                                                                                              July 1 2014


                                          DA 13-0548

              IN THE SUPREME COURT OF THE STATE OF MONTANA
                                          2014 MT 168



JEFFREY G. WINTER,

               Plaintiff and Appellant,

         v.

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

               Defendant and Appellee.


APPEAL FROM:           District Court of the Eighth Judicial District,
                       In and For the County of Cascade, Cause No. BDV-12-0185
                       Honorable Julie Macek, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                       Roland B. Durocher; Hartelius, Durocher & Winter, PC; Great Falls,
                       Montana

                For Appellee:

                       Robert F. James, Cathy J. Lewis; Ugrin, Alexander, Zadick & Higgins,
                       PC; Great Falls, Montana



                                                   Submitted on Briefs: May 21, 2014
                                                              Decided: July 1, 2014


Filed:

                       __________________________________________
                                         Clerk
Justice Jim Rice delivered the Opinion of the Court.

¶1     Jeffrey Winter (Winter) appeals the order of the Eighth Judicial District Court,

Cascade County, denying his motion for summary judgment and granting summary

judgment to State Farm Automobile Insurance (State Farm).            The District Court

determined that State Farm was not required to pay Winter’s medical expenses pursuant

to his automobile medical payments (med pay) coverage that were previously paid by

Winter’s health insurer. We reverse, and address the following issues on appeal:

¶2     1. Did the District Court err by granting summary judgment to State Farm after

concluding that Winter had not “incurred” any medical expenses?

¶3     2. If the District Court erred by not granting summary judgment to Winter, is

Winter entitled to costs, interest, and attorney fees?

                  FACTUAL AND PROCEDURAL BACKGROUND

¶4     On October 20, 2011, Winter injured his left knee when he stepped into his truck

while working on it. His injury required medical care, including surgery, resulting in

total medical expenses of $7,929.83. At the time of the injury, Winter was insured by an

automobile insurance policy issued by State Farm. The truck was a specifically named

insured vehicle for this policy. The State Farm policy provided med pay coverage up to

$15,000. Winter also had health insurance coverage through Blue Cross and Blue Shield

(BCBS) under a separately purchased policy. Winter’s premium for the BCBS insurance

was $8,808 for the year.




                                          2
¶5     Winter’s medical bills were originally submitted to his BCBS health insurance,

which paid nearly all the expenses. On February 15, 2012, Winter notified State Farm of

his claim for benefits pursuant to his med pay coverage. State Farm paid only the $25.02

that was unpaid at that time, refusing to pay further benefits on the ground that no

expenses were left unpaid. Winter filed suit against State Farm, alleging breach of the

insurance contract for its failure to pay the entirety of his medical expenses, and alleging

unfair trade practices.

¶6     The State Farm policy for the coverage at issue states that State Farm will pay:

       medical expenses incurred because of bodily injury that is sustained by an
       insured and caused by a motor vehicle accident.

(Emphasis in original to indicate defined terms.) The policy also includes nonduplication

and exclusion provisions. The nonduplication provisions explain that State Farm will not

pay any medical expenses under med pay coverage that have already been paid:

       1. as damages under Liability Coverage, Uninsured Motor Vehicle
          Coverage, or Underinsured Motor Vehicle Coverage of any policy
          issued by the State Farm Companies to you or any resident relative; or
       2. by or on behalf of a party who is legally liable for the insured’s bodily
          injury.

(Emphasis in original.) The fourteen exclusion provisions are all directed toward what

activities will preclude coverage except one which provides:

       THERE IS NO COVERAGE FOR AN INSURED:
                               . . .
       2. TO THE EXTENT ANY WORKERS’ COMPENSATION LAW OR
          BENEFITS OR ANY SIMILAR LAW APPLIES TO THAT
          INSURED’S BODILY INJURY.


                                         3
(Caps and emphasis in original.) Finally, the policy includes provisions applicable to

when “Other Medical Payments Coverage or Similar Vehicle Insurance Applies.” This

section dictates that:

     1. An insured shall not recover for the same medical expenses or funeral expenses
        under both this coverage and other medical payments coverage or similar vehicle
        insurance.1
     2. The Medical Payments Coverage provided by this policy applies as primary
        coverage for an insured who sustains bodily injury while occupying your car or a
        trailer attached to it.
        If medical payments coverage or other similar vehicle insurance provided by one
        or more sources other than this policy also applies as primary coverage, then we
        will pay the proportion of medical expenses and funeral expenses payable as
        primary that our applicable limit bears to the sum of our applicable limit and the
        limits of all other medical payments coverage or similar vehicle insurance that
        apply as primary.

