3.7.3 Incurred Expenses

• Jurisdiction: Arizona

The issue of actually incurred medical expenses in the medical payments context was considered by the Arizona Supreme Court in Samsel v. Allstate Insurance Co.^[337] In Samsel, Lisa Samsel was injured in an automobile accident. She was taken by ambulance to University Medical Center in Tucson and treated there. The following day, Lisa signed a UMC "Conditions of Admission" form, agreeing in part to "pay all of [her] Hospital charges as and when billed." At the time of the accident, Lisa was an insured under an Allstate automobile policy issued to her parents. The Allstate insurance policy included medical payments coverage with a limit of $10,000 for which her parents paid an additional annual premium. Lisa was also enrolled in a health program, Partners Health Plan (Partners), an HMO regulated as a health care services organization pursuant to A.R.S. Sec. 20-1051 et seq.

As a result of her injuries, Lisa's charges at UMC were substantial. Upon her discharge, UMC billed Lisa as a guarantor. Partners ultimately paid all of the hospital charges except $315.55 of Lisa's expenses. Lisa then subsequently filed a claim with Allstate under her parents' medical payments coverage to recapture the expenses she paid. Allstate paid the $315.55 that was not paid by Partners but denied coverage on the remaining charges, saying that because Partners was obligated to and did pay the charges, Lisa had not actually incurred those expenses, as required by the medical payments provision of the Allstate policy.

On appeal, the Arizona Court of Appeals held that when Lisa signed UMC's admission form, she agreed to accept financial responsibility and liability for her medical expenses.^[338] Therefore, the court held that Lisa had actually incurred those expenses under the medical payments provision of Allstate's policy.^[339] Allstate filed a petition for review on the question of whether the Arizona Court of Appeals erred in concluding that by signing the boilerplate hospital admissions form, Lisa actually incurred medical expenses within the meaning of Allstate's medical payments coverage when under A.R.S. Sec. 20-1072(A) to (C) those expenses were to be paid by Partners and Lisa had no personal liability to UMC.

The medical payments provision of Allstate's automobile policy read in pertinent part as follows: "Allstate will pay to or on behalf of an insured person all reasonable expenses actually incurred by an insured person . . . ."^[340] In analyzing this policy provision, the court recognized that Allstate's medical payments coverage provision, in specific the phrase "actually incurred" is used in several ways. First, medical expenses must have been incurred and thus cannot be speculated or anticipated future expenses. Second, the medical expenses must have been incurred within one year...