Walters v. Government Employees Insurance Company, 29 N.Y.2d 427 (1972)
An insured person “incurs” medical expenses under an insurance policy when they become liable for those expenses, even if a third party, such as worker’s compensation, ultimately pays them.
Summary
Walters, the insured, sought payment from GEICO under the medical expense provisions of his automobile liability policy for medical expenses arising from an accident. Although his employer’s worker’s compensation coverage paid the medical providers directly, GEICO denied Walters’ claim, arguing he hadn’t “incurred” the expenses. The New York Court of Appeals reversed the Appellate Division’s decision, holding that Walters did incur the expenses because he became liable for them when he received treatment, regardless of the eventual payment source. The court emphasized the common understanding of “incurred” and the policy’s specific exclusion for those in the automobile business covered by worker’s compensation, suggesting a broader inclusion otherwise.
Facts
The insured, Walters, was involved in an accident covered by his GEICO automobile liability policy.
The policy included a provision for payment of reasonable medical expenses incurred within one year of the accident.
Walters received medical treatment for his injuries.
His medical expenses were paid by his employer’s worker’s compensation insurance.
GEICO refused to pay Walters under the medical expense provision, arguing that because worker’s compensation paid, Walters had not “incurred” the expenses.
Procedural History
The Civil Court of the City of New York ruled in favor of Walters.
The Appellate Term unanimously affirmed the Civil Court’s ruling without opinion.
The Appellate Division, First Department, reversed the lower courts, dismissed the complaint, and granted a motion for leave to appeal to the Court of Appeals.
The New York Court of Appeals then heard the case.
Issue(s)
Whether an insured “incurs” medical expenses under an automobile insurance policy’s medical expense provision when those expenses are paid by worker’s compensation.
Holding
Yes, because by undergoing treatment, the insured becomes liable for payment, regardless of whether worker’s compensation ultimately covers the costs.
Court’s Reasoning
The court reasoned that the term “incurred” should be given its common and well-understood definition. The court stated: “Suffered means paid; incurred means become liable for.” The insured incurs liability for medical treatment as soon as they undergo treatment, regardless of who ultimately pays the bill or where the bills are initially sent. The court found it significant that the insurance policy had a specific exclusion for medical expenses covered by worker’s compensation only for those employed in the automobile business, implying that other insureds should be covered even if worker’s compensation paid the bills.
The court distinguished this case from Shapira v. United Med. Serv., noting that Shapira involved a particular statute and a policy where the benefit was explicitly based on *actual* expense. It also distinguished Wyman v. Allstate Ins. Co., which involved a specific exclusionary provision related to excess coverage. The court supported its interpretation by referencing insurance law principles, stating: “Since such expense payments are in the nature of health insurance, and payments under such policies are considered to be merely a return of premiums, duplicate payments ordinarily may be secured.”
The dissenting judges at the Appellate Division were praised by the Court of Appeals for correctly stressing the common definition of “incurred,” the plaintiff’s liability for treatment while the compensation claim was pending, and the insurer’s choice not to exclude other businesses or employments from the worker’s compensation exclusion.