A passenger whose medical bills were paid by her driver’s automobile insurer can be required to reimburse that insurer out of a settlement reached with the opposing, negligent driver.
Sharla Rae Moloney was a passenger in Denise Poppert’s vehicle when it was rear-ended. Poppert had automobile insurance with Mercury Casualty Company that included “excess” medical payments coverage. (“Primary” coverage had been available at a higher premium, but Poppert had chosen the less expensive “excess” version.) Mercury paid Moloney’s medical bills of $4,411.35. When Moloney received a $15,000 settlement from the negligent rear-ender’s insurer, Mercury asserted a clause in its policy entitling it to reimbursement. Moloney contended that she was not bound by that clause, because she had never directly entered into any contract with Mercury.
The Court of Appeal disagreed, and ordered judgment in Mercury’s favor. Although Moloney was not a party to the insurance contract with Mercury, she was a beneficiary of that agreement and willingly accepted benefits paid under the policy.
Because the contract provides the foundation of the third party beneficiary’s rights, she ‘must take that contract as [s]he finds it,’ rather than having the right to select the parts she finds advantageous and reject those she finds not to her liking. [Citations.] In the context of an insurance policy, a contrary conclusion would create the anomalous result of providing greater benefits under the policy to the third party beneficiary, who paid nothing, than the policy provides to the insured who paid for the coverage.
The decision in Mercury Casualty Company v. Moloney (November 25, 2003), Case No. D040282, can be found at these links in PDF and Word formats.
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