Jones v. USAA Casualty Insurance Co.

Citations: 952 P.2d 819; 1997 Colo. J. C.A.R. 1495; 1997 Colo. App. LEXIS 189; 1997 WL 453726Docket: 96CA1160

Court: Colorado Court of Appeals; August 7, 1997; Colorado; State Appellate Court

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Wendy L. Jones appealed a summary judgment favoring USAA Casualty Insurance Company regarding her entitlement to personal injury protection (PIP) work loss benefits following a 76-day inability to work due to injuries from an automobile accident. Although Jones received sick pay equivalent to her usual wages from her employer, USAA denied her claim, arguing she did not experience a 'loss of income.' The Colorado Court of Appeals reversed the trial court’s decision, determining that Jones was entitled to work loss benefits under her insurance policy. The court emphasized that the interpretation of insurance contracts is a legal question reviewed de novo, adhering to general contract interpretation principles. The policy defined 'work loss' as income the insured would have earned had they not been injured, suggesting a specific interpretation that allows coverage for income loss directly tied to work performance impacted by bodily injury. The court did not address whether Jones suffered a loss of gross income under the Colorado Auto Accident Reparations Act, as the ruling focused on her entitlement under the policy terms.

The term "work loss" in USAA's insurance policy is interpreted as synonymous with "lost wages," based on common definitions and legal precedent. Jones is eligible for coverage under this definition because she did not receive wages for work performed during her 76-day sick leave, despite being paid for this period through sick leave benefits. These benefits do not qualify as lost wages since they are not compensation for work done. USAA's argument that sick leave and vacation benefits should be considered in determining work loss is rejected; the focus is solely on wages from actual work performed. The interpretation aligns with the National Conference of Commissioners' guidance that an employee who misses work due to injury suffers work loss even if they receive continued pay. Furthermore, USAA's claim that including "loss of gross income" in a benefits provision negates work loss coverage is dismissed. The policy's interpretation should reflect an ordinary person's understanding, emphasizing consumer protection in insurance. The policy specifies that the maximum benefit for work loss is $400 per week, with detailed limitations on coverage percentages for varying income loss amounts.

The term "loss of gross income" in the policy is interpreted to mean "lost wages," aligning it with the term "work loss" in the provision. USAA's argument that a person must receive less than their usual wages to qualify for a loss of gross income is rejected, as it would create internal conflict within the provision. The court finds USAA's interpretation unpersuasive and highlights that the undefined term "loss of gross income" should not modify the defined term "work loss." Should there be ambiguity in the term, it would be construed against USAA, the drafter, and in favor of coverage for the insured, Jones.

Furthermore, precedent cases support the equivalence of "loss of gross income" and "lost wages." The policy's language specifically ties loss of gross income to work that the injured person would have performed if not for the injury, not to past earnings. USAA's claim that sick pay benefits constitute gross income is also rejected, as the policy refers to potential future earnings rather than past income. Lastly, USAA's interpretation of a duplication of benefits clause, which they argue prevents Jones from receiving work loss coverage due to her sick pay, is found to lack support. The clause clarifies that "self insurance" does not encompass sick pay, which is not similar to no-fault insurance.

USAA's argument citing Riss Co. v. Anderson to claim that employee benefits like hospitalization fall under "self insurance" is rejected, as the relevant language does not definitively support this interpretation. The context of "self insurance" typically involves organizations that have self-insured under specific statutes, which does not apply in this case. Although USAA contends that the No-fault Act aims to prevent double recovery, the statute allows for insurers to provide benefits exceeding minimum requirements. Consequently, the duplication of benefits provision in Jones' policy does not permit USAA to offset payments for work loss against her sick pay benefits. As such, Jones is entitled to recover lost wages as defined in her policy, leading to the conclusion that USAA is obligated to pay these benefits directly to her, not her employer, which did not compensate her during her absence. The judgment is reversed, and the case is remanded for a ruling affirming USAA's obligation to pay Jones for work loss.