MAINE SUPREME JUDICIAL COURT                                        Reporter of Decisions
Decision:    2015 ME 140
Docket:      Wal-15-81
Submitted
  On Briefs: September 28, 2015
Decided:     November 3, 2015

Panel:          SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HUMPHREY, JJ.



                                  KIMBERLY WOOD

                                            v.

                                  NEAL E. WOOD JR.

GORMAN, J.

         [¶1]     Kimberly Wood appeals from an order of the Superior Court

(Waldo County, R. Murray, J.) amending a judgment entered on Kimberly’s

negligence claim against her husband, Neal E. Wood Jr., after a jury trial.

Kimberly contends that the court improperly credited Neal’s insurer for the

amounts it paid directly to Kimberly’s medical providers before this action was

commenced. We vacate the order amending the judgment and remand for further

findings.

                                   I. BACKGROUND

         [¶2] The parties do not dispute the underlying facts as established at trial.

On April 3, 2010, Kimberly was a passenger on a motorcycle operated by her

husband when she was injured in an accident caused by his negligence. At the
2

time, both Neal and Kimberly were named insureds on a motorcycle insurance

policy from Progressive Insurance Company. That policy contained the following

provision for medical payments coverage:

               PART II - MOTORCYCLE MEDICAL PAYMENTS
                              COVERAGE

        INSURING AGREEMENT

        If you pay the premium for this coverage, we will pay the reasonable
        expenses incurred for necessary medical services received within
        three years from the date of a motor vehicle accident because of
        bodily injury:

               1. sustained by an insured person; and

               2. caused by that motor vehicle accident.

        We, or someone on our behalf, will determine:

               1. whether the expenses for medical services are reasonable;
                  and

               2. whether the medical services are necessary.

Kimberly had $5,000 in medical payments coverage pursuant to the policy.1

        [¶3] Between April and November of 2010, Progressive made a series of

seven payments to Kimberly’s medical providers totaling $5,619.69. Four of the

checks totaling $3,073.28 listed Neal as the “[i]nsured” and Kimberly as the


    1
      The policy further provided, “When we are reimbursed by an insured person for payments we have
made under Part II – Motorcycle Medical Payments Coverage, we are responsible for a pro rata share of
the attorney fees incurred by the insured person in recovering payment from a liable party.”
                                                                                                3

“[c]laimant,” and contained a claim number corresponding to the April 3, 2010,

date of loss. The other three checks totaling $2,546.41 contained no reference to

Neal, Kimberly, or the claim.

       [¶4] Kimberly filed a complaint against Neal in the District Court (Belfast)2

alleging one count of negligence in connection with the accident. After a trial held

in August of 2014, a jury returned a verdict finding Neal negligent and awarding

Kimberly $50,000 in “total damages for the injuries which she sustained as a result

of the accident occurring on April 3, 2010.” The court entered a judgment on the

verdict in the amount of $50,000.

       [¶5] Neal later moved to amend the judgment to obtain a credit for the

$5,619.69 in prejudgment payments that Progressive had made to Kimberly, and

Kimberly sought payment of her costs and prejudgment interest pursuant to

M.R. Civ. P. 54(d). By decision dated January 21, 2015, the court granted Neal’s

motion to amend the judgment to award Kimberly $44,380.31 (the $50,000 verdict

less the $5,619.69 in prepayments) based on its application of 24-A M.R.S. § 2426

(2014). The court also awarded Kimberly costs and prejudgment interest based on

the total damages award of $44,380.31. Kimberly appeals.




   2
     Neal later removed the case to the Superior Court (Waldo County) for a jury trial pursuant to
M.R. Civ. P. 76C.
4

                                  II. DISCUSSION

      [¶6]   Kimberly argues that the court erred in interpreting 24-A M.R.S.

§ 2426 to allow Neal a credit against the judgment for $5,000 (the medical

payments maximum coverage) of what Progressive had already paid to her medical

providers. The interpretation of section 2426 is an issue of law we review de novo,

first by evaluating the plain language of the statute to determine its meaning.

MaineToday Media, Inc. v. State, 2013 ME 100, ¶ 6, 82 A.3d 104; Landis v.

Hannaford Bros. Co., 2000 ME 111, ¶ 9, 754 A.2d 958.            If the language is

unambiguous, we interpret it accordingly. MaineToday Media, Inc., 2013 ME 100,

¶ 6, 82 A.3d 104. If the language is ambiguous, we consider other indicia of

legislative intent to discern its meaning. Id.

