Stacking the Deck: Oregon Appellate Court Holds That the 52-Week Payment Period for PIP Policies Is Stackable

From the Desk of Josh Hayward:

Following a car accident, an injured person will typically make a PIP claim. A passenger in a vehicle will often have coverage under the vehicle’s policy and their own auto policy. If a passenger misses more than 52 weeks of work, can they recover benefits related to the additional time off from work from their excess PIP policy? Read on to find out.

Claims Pointer:  

In this case, the Oregon Appellate Court held that the 52-week payment period for wage-loss payments under ORS 742.524(1)(b) is stackable. Therefore the 52-week payment period limitation for wage-loss payments is a per-policy limitation that does not run concurrently for all applicable policies. 

Padilla v. State Farm Mutual Auto. Ins. Co., 314 Or App 300 (2021).

Facts:

Danielle Padilla (“Plaintiff”) was the passenger in a car that crashed. She was seriously injured and, as a result, was unable to work for more than 86 weeks. She received payments from the driver’s vehicle’s PIP policy for lost wages for 52 weeks. After receiving compensation for 52 weeks from that policy, Ms. Padilla filed a claim for PIP benefits with her own auto carrier, State Farm Mutual Automobile Insurance Company (“Defendant”). Defendant refused to pay Plaintiff’s additional PIP benefits, arguing that, because Plaintiff already received 52 weeks of wage loss benefits from the primary auto policy, she was not entitled to receive PIP benefits for additional missed weeks from her own excess policy. Plaintiff filed an action for breach of contract, arguing that she was entitled to PIP benefits under her own policy for up to an additional 52 weeks. The trial court ruled that the 52-week limitation on wage-loss under ORS 742.524(1)(b) ran concurrently for all policies, meaning that an injured party is not entitled to any additional PIP benefits beyond the 52-week period covered by the primary policy. Plaintiff appealed.

Law:

When examining the interplay between two related statutes, ORS 752.526, describing excess coverage, and ORS 742.524, describing PIP benefits, the Court engages in a statutory analysis. In order to discern the legislative intent with regard to the payment of wage-loss benefits under multiple policies with PIP, the Court considers the text of the statutes, their surrounding context, and their legislative history when it is useful.  State v. Gaines, 346 Or 160, 171-72 (2009).

Under ORS 742. 524 if an injured person is (1) usually engaged in a remunerative occupation and (2) their disability continues for at least 14 days, then the PIP benefits will be for a percentage of the injured person’s loss of income from work during the period they cannot return to work. The payment of PIP for lost income is limited in two ways (1) it is subject to a maximum payment of $3,000 per month, and (2) there is a maximum payment period in the aggregate of 52 weeks.

More than one motor vehicle policy can provide PIP coverage for an injured person. ORS 742.526(1) addresses the relationship between multiple applicable policies. In relevant part, the PIP benefit available with respect to “passengers injured while occupying the insured motor vehicle shall be primary… (d) the insured and members of family residing in the same household injured while occupying a motor vehicle not insured under the policy shall be excess.” ORS 742.526(1)(b), (d).

Analysis:

In this case, the disputed personal injury protection payments related to loss of income. The parties did not dispute that Plaintiff’s personal PIP policy was the excess policy. They disagreed about whether Plaintiff could recover benefits for time missed that exceeded 52 weeks in light of ORS 742.524(b)(1) which states that PIP benefits are subject to a maximum payment period of the aggregate 52 weeks.

Defendants argued that the Oregon legislature intended to impose a maximum payment period of 52 weeks for all PIP coverage available on all applicable policies. According to Defendants, this meant that the policies would not stack, thereby limiting the benefits received from all policies to 52 weeks. Plaintiff argued that the 52-week limitation was actually a per policy limitation and not a collective policy limitation.

The Court looked at the text of the statute and found that, the term “aggregate” used by the legislature in ORS 742.524(1)(b) applied to the PIP benefits required by ORS 742.520. Since ORS 742.520 requires insurance policies to include PIP coverage for wage-loss on a per-policy basis, the 52-week limitation on wage-loss payments from PIP was also on a per policy basis.

The Court also stated that the second limitation listed in ORS 742.524, the maximum $3,000 per month wage-loss payment limitation, was a per-policy limitation.  According to the Court, there was no reason to think that the 52-week limitation should be understood any differently than the $3,000 per month limitation.

The Court held that the text of the statutes supported the conclusion that the second sentence of ORS 742.524(1)(b) imposes a per-policy limitation, not a 52-week period that applies to, and runs consecutively for all applicable PIP policies.

The Big Picture:

When there are multiple PIP policies at play, an insurer should be aware that PIP policies stack. Since the limiting language of ORS 742.524 applies on a per-policy limitation, and the 52-week limitation on PIP payments does not run concurrently for each policy, insurers with excess PIP coverage may need to pay wage-loss benefits long after an accident occurrs.