21st Century Insurance Company v. Superior Court (Quintana) (2009)

August 24, 2009
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Horvitz & Levy LLP participated as amici curiae in support of 21st Century in this case, in which the California Supreme Court determined that the “made-whole” rule does not allow an insured to recoup attorney fees before being required to reimburse the insurer for med-pay benefits received under the policy.

In the case, 21st Century Insurance Company sought reimbursement for medical benefits paid to its insured following the insured's settlement of her personal injury lawsuit. The insured, Quintana, claimed she should not have to pay any reimbursement at all because she had not been fully compensated by the settlement under the “made-whole” rule when the attorney fees and costs she had to pay are subtracted from her recovery.

The Supreme Court unanimously agreed with 21st Century that “although the made-whole rule applies in the med-pay insurance context, and the insured must be made whole as to all damages proximately caused by the injury, liability for attorney fees is not included under the made-whole rule. Those fees instead are subject to a separate equitable apportionment rule (or pro rata sharing) that is analogous to the common fund doctrine.” In so deciding, the court expressly disagreed with a federal district court opinion that had come to the opposite result, Chong v. State Farm Mut. Auto Ins. Co. (S.D.Cal. 2006) 428 F.Supp.2d 1136.

In a concurring opinion, Justice Kennard summarized the error in Quintana’s argument: “The net effect of adopting plaintiff's proposed rule . . . would be to convert automobile insurance medical payment coverage into litigation expense coverage, thereby giving insureds a benefit for which they have not paid and forcing automobile insurers to bear a risk they did not contractually agree to assume.”

Horvitz & Levy’s amici curiae brief was filed on behalf of the Association of California Insurance Companies, the National Association of Mutual Insurance Companies, the Personal Insurance Federation of California, Mercury Casualty Company, and Mercury Insurance Company.