      [¶7] Title 24-A M.R.S. § 2426 provides in its entirety as follows:

      § 2426. Advance payments

            1. No payment or payments made by any person, or by his
      insurer by virtue of an insurance policy, on account of bodily injury or
      death or damage to or loss of property of another, shall constitute an
      admission of liability or waiver of defense as to such injury, death,
      loss or damage, or be admissible in evidence in any action brought
      against the insured person or his insurer for damages, indemnity or
      benefits arising out of such injury, death, loss or damage unless
      pleaded as a defense to the action.

            2. All such payments shall be credited upon any settlement
      with respect to the same damage, expense, or loss made by, or upon
      any judgment rendered therefor in such an action against, the payor or
                                                                                  5

      his insurer, and in favor of any person to whom or on whose account
      payment was made.

It therefore allows a credit when each of five conditions has been satisfied:

(1) a prepayment is made; (2) the prepayment was made by a person or by an

insurer “by virtue of an insurance policy”; (3) the prepayment was made “on

account of bodily injury or death or damage to or loss of property of another”;

(4) a settlement “with respect to the same damage, expense, or loss” is reached or

“any judgment . . . therefor” is rendered; and (5) the settlement or judgment is “in

favor of [the] person to whom or on whose account payment was made.”

24-A M.R.S. § 2426. Here, there is no dispute as to conditions 1, 2, 4, and 5; the

parties agree that Progressive indeed made prepayments for Kimberly, those

payments were made by virtue of her and Neal’s motorcycle insurance policy, and

a judgment was rendered in Kimberly’s favor for those injuries for which the

payments were made.

      [¶8]   The parties disagree regarding condition 3, that is, whether the

prepayments were made “on account of bodily injury . . . to . . . another.”

24-A M.R.S. § 2426(1).     Kimberly argues that the prepayments were medical

expense payments pursuant to her own medical payments coverage in the policy,

and therefore were not issued pursuant to her or Neal’s obligation to another

person, placing them outside the scope of section 2426. The Superior Court
6

concluded that this language of section 2426 applies to Progressive’s prepayments

regardless of whether those payments were made pursuant to Neal’s liability

coverage or Kimberly’s medical payment coverage.3 Neal argues that the Superior

Court correctly interpreted section 2426, but also suggests that the prepayments

were based on Progressive’s duty to pay as Neal’s liability carrier.

        [¶9] We look to the plain language of the statute. A prepayment is eligible

for a credit only when made “on account of bodily injury . . . to . . . another.”

24-A M.R.S. § 2426(1) (emphasis added). In other words, a credit is available for

any payment made to an injured person because the at-fault party caused injury to

that person, i.e., because he is liable for that person’s injuries. See Black’s Law

Dictionary 873 (9th ed. 2009) (defining “liability insurance” as “[a]n agreement to

cover a loss resulting from the insured’s liability to a third party, such as a loss

incurred by a driver who injures a pedestrian”); see also 24-A M.R.S. § 2912(1)

    3
       We have interpreted section 2426 on only one occasion—in Landis v. Hannaford Brothers Co.,
2000 ME 111, 754 A.2d 958—on which the Superior Court relied in concluding that Progressive’s were
the type of payments for bodily injury that section 2426 was meant to address. In that case, the plaintiff
was injured after slipping on a wet floor. Landis, 2000 ME 111, ¶ 2, 754 A.2d 958. Hannaford paid the
plaintiff $6,000 for “medical expenses” prior to the trial. Id. ¶¶ 1-2. A jury found Hannaford liable, but
awarded the plaintiff no damages. Id. ¶ 3. Hannaford then attempted to offset its obligation to pay the
plaintiff’s litigation costs pursuant to M.R. Civ. P. 54(d) by the $6,000 it had prepaid. Id. ¶ 9. We
affirmed the Superior Court’s denial of Hannaford’s request for a credit for those amounts. Id. ¶¶ 4, 9,
13.

    Landis does not direct the outcome here because there was no dispute that the amounts Hannaford had
already paid to the injured party were indeed prepayments pursuant to section 2426; the dispute was
instead whether those prepayments could be used to offset the costs awarded to the injured party pursuant
to Rule 54(d). Here, in contrast, the parties dispute whether the payments made by Progressive actually
qualify as prepayments within the meaning of section 2426.
                                                                                   7

(2014) (distinguishing among types of automobile insurance policies by separating

“bodily injury liability” and “property damage liability” from “medical payments”

and “uninsured motorist coverage”); Dickau v. Vt. Mut. Ins. Co., 2014 ME 158,

¶ 5, 107 A.3d 621 (recognizing the “basic premise underlying insurance law, and

tort law in general, that an injured person’s damages are paid by or on behalf of the

at-fault party”). Indeed, Neal and Kimberly’s own policy defines “liability” as

damages owed “TO OTHERS . . . for bodily injury and property damage for

which an insured person becomes legally responsible because of an accident.”

