What Do You Mean It's Not Covered: Threshold Amounts and Set-Off Violations

Cramer countered by arguing that, by including the automobile MPC in the CMER's "threshold amount" calculation, State Farm had created a so-called "set-off violation" of Nevada insurance law. First, the disputed provision stated: DB>If, while this rider is in force, a Covered Person incurs Covered Medical Expenses during a calendar year in excess of the Threshold Amount, the Company will pay, subject to the provisions, exclusions and limitations of this rider, benefits for that Covered Person's Covered Medical Expenses incurred during such calendar year. The amount of such benefits payable under this rider is the amount by which all such Covered Medical Expenses incurred for that Covered Person during the calendar year exceed the Threshold Amount. Second, the "threshold amount" was defined as the sum of: A. The amount of benefits provided for a Covered Person's Covered Medical Expenses by Other Medical Expense Coverage, and B. Fifteen Hundred Dollars ($1,500) Out-of-Pocket Expenses per Covered Person. Third, Nevada insurance law provided: The insurer shall include in [any set-off] provision a definition of "other valid coverage" approved... by the commissioner. Such term may include hospital, surgical, medical or major medical benefits provided by individual or family-type coverage, government programs or workmen's compensation. Such term shall not include any group insurance, automobile medical payments or third party liability coverage. The district court sided with Cramer, ruling that State Farm's definition of threshold amount violated Nevada law. State Farm appealed.