(Emphasis in original.)

¶7      The parties filed cross motions for summary judgment. They agreed there were no

material issues of disputed fact, and further stipulated to the amount of Winter’s “medical

expenses,” that Winter suffered a “bodily injury,” that Winter was “an insured,” and that

his injury was due to “a motor vehicle accident.” State Farm also agreed that health

insurance is not included among the exclusion, nonduplication, or “other insurance”

provisions of the policy. State Farm’s sole argument was that the term “incurred,” as

used but not defined in the policy, only applied to expenses that the insured either

personally paid or was liable to pay at the time he requested payment, and, therefore,



1
  This paragraph of the State Farm policy, referencing “other medical payments coverage,” is not
raised as an exclusion or a defense to the medical payments claimed by Winter, and thus we do
not address it further.
                                             4
Winter had not “incurred” any expenses for purposes of his med pay coverage other than

the $25.02 which it had paid.

¶8     The District Court granted summary judgment in favor of State Farm, reasoning

that “State Farm was not presented with a medical expense that had been incurred, in that

Mr. Winters [sic] did not become liable or subject to any medical bills as a result of his

injury and has, in fact, been made whole.”           It further determined that Winter’s

“reasonable expectations” were met because a “reasonable insured would not expect

coverage for a nonexisting debt,” citing Newbury v. State Farm Fire & Cas. Ins. Co.,

2008 MT 156, 343 Mont. 279, 184 P.3d 1021.

                                STANDARD OF REVIEW

¶9     We review a district court’s grant of summary judgment de novo, using the same

M. R. Civ. P. 56 criteria applied by the district court. Harris v. State, 2013 MT 16, ¶ 11,

368 Mont. 276, 294 P.3d 382. A moving party is entitled to summary judgment when the

party “demonstrates both the absence of any genuine issues of material fact and

entitlement to judgment as a matter of law.” Harris, ¶ 11. The parties in this case do not

raise any genuine issues of material fact, and we determine there are none, leaving only

the question of entitlement to judgment as a matter of law. The interpretation of an

insurance contract is a question of law. Babcock v. Farmers Ins. Exch., 2000 MT 114,

¶ 5, 299 Mont. 407, 999 P.2d 347. Questions of law are reviewed to determine if the

district court’s conclusions are correct. Harris, ¶ 11.




                                          5
                                       DISCUSSION

¶10 1. Did the District Court err by granting summary judgment to State Farm after
concluding that Winter had not “incurred” any medical expenses?

¶11    The parties’ positions boil down the dispute in this case to the meaning of the term

“incurred” as used in Winter’s insurance contract with State Farm. The term is not

defined by the policy. Winter argues that because there is no exclusion or nonduplication

provision in the policy to preclude coverage for medical expenses when a separately

purchased health insurance policy has already paid them, the plain language of the

policy’s med pay coverage requires that his expenses be paid. He disputes State Farm

and the District Court’s definition of the term “incurred,” arguing “[t]he fact that he

incurred [the medical expenses] does not change simply because another source was also

available to pay those bills on Mr. Winter’s behalf.” He also argues that the definition of

incurred offered by State Farm makes the exclusions and nonduplication provisions in the

policy superfluous, because they specifically contemplate payment of the insured’s

expenses by an alternate source, such as workers’ compensation, a separate vehicle

insurance policy, or a liable third party.

¶12    State Farm acknowledges that no provision in the policy expressly prevents

duplicate payments when health insurance has paid the expenses on the insured’s behalf.

However, State Farm argues that, in determining the correct meaning of incurred, “the

word must be interpreted to give effect to the consistent, non-duplication of coverage

objective reflected in the policy as a whole” and to “reflect the non-duplication intent of

the [med pay coverage] benefits.” State Farm also argues that its definition is the only
                                             6
one that complies with our prior cases, and notes that, like the insured in Newbury,

Winter has already been made whole for all of his medical expenses.              State Farm

contends that any further payment under the policy would result in a prohibited windfall

to Winter, and it is not reasonable for him to expect to receive duplicate payments for the

same expenses.

