Last week, the DC Court of Appeals decided Hubb v. State Farm, a case involving subrogation of personal injury protection (“PIP”) benefits under Washington, DC law. The Court held that PIP insurers in DC have the right to subrogate (or be reimbursed) from the proceeds received by an injured person from the wrongdoer. This is not a groundbreaking result. In fact, I think even if the Court had adopted Hubb’s argument in this dispute, there was not going to be a repeatable benefit for other injured people in the future. But what is noteworthy about Hubb v. State Farm is the reasoning employed to derive the result. It turns out statutory construction, like statistics, can be used to prove almost anything.
First, the facts. Hubb was injured in a car accident in Montgomery County by a Maryland-insured driver. Hubb had a DC auto insurance policy. DC’s lawsuit restriction (DC Code § 31-2405) doesn’t apply for a collision in Maryland involving a Maryland wrongdoer, so Hubb made a PIP claim with his own insurer, State Farm, and then also pursued a liability claim against the wrongdoer. State Farm paid out $25,519.33 in PIP benefits on Hubb’s behalf. Hubb ultimately settled with the wrongdoer’s liability insurer for $60,000. After this settlement, State Farm indicated that it expected to be reimbursed all $25,519.33 it had paid out in PIP benefits because Hubb had received money from the wrongdoer. Hubb did not believe State Farm was entitled to reimbursement. The trial court hearing this dispute granted summary judgment for State Farm’s claim that it should be reimbursed.
In his appeal, Hubb argues that DC Code § 31-2411(d) governs a PIP insurer’s rights to subrogation:
(1) An insurer shall have a right of reimbursement from any other insurer, based upon determination of fault, for any personal injury protection benefits paid . . .
Parsing the words of this statute, Hubb argues that § 31-2411(d) only provides a right of reimbursement from another insurer, not from him individually. While I agree with Hubb that this is what the statute says, I’m not sure this provides injured victims much protection. In the future, it just seems that PIP insurers would do whatever was necessary to ensure they got paid from the liability insurer directly (which would probably reduce the settlement by the same amount). In other words, no one is arguing that DC PIP insurers have no right to be reimbursed at all, not even Hubb. His argument is more about timing than about the ultimate right of reimbursement.
However, Hubb v. State Farm takes a completely different path in reaching a result. Instead of focusing on DC Code § 31-2411(d), the opinion instead focuses on § 31-2406(f):
(f) Mandatory uninsured motorist insurance . . . .
(5) To the extent of any payment made to any person by the insurer under the coverage required by this section and subject to the terms and conditions of the coverage, the insurer is entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of any person against any other person legally responsible for the bodily injury . . . . (emphasis added)
The court’s argument goes like this:
- DC Code § 31-2406(f)(5) applies to all coverages required by § 31-2406.
- Section 31-2406 requires PIP.
- Therefore, § 31-2406(f)(5) provides a PIP insurer the right to be reimbursed from the liability proceeds.
The only problem is that not one of these three points is obviously true. Let’s go through this argument step by step.
- DC Code § 31-2406(f)(5) applies to all coverages required by § 31-2406.
To reach point # 1, the court spends quite a bit of time going over the meaning of the word “section” in § 31-2406(f)(5) (underlined above). The opinion states that Hubb confuses “section” with “subsection”. “Section,” the opinion says, refers to all of § 31-2406, not merely to subsection § 31-2406(f). In a vacuum, I completely agree. But, the problem is that subsection (f) is titled “Mandatory uninsured motorist insurance.” Paragraph (5) is thus under a subsection that quite clearly refers to uninsured motorist insurance. Hubb v. State Farm seems to almost completely ignore the title of the subsection. When most people eat at restaurants, they look for entrées in the entrée section, not the dessert menu. Finding an entrée on the dessert menu might lead a reasonable diner to believe that there is a mistake on the menu. Hubb v. State Farm doesn’t address the this issue, other than to say that § 31-2406(f)(5) applies to all insurance required by § 31-2406.
2. Section 31-2406 requires PIP.
For the court to reach its intended destination, PIP coverage must be a type of coverage “required by this section,” namely, § 31-2406. The opinion draws our attention to § 31-2406(a)(1)(D), which says, “each insurer shall offer optional personal injury protection insurance required by § 31-2404 and uninsured motorist coverage as required by this section.” The problem here is that the way I read this sentence, it’s actually § 31-2404 that requires PIP, not § 31-2406. In fact, § 31-2404 confirms this when it says, “In addition to insurance required to be provided by an insurer under § 31-2406, each insurer shall offer to each person required to have insurance under this chapter optional personal injury protection insurance . . . .” So § 31-2406 seems to say that it is § 31-2404 that requires PIP, not § 31-2406, and § 31-2404 agrees. But the court didn’t see it this way, nor did it attempt to clarify this.
3. Therefore, § 31-2406(f)(5) provides a PIP insurer the right to be reimbursed from the liability proceeds.
This point is true only if #1 and #2 are true. But this conclusion is not the only conclusion a reasonable person could come to on this issue, because #1 and #2 are not clearly correct. Furthermore, § 31-2406(f)(5) says nothing about PIP itself. So if #1 and #2 above are not true, then there is no clear reason to think § 31-2406(f)(5) applies to PIP. Curiously, if the court is correct in its conclusion, then there are actually two separate statutes that deal with a PIP insurers right to subrogation and reimbursement, both § 31-2406(f)(5) and § 31-2411(d). In sum, given the length to which the opinion argues that its interpretation makes perfectly good sense, I’m not sure it does. If the only way to resolve this dispute was by statutory interpretation, I think a reasonable person might call it a draw.
As I mentioned above, the ultimate result of Hubb v. State Farm does not significantly change the law. No one seemed to be arguing that DC PIP insurers lacked the right to be reimbursed from liability settlements. The question presented was whom PIP insurers could receive reimbursement from, which also begs the question of when a PIP insurer must make its reimbursement claim. So I don’t think the DC Court of Appeals was even required to perform any statutory construction to resolve the dispute. Instead, it could have just ruled on the facts of the underlying dispute: did State Farm provide notice to Hubb and the liability carrier that it intended to subrogate? By drilling down into the minutiae of statutory construction, Hubb v. State Farm derives a clear result by arbitrarily focusing on some words while ignoring others. For practitioners, only one thing is clear, never assume legislators confuse the word section and subsection.
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