We have previously construed the term "incurred" in a nearly identical medical payments provision of an automobile insurance policy as unambiguous and concluded that "[a]n expense can only be `incurred' . . . when one has paid it or become legally obligated to pay it." Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 696, 385 S.E.2d 612, 614 (1989). The language at issue in Hodges was "all reasonable expenses incurred within one year from the date of accident for necessary medical . . . services."

. In Virginia Farm Bureau Mut. Ins. Co. v. Hodges , 238 Va. 692, 385 S.E.2d 612 (1989), the plaintiff, who injured her arm in an automobile accident, sued her insurer. On appeal, we considered whether the plaintiff incurred certain medical expenses within a year under a former version of Code § 38.2-2201.

The policy defined medical expense as "all reasonable and necessary expenses for medical . . . services . . . incurred. . . ." Id. Accordingly, to answer the coverage question, we focused on the meaning of the term "incurred," as defined by this Court in Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 385 S.E.2d 612 (1989). In Hodges, we said that "[a]n expense can only be `incurred' . . . when one has paid it or become legally obligated to pay it."

Thus, "[a] binding contract is not formed until the offeree communicates an acceptance to the offeror." Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 385 S.E.2d 612, 613 (Va. 1989). Applying these principles, the court remains convinced that the First Agreement is not enforceable, since Mr. Rutherford did not initial Ms. Whalen's modification or otherwise communicate his assent to her.

Hutter v. Heilmann, 252 Va. 227, 475 S.E.2d 267, 270 (1996) (citations and internal quotation marks omitted). If the terms are unambiguous, the court need not apply any other rules of construction. Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 385 S.E.2d 612, 614 (1989). However, if the language is ambiguous, “[t]he rule of construction consistently applied in [Virginia] is that ambiguous language in insurance policies must be interpreted most strongly against the scrivener and in favor of the insured.”

"An expense can only be incurred, however, when one has paid it or become legally obligated to pay it." Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 385 S.E.2d 612, 614 (1989). For the collateral source rule to be in effect under Virginia law, the injured party must be responsible for making payment, even if a collateral source actually pays.

The Court of Appeals observed that "[t]o 'incur' means '[t]o suffer or bring on oneself (a liability or expense),'" id. (quoting Black's Law Dictionary 885 (10th ed. 2014)), and that this Court has held that a medical expense "can only be 'incurred' when one has paid it or become legally obligated to pay it," id. (quoting Virginia Farm Bureau Mut. Ins. v. Hodges, 238 Va. 692, 696 (1989); State Farm Mut. Auto. Ins. v. Bowers, 255 Va. 581, 585 (1998)). The Court of Appeals found this definition of "incurred" to be inapplicable because it arose in cases involving automobile insurance, and "[t]his, of course, is not an auto insurance case." Id.

Because USAA was required under the terms of its policy with Schlang to pay only those expenses "incurred" within three years of the accident, the threshold issue before us is whether Schlang's claimed expenses were timely incurred. A majority of courts considering the issue have concluded that expenses are "incurred" when one has paid or become legally obligated to pay them. For example, in Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 385 S.E.2d 612 (Va. 1989), an insured sued her insurer for plastic surgery that was to be performed after the period permitted by her policy. Two days prior to the one-year limitation, her physician drafted a memo in which he agreed to perform surgery for a specified cost.

Moreover, the court held that Karen Chasen's silence was insufficient to indicate her agreement to the proposed transfer. See Va. Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 695, 385 S.E.2d 612, 613 (1989) ("A binding contract is not formed until the offeree communicates an acceptance to the offeror."). Accordingly, the court denied the motion to correct the alleged scrivener's error.

There are three potentially "interested" jurisdictions: the District of Columbia, where the Whitneys reside and where the automobile accident took place; Maryland, where GEICO is incorporated and has its principal place of business; and Virginia, where the Fetisoffs are domiciled. The law in each of these jurisdictions is the same with respect to the interpretation of insurance contracts — in all three, the plain meaning of the policy language controls, and any ambiguities are resolved in favor of the insured. See Meade v. Prudential Ins. Co. of America, 477 A.2d 726, 728 (D.C. 1984); Howell v. Harleysville Mut. Ins. Co., 305 Md. 435, 505 A.2d 109, 113 (1986); Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 385 S.E.2d 612, 614 (1989). Thus, there is no "true conflict" and we apply the law of the District of Columbia by default.