¶13       Although a general rule of interpretation is to “read the policy as a whole and, if

possible, [ ] reconcile its various parts to give each one meaning and effect,” we must

first consider the terms and words of the contract, which “are to be given their usual

meaning and construed using common sense.” Newbury, ¶ 19. When the parties dispute

the meaning of a term in the contract, “we determine whether the term is ambiguous by

viewing the policy from the viewpoint of a consumer of average intelligence not trained

in the law or insurance business.” Newbury, ¶ 19. It is not the Court’s duty to impose an

exclusion from coverage based on an inference taken from an undeclared purpose of the

policy.      To the contrary, “limiting language must be clear and unambiguous.”

Christensen v. Mt. W. Farm Bureau Mut. Ins. Co., 2000 MT 378, ¶ 27, 303 Mont. 493, 22

P.3d 624. “It is the rule of construction in Montana that language of limitation or

exclusion must be clear and unequivocal; otherwise, the policy will be strictly construed

in favor of the insured.” Christensen, ¶ 27 (citations omitted).

¶14       Winter cites, and the District Court applied, a dictionary definition of “incur” as

“to become liable or subject to.” Merriam-Webster’s Collegiate Dictionary 590 (10th

ed., Merriam-Webster, Inc. 1998). The parties agree to this basic definition, but disagree

                                            7
about when an injured person becomes “liable or subject to” medical expenses for

purposes of the policy. “Liable” is defined as “obligated according to law or equity” or

“responsible.” Merriam-Webster’s Collegiate Dictionary 670. State Farm argues that an

insured cannot be liable for expenses that are paid on his behalf by a third party and no

amount is owed. Winter argues that an injured person becomes liable for the expenses at

the time services are rendered regardless of whether a third party will ultimately pay them

on his behalf, and therefore the med pay coverage is triggered.

¶15   Though we have not previously addressed this issue, both parties support their

respective positions by citing prior cases wherein the term “incurred” was used. State

Farm notes that in Conway v. Benefis Health System, 2013 MT 73, ¶ 34, 369 Mont. 309,

297 P.3d 1200, we explained that our decision in Newbury “ultimately upheld State

Farm’s refusal to pay more than the medical expenses actually incurred because a

windfall would result if the plaintiff were to receive additional money under his medical

payments coverage in excess of his total medical expenses.”            (Emphasis added.)

Similarly, Winter cites Diaz v. State, 2013 MT 331, ¶ 13, 372 Mont. 393, 313 P.3d 124,

wherein we explained our holding in Blue Cross & Blue Shield of Montana v. Montana

State Auditor, 2009 MT 318, 352 Mont. 423, 218 P.3d 475: “In that case, coordination of

benefits language in a Blue Cross and Blue Shield policy excluded coverage for any

health care costs incurred by its insureds if they received or were entitled to receive

payment of those costs from a third party’s automobile or premises liability policy.”

(Emphasis added.) However, in neither of these cases was the meaning of “incurred” as

                                         8
used in the policy at issue. The term was simply used to summarize the holding of a prior

case.   We do not find the cited language from either case to be instructive on the

definitional issue here.

¶16     We agree with Winter that an ordinary consumer would consider the term

“incurred” to be clear and unambiguous. Under general understanding, a person incurs

medical expenses at the time services are rendered. When a patient presents at a hospital

or doctor’s office, the provider makes clear that the patient is responsible for any and all

charges, whether or not insurance or some other third party ultimately pays them. The

provider does not agree to hold the patient harmless for the services rendered on his

behalf, nor does an insurer assume liability for payment of all medical expenses simply

by issuing the policy. Thus, a common sense understanding dictates that a person incurs

medical expenses at the time of service because he is responsible for the charges from

that moment forward. If a third party, such as an insurer, ultimately pays some or all of

those charges, the insurer is merely relieving the person of liability he has already

assumed. At no point does the insurer become liable to the provider directly. Rather, if

the insurer fails to pay according to the terms of the policy, the insured’s remedy is to file

an action against the insurer. Meanwhile, the provider may seek payment from the

insured, regardless of how meritorious the insured’s case is against the insurer. The

provider could not pursue collection against the insurer directly without a valid

assignment of claim from the insured because no contractual obligation exists between

the provider and the insurer for the services.

