                                                                             United States Court of Appeals
                                                                                      Fifth Circuit
                                                                                    F I L E D
                      IN THE UNITED STATES COURT OF APPEALS
                                                                                    February 6, 2007
                               FOR THE FIFTH CIRCUIT
                                                                                Charles R. Fulbruge III
                                                                                        Clerk
                                         No. 06-60338
                                       Summary Calendar



JEWEL WELBORN,

                                                                             Plaintiff-Appellee,

                                             versus


STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

                                                                           Defendant-Appellant.



                          Appeal from the United States District Court
                            for the Southern District of Mississippi
                                (No. 2:04-CV-00323-KS-JMR)




Before DeMOSS, STEWART, and PRADO, Circuit Judges.

PER CURIAM:

        State Farm Mutual Automobile Insurance Company(“State Farm”) appeals the district court’s

award of $10,000 to Jewel Welborn for damages arising from a car accident. State Farm argues that

only $5,000 of Uninsured Motor Vehicle (“UM”) coverage is owed because of a prior payment to

Welborn under her Medical Payment (“Med Pay”) coverage. For the following reasons, we reverse

the district court.

                      I. FACTUAL AND PROCEDURAL BACKGROUND
        Welborn, a citizen of Mississippi, filed suit against Hilda Watkins, a citizen of Mississippi, in

Mississippi state court on September 16, 2002. Welborn later amended the complaint to include State

Farm, a corporate citizen of Illinois, as a defendant. Welborn settled her claims with Watkins,

receiving $10,000 from Watkins’s insurance company. State Farm also paid Welborn $5,000 under

her Med Pay coverage for her medical expenses. After Watkins’s dismissal from the suit, State Farm

removed the case to federal court. A jury determined that Welborn’s damages from the accident

totaled $20,000. The trial court entered a final judgment against State Farm, Welborn’s UM carrier,

in the amount of $10,000, declining to reduce the amount by the $5,000 that State Farm had

previously paid. State Farm appeals, contending that Welborn should only recover $5,000 in UM

payments.

                                          II. DISCUSSION

        Our review of the district court’s determination of Mississippi law is de novo. Am. Reliable

Ins. Co. v. Navratil, 445 F.3d 402, 404 (5th Cir. 2006). Because this is a diversity case, we resolve

this dispute according to the substantive law of Mississippi, Erie R.R. Co. v. Tompkins, 304 U.S. 64,

79-80 (1938), making an educated “Erie guess” of how the Mississippi Supreme Court would decide

this issue if it is not fully resolved by prior Mississippi case law. Primrose Operating Co. v. Nat’l Am.

Ins. Co., 382 F.3d 546, 565 (5th Cir. 2004). To the extent that a prior panel of this Circuit has ruled

on this issue and has not been superceded by either Mississippi case law or a change in statutory

authority, we are bound by the prior decisions of this Circuit as to the meaning of Mississippi law.

Lamar Adver. Co. v. Cont’l Cas. Co., 396 F.3d 654, 663 n.8 (5th Cir. 2005).

        The question in this case is whether a provision that allows an insurance company to avoid

double payment of medical expenses under a UM policy is enforceable in Mississippi. The Mississippi


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Supreme Court has not directly addressed this question. In Tucker v. Aetna Cas. & Sur. Co., 801

F.2d 728 (5th Cir. 1986), this court, sitting in diversity, considered this issue. The insured sought

punitive damages because Aetna’s insurance policy contained a provision that the same benefits

would not be paid under both the Med Pay coverage and the UM coverage. The Fifth Circuit,

interpreting Mississippi law, held that the provision was not an attempt to reduce the minimum

amount of UM coverage because “the only effect of this clause is to allow [the insurer] to avoid

paying the insured’s medical expense twice: once under med-pay coverage and again under UM. . .

. [T]he total UM limit is owed if the insured’s total damages, exclusive of the medical expenses paid

under med-pay, exceeds the UM limit.” Id. at 731.

       The State Farm provision at issue here operates the same way. Welborn’s State Farm policy

included up to $300,000 of stacked UM coverage and $5,000 of Med Pay coverage. If Welborn’s

damages had been assessed at $307,000, she would be entitled to recover the full limits of her UM

policy under the provision at issue in this case. Even once the $5,000 of expenses covered by the

Med Pay benefits were deducted, Welborn would still have $302,000 worth of damages, entitling her

under both the provision and Mississippi law to the full amount of her UM policy. Here, State Farm

merely argues that since Welborn is only entitled to $20,000 in damages, that is all she should get.