Kimberly’s medical payments coverage, in contrast, sets out Progressive’s direct

obligation to Kimberly as an insured.

      [¶10] The overall objective of section 2426 bolsters this plain language

interpretation.   See Dickau, 2014 ME 158, ¶ 21, 107 A.3d 621 (“[W]e must

interpret the plain language by taking into account the subject matter and purposes

of the statute, and the consequences of a particular interpretation.”). The purpose

of the statute is to “encourage the payment of damages while a matter remains in

dispute” by both removing any prospect of the defendant or defendant’s insured

being deemed to have admitted liability or waived a defense if there is a

subsequent lawsuit brought by the injured party, and preventing a successful

plaintiff from obtaining a windfall in the form of the full amount of the judgment

in addition to any amounts that the defendant or the defendant’s insured had
8

already prepaid. Landis, 2000 ME 111, ¶ 11, 754 A.2d 958; see 24-A M.R.S.

§ 2426(1) (stating that a qualifying prepayment “shall [not] constitute an admission

of liability or waiver of defense as to such injury . . . in any action brought against

the insured person” and “shall be credited upon any settlement . . . or upon any

judgment rendered . . . in such an action”). Indeed, section 2426 has no effect

other than to guard against certain possibilities in a later lawsuit filed by a third

person against the insured. This legislative intent is meaningless as to an insurer’s

obligation to its own insured, as in the case of medical payments coverage, because

an insured would have no cause to later attempt to prove liability against herself.

See Monahan v. Monahan, 2015 ME 65, ¶ 11 n.2, 116 A.3d 950 (stating that we

must interpret statutory provisions to avoid absurd results). Pursuant to its plain

language, we interpret section 2426 to apply only to payments made based on a

liability provision of a policy.

      [¶11] For that reason, whether Progressive’s prepayments to Kimberly’s

medical providers were indeed “medical payments” pursuant to the policy’s

coverage of Kimberly, or “liability payments” pursuant to the policy’s coverage of

Neal, is dispositive of whether section 2426 operates to afford a credit for those

payments.

      [¶12] Generally, we interpret insurance contracts as we do statutes, by

reviewing the plain language of the policy de novo, resolving any ambiguities in
                                                                                    9

favor of the insured. Pelkey v. Gen. Elec. Capital Assurance Co., 2002 ME 142,

¶ 10, 804 A.2d 385. Whether a particular prepayment check was issued pursuant

to one portion of a policy or another portion of a policy is an issue of fact reviewed

for clear error, however, because it does not require any interpretation of the

contract language itself. See Bernier v. Merrill Air Eng’rs, 2001 ME 17, ¶¶ 7-8,

770 A.2d 97 (stating that a factual prerequisite to the application of a contract

provision is reviewed for clear error). Here, given the court’s conclusion that

section 2426 applied equally to medical payments or liability payments, no such

factual determination was ever made. Although the parties agreed that the copies

of Progressive’s prepayment checks submitted with Neal’s motion to amend the

judgment were in fact those by which Progressive paid Kimberly’s medical

providers, the court did not determine whether the payments were medical or

liability payments. Therefore, we must vacate the court’s decision granting that

credit and remand for a factual determination of the type of prepayments

Progressive made—whether liability payments pursuant to Neal’s policy, medical

payments pursuant to Kimberly’s policy, or some other type of payment;

reconsideration of Neal’s motion to amend the judgment based on that finding; and

recalculation of costs owed to Kimberly pursuant to Rule 54(d) based on the

amount of that judgment.
10

        The entry is:

                           Order amending judgment vacated. Remanded for
                           further proceedings consistent with this opinion.



On the briefs:

        Sarah I. Gilbert, Esq., Elliott & MacLean, LLP, Camden, for
        appellant Kimberly Wood

        Paul S. Douglass, Esq., Paul S. Douglas, P.A., Lewiston, for
        appellee Neal E. Wood Jr.



Waldo County Superior Court docket number CV-2013-22
FOR CLERK REFERENCE ONLY