                                          9
¶17    Other jurisdictions have similarly concluded that a common sense rendering of the

term means that an insured incurs medical expenses at the time services are rendered.

See Shanafelt v. Allstate Ins. Co., 552 N.W.2d 671, 676 (Mich. App. 1996) (“Obviously,

plaintiff became liable for her medical expenses when she accepted medical treatment.

The fact that plaintiff had contracted with a health insurance company to compensate her

for her medical expenses, or to pay directly the health care provider on her behalf, does

not alter the fact that she was obligated to pay those expenses.”); Samsel v. Allstate Ins.

Co., 59 P.3d 281, 286 (Ariz. 2002) (quoting Hollister v. Govt. Employees Ins. Co., 224

N.W.2d 164, 166 (Neb. 1974)) (“‘incurred’ or ‘actually incurred’ language does not bar

an insured who became liable for expenses from recovery simply because ‘of the

availability of collateral means of discharging his liability therefor so as to have relieved

him of the need to pay the charges personally.’”); Coconino County v. Fund Adminstrs.

Assn. Inc., 719 P.2d 693, 696 (Ariz. App. Div. 1 1986) (injured insured “incurred”

medical expenses despite the availability of other medical coverage because insured

agreed at admittance that he was the ultimate guarantor of all treatment costs); Am.

Indem. Co. v. Olesijuk, 353 S.W.2d 71, 72 (Tex. App.—San Antonio 1961) (where

insured “contracted for [medical] services with private persons and institutions and

became liable for the payment of the charges therefor, such charges were incurred by him

and [insurer] became liable to him for such expenses so incurred” despite payment of

charges by insured’s employer).




                                         10
¶18    Insurance commentators have likewise recognized this principle. Appleman on

Insurance states:

       In the ordinary situation, and in the absence of any policy provision to the
       contrary, it would be a matter of indifference to any insurer how many
       policies of like type an insured might carry, and duplicate reimbursement
       would be permissible. . . . Instead of expending those funds for premiums
       [on duplicate insurance], he could put them in a savings account and have
       them available for use in an emergency. None could then criticize their
       availability.

John Alan Appleman & Jean Appleman, Insurance Law and Practice vol. 8A, § 4902.50,

267 (West 1981) (emphasis added) (citing Phoenix Ins. Co. v. Leonard, 119 So. 2d 217

(Ala. 1960) (holding that insured’s attempt to collect for the same injuries under other

insurance policies was irrelevant because the policy at issue did not contain a coinsurance

or pro rata clause, and that where the insured obtained the money to pay the medical bills

before the defendant insurer paid the claim was immaterial)).         See also Couch on

Insurance vol. 11, § 158:12 (Lee R. Russ & Thomas F. Segalla, eds., 3d ed., Thompson

West 1997) (collecting cases). Thus, under a common sense understanding of the plain

language of the policy, Winter “incurred” related medical expenses at the time of service

that were subject to payment, without any exclusion or set-off by the policy.

¶19    State Farm argues that this conclusion conflicts with our prior jurisprudence in

several ways, starting with the reasonable expectations doctrine.        “The reasonable

expectations doctrine provides that the objectively reasonable expectations of insurance

purchasers regarding the terms of their policies should be honored notwithstanding the

fact that a painstaking study of the policy would have negated those expectations.”

                                        11
Giacomelli v. Scottsdale Ins. Co., 2009 MT 418, ¶ 42, 354 Mont. 15, 221 P.3d 666

(quotation omitted). This doctrine was created as a means to protect consumers from

confusing or unclear contract language based on the recognition that “‘most insurance

contracts, rather than being the result of anything resembling equal bargaining between

the parties, are truly contracts of adhesion.’”   Giacomelli, ¶ 42 (quoting Couch on

Insurance vol. 2, § 22:11, 22-23). The doctrine is not a means of protecting the insurer,

who drafted the contract language, from its responsibility to provide coverage pursuant to

the contract. Just as “[t]he doctrine of reasonable expectations does not apply to create

coverage where the terms of the insurance policy clearly demonstrate an intent to exclude

such coverage,” Babcock, ¶ 18 (quotation omitted); Fisher v. State Farm Mut. Auto. Ins.