Under the district court’s judgment as it currently stands, Welborn recovers $25,000, a $5,000

windfall. We are bound by Tucker’s assessment of the law of Mississippi that State Farm’s provision

preventing this windfall is valid, absent any intervening Mississippi case law or statutory amendments.

       There are three cases that arguably address issues of law similar enough to affect the outcome

of this case: Talbot v. State Farm Mut. Auto. Ins. Co., 291 So.2d 699 (Miss. 1974), Nationwide Mut.

Ins. Co. v. Garriga, 636 So.2d 658 (Miss. 1994), and Fidelity & Guar. Underwriters, Inc. v. Earnest,


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699 So.2d 585 (Miss. 1997). While the district court relied on Talbot to determine that State Farm’s

provision was unenforceable, this was an error. The district court is bound by this Circuit’s

interpretation of Talbot. In Tucker, this court decided that Talbot was inapposite to this question

because the provision in Talbot would have reduced the UM payment to the insured by the amount

paid out under the Med Pay provision even though the insured’s total damages, minus the Med Pay

payments, exceeded the UM limit. 801 F.2d at 730-31. What Talbot forbids is for State Farm to

argue that, if Welborn’s damages were $305,000, she would be owed only $295,000 under her UM

coverage because the company already paid $5,000 in Med Pay. See 291 So.2d at 703. Because this

is not the situation at issue here and because the Fifth Circuit distinguished Talbot in Tucker, we find

Talbot does not affect the resolution of the issue in this case.

       The insured argues strongly that Garriga renders Tucker void, but we disagree. In Garriga,

the Mississippi Supreme Court held that a provision requiring offset of benefits received from

workers’ compensation was unenforceable under Mississippi law. 636 So.2d at 664-65. The

reduction clause at issue in Garriga would “always reduce the $50,000 policy limit if workers’

compensation has been paid, no matter the ultimate damages suffered. In fact, if Garriga had received

$50,000 in workers’ compensation, this clause would act to deny him any recovery, even the $10,000

statutory minimum.” Id. at 661. The court held that such a clause was unenforceable, even if it did

not reduce coverage below the statutorily required minimum, because it reduced “the coverage that

the insured [chose] up to that amount equal to the liability amount acquired.” Id. at 664. The court

also noted, however, that an insured is only entitled to recover “‘the amount of damages which may

be judicially determined.’” Id. at 662 (quoting Hartford Accident & Indemnity Co. v. Bridges, 350




                                                   4
So.2d 1379, 1381 (Miss. 1977)). The clause in Garriga was unenforceable because it operated to

always reduce an insured’s recovery, even if the insured’s damages far exceeded the policy limits.

        The clause at issue here does not operate the same way. The clause provides that “[n]o

person for whom medical expenses are payable under this coverage shall recover more than once for

the same medical expense under this or similar vehicle insurance.” (emphasis added). The purpose

of this clause is to limit the amount of an insured’s damages to the amount of damage that is actually

suffered. Here, Welborn was adjudged to have $20,000 worth of damages. She had already received

$15,000 from other sources, including $5,000 from State Farm for medical expenses. This clause

would not operate to deny Welborn the limits of her UM policy if her damages had been high enough;

instead, it only operates to prevent a double payment for exactly the same damages. This is unlike

the provision in Garriga which provided that workers’ compensation benefits would always be

dedeucted from the UM benefits regardless of the damages sustained by the insured. Therefore,

Garriga does not overturn Tucker for the provision at issue in this case.

        Finally, the district court also relied on Earnest, which emphasized that the “use of offset

provisions to escape statutory minimum levels of UM coverage” is not allowed under Mississippi law.

699 So.2d at 589. The court also noted, however, that not all offsets of liability are impermissible,

noting explicitly that offsets of liability based on payments to the insured by the tortfeasor are

allowed. Id. at 589. The provision at issue here does not implicate the concern of Earnest that the

full amount of required coverage be provided to the insured. Here, Welborn will receive the full

amount of damages to which she is entitled, and the provision would not act to deprive an insured

who had damages greater than the UM limits of full coverage. Because no intervening Mississippi

case law effects the outcome of this case, we affirm the ruling in Tucker and reverse the district court.


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                                     III. CONCLUSION

      We reverse the district court and order that judgment be entered against State Farm in the

amount of $5,000.




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