion for a unanimous court.

Broad language

The plaintiff was hurt in a 1994 car wreck in Fairfax County. At the time, he was an insured under a family auto policy with Erie Insurance that provided him medical expenses “as a result of bodily injury caused by accident.”

He settled his claim against the other driver for $19,500, Compton wrote.

He executed a general release in favor of the tortfeasor. Under the language of the document, the plaintiff release them and “all other persons, firms or corporations” who might be liable for “any claims, demands, actions, causes of action or suits” arising from the accident.

He filed a lawsuit to collect medical expenses in 1998, and the carrier moved for summary judgment, citing the broad contract language.

The Fairfax judge granted that motion, finding the release “unambiguous.” He was giving the language of the release its “plain meaning” in ruling for the carrier, Compton wrote.

In the appeal to the high court, Compton observed that the case presented a question of first impression under Virginia law.

The court likewise found the language of the release to be unambiguous, but “the crucial task is to determine the intention of the parties to the document, that is, whether the insured and the tortfeasor contemplated the release of an insurer from a medical expense claim arising from the accident.”

Clearly, they did not envision that result, he concluded.

“Even given the broad, all-inclusive language of the document in question, we hold as a matter of law that it could not have been the intention of the parties, the injured insured and the tortfeasor, to release the insurer from its obligation to pay medical benefits,” he wrote.

The policyholder was releasing a tort claim, and the medical-expense issue involved contract, the justice said.

And the two insurance claims are differentone is the promise to pay if the insured hurts someone else and the other is a contractual obligation to pay medical expenses “regardless of fault,” he wrote.

Compton added that even the carrier conceded that if the broad sweep of the position they advocated was imposed, the release even could be used to bar a life insurance claim is the insured had died in the accident.

The court reversed the decision and remanded the case.

VLW 000-6-079

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