Co., 2013 MT 208, ¶ 20, 371 Mont. 147, 305 P.3d 861, the doctrine of reasonable

expectations cannot create an exclusion from coverage where the terms of the insurance

policy do not clearly demonstrate an intention to exclude such coverage.         To hold

otherwise would be to disregard the requirement that limitations be stated clearly and

unequivocally. See Christensen, ¶ 27.

¶20   State Farm also argues that Winter has been made whole.           The made-whole

doctrine was established by this Court in 1977 “to be applied in insurance subrogation

cases.” Swanson v. Hartford Ins. Co., 2002 MT 81, ¶ 15, 309 Mont. 269, 46 P.3d 584

(citing Skauge v. Mt. States Tel. and Tel. Co., 172 Mont. 521, 565 P.2d 628 (1977)). The

doctrine requires “that an insured be ‘made whole’ before an insurer [can] assert its

subrogation rights.”   Swanson, ¶ 15.    This doctrine is inapplicable here, where the

                                        12
insurer’s obligation to pay the insured according to the plain language of the policy is the

issue. We have never extended the made-whole doctrine to a dispute regarding the

enforceability of a nonduplication or exclusion provision, and we decline to do so here.2

¶21    State Farm argues that our conclusion conflicts with our holdings that prohibited a

double recovery for the insureds in Newbury and Conway. This argument necessarily

overlooks the undisputed fact that the State Farm policy contains no double recovery

exclusion or limitation, which sets this case apart from the contract provisions at issue in

Newbury and Conway. Although our holdings in those cases barred a double recovery,

we have never declared as a general principle that an insured may never recover duplicate

payments under separate insurance policies. In fact, the law recognizes that duplicate

payments are possible. Section 33-23-203(2), MCA, provides that:

       A motor vehicle liability policy [including med pay coverage pursuant to
       § 33-23-204(2), MCA] may also provide for other reasonable limitations,
       exclusions, reductions of coverage, or subrogation clauses that are designed to
       prevent duplicate payments for the same element of loss under the motor vehicle
       liability policy. . . .

(Emphasis added.) This section authorizes insurers to add exclusions, nonduplication

provisions, and subrogation clauses in the policy in order to “prevent duplicate payments

for the same element of loss under the motor vehicle liability policy.” By recognizing




2
 The made-whole doctrine could be relevant in the present case to the extent BCBS would seek
subrogation of payments it had expended on Winter’s behalf from State Farm, or vice versa. No
party has raised the issue of subrogation rights as between BCBS and State Farm, and we do not
address the same. Likewise, because we reach our conclusion based on the plain language of the
contract, we need not address Winter’s alternate argument that the made-whole doctrine should
be applied to allow recovery of his BCBS premiums.
                                             13
that such limitations may be included in a policy, it is implicit that without such

limitations duplicate payments are possible.

¶22   Our cases concluding that double recovery would result in a prohibited windfall to

the insured have dealt with express exclusions or other limiting language in a policy or

agreement.   When the insured challenged the policy language, we were required to

determine whether the express limitation was enforceable pursuant to public policy or the

doctrine of reasonable expectations. In Newbury, the insured carried two automobile

insurance policies with State Farm, each with med pay coverage up to $5,000. The

policies stated that coverage was not available “to the extent workers’ compensation

benefits are required to be payable.” Newbury, ¶ 9. Newbury was injured while on the

job in an accident otherwise insured by his med pay coverage. Workers’ compensation

paid $17,230.00 toward Newbury’s medical expenses, and State Farm paid the remaining

$1,175.80. Newbury, ¶¶ 8, 10. Newbury brought suit seeking the full $10,000 of stacked

med pay coverage. He argued that the workers’ compensation limitation in the policy

was in violation of public policy and therefore unenforceable. Newbury, ¶ 11. We

determined that the phrase “required to be payable” was clear and unambiguous, and the

express limitation preventing duplicate recovery when medical expenses were paid by

workers’ compensation “did not defeat coverage and render any coverage State Farm

promised to provide illusory.” Newbury, ¶¶ 20, 27. We also concluded that the workers’

compensation limitation did not violate public policy by violating Newbury’s reasonable

expectations of coverage because “expectations that are contrary to a clear exclusion

                                        14
from coverage are not objectively reasonable.” Newbury, ¶ 35. See also Scheafer v.

