Key Decisions

July 2013 – Payment Was Available Under Med-Pay Coverage

(filed under: Key Decisions Archive | July 22, 2013)

Payment Was Available Under Med-Pay Coverage

Barnes v. Western Heritage Insurance Company, 217 Cal.App.4th 249, filed June 18, 2013, published June 18, 2013


Justin Barnes, then 11-years-old, was injured in 2001 when a table fell on his back during a recreational program co-sponsored by the Shingletown Activities Council. Barnes made a claim against the Activities Council.

The Activities Counsel was an insured under a Western Heritage Insurance policy. The policy provided that Western Heritage would “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” The policy also provided coverage of up to $5,000 per person for medical expenses, provided that, among other things, the medical expenses were incurred and reported to Western Heritage within one year of the date of the accident. The obligation to pay for medical expenses under the medical payment provision was regardless of fault.

More than one year after the accident Barnes asked Western Heritage for payment for consultation with a medical specialist. Western Heritage denied the request based on its position that claimed medical expenses had to be reported to it within one year of the accident.

Barnes settled a separate personal injury lawsuit against the Activities Council and other local entities regarding his medical expenses. Western Heritage was not a party to that lawsuit.

Five years later, Barnes sued Western Heritage for breach of contract and breach of the implied covenant of good faith and fair dealing based on the denial of his request for medical payment coverage.

The trial court granted summary judgment in favor of Western Heritage. Among other things, the trial court ruled: (1) Barnes’ lawsuit against Western Heritage was barred by collateral estoppel because he settled his claims in the underlying personal injury action, including any claim for medical expenses; (2) Allowing Barnes to recover under the medical payment provision of the policy would result in impermissible double recovery; and (3) Western Heritage was not equitably estopped to assert the policy’s one-year deadline as a defense because Western Heritage had no duty to disclose the deadline to Barnes and Barnes did not rely to his detriment on any failure to disclose.


The Court of Appeal reversed. It held the trial court erred in granting Western Heritage summary judgment.

The court concluded that collateral estoppel did not bar Barnes’ action against Western Heritage because the issues asserted were not litigated or determined in the prior personal injury action. The issues in a personal injury action are liability for an injury and its value. Personal injury actions generally do not resolve insurance coverage issues. Barnes’ action against the Activities Counsel was for his personal injuries. His action against Western Heritage was as a beneficiary of the contract of insurance.

The court also ruled that a recovery in Barnes’ action against Western Heritage would not amount to an impermissible double recovery because Barnes was suing Western Heritage for breach of its duty to him under the medical payment provision of the insurance policy, a duty distinct from the obligation Western Heritage owed the Activities Council under the liability provision of the policy. The court noted: “[N]o language in the policy evinces the intent that payment under the liability provision extinguishes Western Heritage’s obligation under the medical payment provision.”

In addition, the court ruled there was a triable issue of material fact regarding whether Western Heritage was equitably estopped to assert the policy’s one-year deadline as a defense. Although Western Heritage had paid some of Barnes’ medical expenses, the court held: “Western Heritage was required to provide [Barnes] with actual notice of the one-year time limit for making additional claims.” However, to ultimately prevail, Barnes would have to establish the other elements of equitable estoppel. These would include that Western Heritage’s omission caused him to refrain from filing a timely claim, and that his reliance was reasonable. Barnes had evidence from which a jury could conclude Western Heritage was estopped, so its argument that his claim was time barred would not support a summary judgment.


Although it reversed the summary judgment, the court did not express an opinion as to whether Barnes will ultimately prevail on his claims against Western Heritage. Nonetheless, the language of the court leaves the distinct impression that Barnes had the better position for trial.