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State Farm Mut. Auto. Ins. Co. v. Davis

Supreme Court of Delaware

November 1, 2013

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant Below-Appellant,
v.
Melvin DAVIS, Plaintiff Below-Appellee.

Submitted: Aug. 28, 2013.

Page 629

Court Below: Superior Court of the State of Delaware in and for Sussex County, C.A. No. S10C-09-005.

Upon appeal fro the Superior Court. REVERSED and REMANDED.

Thomas J. Frederick, Esquire (argued), of Winston & Strawn, LLP, Chicago, Illinois, and Colin M. Shalk, Esquire, of Casarino, Chistman, Shalk, Ransom & Doss, P.A., Wilmington, Delaware for appellant.

John S. Spadaro, Esquire, of John Sheehan Spadaro, LLC, Hockessin, Delaware for appellee.

Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS, and RIDGELY, Justices, constituting the Court en Banc.

RIDGELY, Justice:

This interlocutory appeal involves whether Delaware's personal injury protection

Page 630

(PIP) statute [1] requires insurers to reserve PIP benefits for lost wages when requested. The plaintiff suffered severe injuries as a passenger in a car accident. While he was in a coma, his mother signed for him an assignment of insurance benefits in favor of the hospital. Plaintiff has not challenged the validity of this assignment. The hospital's claim was promptly paid by the insurance company. When the plaintiff later requested the insurers to reserve his PIP benefits for his past and future lost wages, he was informed that the benefits had been exhausted by the payment to the healthcare provider.

On cross-motions for summary judgment, the Superior Court held sua sponte that the unchallenged assignment to the healthcare provider was invalid. The court also held that the policy underlying the PIP statute requires insurers to reserve PIP benefits for lost wages upon request. But the issue of the validity of the assignment of plaintiff's benefits was not briefed or argued below. Plaintiff's counsel conceded to the trial court, " [w]e haven't contested the validity of the assignment" which he described as " an assignment of medical expenses, not an assignment of lost wages." [2] The Superior Court erred as a matter of law in deciding this uncontested issue. Because the assignment on behalf of the plaintiff resulted in the exhaustion of his PIP benefits before the plaintiff requested the reservation of PIP benefits for his lost wages, the legal issue of whether the insurer was required to reserve PIP benefits for lost wages is moot. Accordingly, we REVERSE the judgment of the Superior Court.

Facts and Procedural History

This matter arises from a single-vehicle accident in 2009. Melvin Davis was the passenger in a car being driven by James Sheppard who lost control of the vehicle. Davis was seriously injured and spent six weeks in Christiana Hospital. The owner of the car was Donna Wilson. Wilson had an insurance policy on the car with State Farm Mutual Automobile Insurance Company (" State Farm" ), which provided $15,000 in PIP benefits. Following the accident, and while Davis was in a coma, his mother executed a revocable assignment of insurance benefits in favor of Christiana Care, which authorized the health care facility to seek payment directly from State Farm. The assignment provided:

I assign and request payment of benefits to Christiana Care Health Services and to physicians providing hospital-based services ... for which I am entitled under the terms of any and all policies under which I have coverage. This assignment applies to all services related to my ...

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