Safeco Ins. Co. of Ill., 2014 MT 73, 374 Mont. 278, 320 P.3d 967 (upholding “other

insurance” exclusion and excess clause in med pay coverage against a challenge that the

exclusion acted as prohibited de facto subrogation); Infinity Ins. Co. v. Dodson, 2000 MT

287, 302 Mont. 209, 14 P.3d 487 (where “policy unquestionably provide[d] an absolute

cap of $50,000 in the event more than one insured is found liable for an accident,” the

term “accident” was not ambiguous and the insurer’s payment limit of $50,000 where

two insureds were liable for one accident did not violate state law requiring a minimum

of $50,000 coverage per accident, per vehicle rather than per insured). None of these

cases are controlling here because an express limitation does not exist in State Farm’s

policy and, as we have previously explained, subrogation and the reasonable expectations

doctrine are not applicable.

¶23    In Conway, the insured was involved in a motor vehicle accident and received

treatment at Benefis Hospital. Conway had health care coverage through TRICARE and

med pay coverage through his automobile insurance carrier, Kemper. TRICARE had a

preferred provider agreement (PPA) with Benefis wherein the provider agreed to accept a

defined “reimbursement rate” as the only payment for services and waive the remaining

charges.   Conway, ¶ 6.        TRICARE, as a benefits program offered through the

government, operates as a secondary payer similar to Medicaid and Medicare. TRICARE

paid $662.74 to Benefis in full satisfaction of Conway’s total treatment costs of

$2,073.65. Six days later, Benefis received payment of $1,866.29 from Kemper, from

                                       15
which Benefis reimbursed TRICARE’s $662.74 payment in full. Conway, ¶ 7. Conway

filed suit against Benefis seeking to recover the $1,203.55 that Benefis received from

Kemper over and above the TRICARE reimbursement rate. Conway, ¶ 8. Conway

alleged Benefis breached the PPA by accepting payment from Kemper in excess of the

TRICARE reimbursement rate. Conway, ¶ 33. We concluded that the PPA did not

prevent Benefis from accepting a greater amount from the responsible insurer to settle the

account because it only applied when payment was made by TRICARE. Conway, ¶ 32.

We also concluded that this result complied with the doctrine of reasonable expectations

because where Conway’s treatment costs were paid in full, he received the coverage he

reasonably expected—payment of his medical expenses. Conway, ¶¶ 34-35.

¶24    In Harris v. St. Vincent Healthcare, 2013 MT 207, 371 Mont. 133, 305 P.3d 852,

we reached a similar result on a consolidated appeal. Two different plaintiffs had each

been injured in separate automobile accidents. Their respective medical expenses were

paid directly to the providers by the at-fault tortfeasors’ automobile insurers. St. Vincent

Healthcare, ¶¶ 4-5. Both plaintiffs were also members of a BCBS health plan at the time

of their injuries. BCBS had entered into a PPA agreement with the medical providers the

plaintiffs had visited whereby the providers agreed to a discounted reimbursement rate

for services provided to BCBS insureds. St. Vincent Healthcare, ¶ 6. The plaintiffs filed

suit alleging that the providers were only entitled to payment up to the maximum PPA

reimbursement rate under the BCBS policy even though payment was made by different

insurers, and that the difference should be remitted to them personally. St. Vincent

                                         16
Healthcare, ¶ 7. We relied on our holding in Conway to determine that the providers

were only bound by the discounted reimbursement rate when BCBS was the insurer

paying for the services, and that the providers did not breach any contract in retaining

payment in excess of this amount. St. Vincent Healthcare, ¶¶ 25-27.

¶25   State Farm points to dicta in Conway, where we stated:

      Conway is no more entitled to pocket excess medical payments here than
      he would be under the circumstances in Newbury, or any other situation in
      which all of his medical expenses are paid by his insurer under its medical
      payments coverage. . . . [T]he basic premise [is] that medical payments
      coverage is for the payment of medical expenses only; it does not provide
      for the payment of additional or excess sums to the insured.

Conway, ¶ 35. Viewed in isolation, this statement supports State Farm’s argument, but

the analysis preceding this conclusion demonstrates its inapplicability here. In both

Conway and Newbury the insureds sought to recover excess sums despite the fact that the

insurance policy clearly did not provide a mechanism for such recovery.          Conway

attempted to recover from the medical provider, not the insurer, funds paid on his behalf

for services rendered based on a contract to which he was not a party. Newbury sought a

double payment by rendering an express exclusion unenforceable. Our conclusion that

Conway was not entitled to pocket excess sums relied on our analysis of the reasonable

expectations doctrine in Newbury, where we concluded that it was not a reasonable

expectation for an insured to expect payment of additional sums after his expenses are

paid when the insurance policy clearly excludes such payment. Conway, ¶¶ 34-35. As

noted, the reasonable expectations doctrine is not at issue here. We similarly relied upon

this language from Conway in Van Orden v. United Services Automobile Association,
                                        17
2014 MT 45, ¶ 21, 374 Mont. 62, 318 P.3d 1042, to conclude that, under a made-whole

analysis, an insured was not entitled to double recover for property damages when

medical coverage was insufficient.        Like Conway and Newbury, Van Orden is

distinguishable from the present case because the insured did not seek to collect under the

plain terms of the policy. Rather, Van Orden sought to obtain duplicate payment of

property damages from two separate insurance policies because the medical payments

coverage was insufficient to cover all his medical expenses. Van Orden, ¶¶ 6-9. There,

we declined to extend the made-whole doctrine to allow an insured to recover twice for

one type of damages in order to cover a separate type of loss when the policies clearly

provided for separate coverage limits and the insured could not demonstrate any right to

recover medical expenses under property insurance coverage. Van Orden, ¶ 21.

¶26    While we declined to approve the requested duplicate payment to the insureds as a

“windfall” in the preceding cases, we did not hold that a duplicate recovery was

prohibited in all cases, and thereby eschew the law of contract. “The fundamental tenet

of modern contract law is freedom of contract; parties are free to mutually agree to terms

governing their private conduct as long as those terms do not conflict with public laws.”

Arrowhead Sch. Dist. No. 75 v. Klyap, 2003 MT 294, ¶ 20, 318 Mont. 103, 79 P.3d 250;

see also Gibbons v. Huntsinger, 105 Mont. 562, 573, 74 P.2d 443, 449 (1937) (“Freedom

of contract is one of the fundamental liberties of the individual . . . .”). We find no basis

in contract law, insurance law, or public policy for a blanket rule prohibiting duplicate




                                         18
insurance coverage when the parties have not expressly agreed to such a limitation and

the insured has paid for the coverage.

¶27    Other jurisdictions have similarly determined that the prohibition on double

recovery does not apply in situations where an insured purchases separate policies,

paying multiple premiums, for the same coverage (provided there is no express limitation

on such recovery in the policies).       The Idaho Supreme Court noted that “double

recovery” is ordinarily used in the context of tort actions to prevent a plaintiff from

satisfying a single judgment multiple times against different defendants. Linn v. N. Idaho

Dist. Med. Serv. Bureau, 638 P.2d 876, 884 (Idaho 1981). Such a restriction does not

apply in the context of contractual relationships because payment on each policy is

“made pursuant to a contractual obligation incurred for a premium paid.” Linn, 638 P.2d

at 884. The court in Linn also cited several other jurisdictions for the proposition that

“there is no legal or policy reason why an insured should not be allowed to contract with

insurance companies for double or multiple medical coverage.” Linn, 638 P.2d at 884.

One such jurisdiction noted:

       there is no public policy which dictates a single insurance recovery for
       medical payments. A person may bargain with as many insurance
       companies as he pleases for the payment of medical expenses incurred by
       him. This does not result in any unfairness to the multiple insurers. Each
       insurer receives a premium which we may assume is computed upon the
       basis that the insurer alone will be obligated to pay the medical expenses of
       the insured and not simply the excess or a pro rata proportion of the
       expense with other insurers. As we have already noted, if it were the
       intention to so limit liability, it is reasonable to assume that the insurer
       would have included an excess or pro rata clause in the section of its policy
       on medical expense coverage.

                                         19
Heis v. Allstate Ins. Co., 436 P.2d 550, 552 (Or. 1968).

¶28    We can only interpret the policy as it is written. We are not at liberty to add an

exclusion to coverage based on the insurer’s general desire to preclude duplicative

payments to an insured.

       Where plaintiff has an uncoordinated no-fault insurance contract with
       defendant that provides no limitation on plaintiff’s right to recover from
       defendant in the context of duplicate insurance coverage [the defendant
       does not have] the right to refuse payment to plaintiff where plaintiff’s
       injuries fall within the coverage of her policy with defendant.

Shanafelt, 552 N.W.2d at 678. Based on the plain language of the policy, using the

common sense meaning of the term “incurred,” there is no limitation that prevents Winter

from receiving a duplicate payment for medical expenses under separately purchased,

uncoordinated insurance policies.

¶29 2. If the District Court erred by not granting summary judgment to Winter, is
Winter entitled to costs, interest, and attorney fees?

¶30    As the District Court denied Winter’s motion for summary judgment, it also

denied his request for costs, interest, and attorney fees. On appeal, Winter asks us, in the

event he prevails on his appeal, to award costs, interest, and attorney fees. State Farm

argues that should we find in favor of Winter, we should remand this question to the

District Court, though it cites no authority for why remand would be necessary other than

the basic argument that “the District Court did not first rule upon those issues.”

¶31    Montana follows the American Rule regarding attorney fees where each party is

ordinarily required to bear his or her own expenses absent a contractual or statutory

provision to the contrary. However, there are several equitable exceptions to this rule.
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Mt. W. Farm Bureau Mut. Ins. Co. v. Brewer, 2003 MT 98, ¶ 14, 315 Mont. 231, 69 P.3d

652. An equitable award of attorney fees may be discretionary, requiring a lower court to

first rule upon the issue, such as an award under § 27-8-313, MCA, which allows an

award of fees when the court deems it “necessary or proper.” Brewer, ¶ 17. However,

Winter does not seek a discretionary award of attorney fees. Rather, he bases his claim

on the insurance exception to the American Rule. In Brewer, ¶ 36, we held that “an

insured is entitled to recover attorney fees, pursuant to the insurance exception to the

American Rule, when the insurer forces the insured to assume the burden of legal action

to obtain the full benefit of the insurance contract.” Such an award is not discretionary,

and as such does not require a lower court to consider the issue in the first instance. We

hold that Winter is entitled to attorney fees as a matter of law under the insurance

exception because he was forced to pursue legal action in order to obtain the full benefit

of the insurance contract.

¶32    An award of prejudgment interest is likewise not discretionary. A prevailing party

is entitled to prejudgment interest pursuant to § 27-1-211, MCA, if (1) an underlying

monetary obligation exists, (2) the amount of recovery is capable of being made certain

by calculation, and (3) the right to recover the obligation vests on a particular day. New

Hope Lutheran Ministry v. Faith Lutheran Church, 2014 MT 69, ¶ 70, 374 Mont. 229, __

P.3d __. There is no dispute over the amount of medical expenses Winter requested

under his med pay coverage, and the underlying obligation to pay the claim arose upon

submission of the claim. Further, entitlement to post-judgment interest is a statutory right

                                         21
pursuant to § 25-9-205, MCA. Winter is therefore entitled, as a matter of law, to pre- and

post-judgment interest.

¶33    Finally, Winter, as the prevailing party, is also entitled to costs pursuant to M. R.

Civ. P. 54(d) and § 25-10-101(3), MCA. Upon remand, the District Court will consider

the correct amount of fees, costs, and interest to which Winter is entitled.

¶34    We note that Winter’s Complaint requested punitive damages based on a violation

of the UTPA. However, he does not present this request in his briefing to this Court or

request remand to the District Court for determination of whether such an award is

appropriate. We therefore view his request for punitive damages as waived.

¶35    Reversed and remanded for further proceedings consistent with this opinion.


                                                  /S/ JIM RICE


We concur:

/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ BETH BAKER
/S/ MICHAEL E WHEAT




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