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Around the Nation: January 2013

News and updates from CLM state chairs, reps, and committees.

January 23, 2013 Photo

OREGON

Inter-Insurer Reimbursement

In Providence Health Plan v. Winchester, the Oregon Court of Appeals determined that subrogation under ORS 742.538 is only available to a health insurer when subrogation recovery through inter-insurer reimbursement under ORS 742.534 or a lien under ORS 742.536 is not available. Further, the court found that any provision in a health insurance policy that requires the insured to reimburse the health insurer is void.

The net effect of this case is unclear, but in the short term, liability insurers should be aware that health insurers may have forfeited any right to reimbursement unless they made a timely and proper demand for inter-insurer reimbursement.—From Oregon State Chapter Co-Chair Jack Levy

WASHINGTON

Insurers Denied Right to Jury Trial

The Washington Supreme Court ruled that an insurer was not entitled to have the reasonableness of a $3.75 million covenant judgment determined by a jury in Bird v. Best Plumbing Group, LLC. On appeal, the insurer contended that the reasonableness hearing violated its right to a jury trial under the Washington State Constitution because the hearing set the presumptive damages for the claimant’s soon-to-follow bad faith lawsuit against the insurer. The Court of Appeals rejected the argument and affirmed the trial court’s finding that the settlement was reasonable. The Washington Supreme Court affirmed.—From Washington State Co-Chair Paul Rosner

COLORADO

Premises Liability and Dog Bites

In Legro v. Robinson, a participant of bike race in a national forest was attacked by two “predator control” dogs. Legro and her husband asserted claims against the dog owners, who held a permit to graze sheep where the attack occurred.          

The Colorado Court of Appeals addressed the applicability of the state’s premises liability act and dog-bite statute. It noted that the term “landowner” is broadly defined under the premises liability act. Because the dog owners had a legal entitlement to be on the property under a permit and were responsible for conducting an activity that caused injury to Legro, the court held that they qualified as landowners under the premises liability act. Because the act bars plaintiffs’ common law claims, the court of appeals affirmed the district court’s summary judgment order as to the negligence claims, but reversed its order dismissing the statutory claim under the dog-bite statute.

The Colorado Court of Appeals also held that the premises liability act and dog-bite statute could be construed harmoniously. In doing so, the court analyzed whether the dog owners had “control” of property not owned by them, which would potentially cause an exclusion for the dog-bite statute to apply. For it to apply, the dog owner must have the right to exclude people from the property. The fact that the dog owners had a permit to graze sheep on the land was insufficient for the exclusion to apply, and the appellate court ordered that the district court erroneously granted summary judgment of the plaintiffs’ claim under the dog-bite statute.—From Colorado State Lead Chair Deana R. Dagner

OHIO

New Consumer Sales Practices Statutory Remedy

In July, Ohio enacted a new consumer sales practices statutory remedy. It allows a defendant in an action alleging a Consumer Sales Practices Act violation to make an initial monetary offer to “cure” the violation (a cure offer). The offer must be made within 30 days of service and include both an explanation of the resolution being offered and the statutory disclosure.

If the offer is accepted by the consumer, the supplier would also be required to pay up to $2,500 in reasonable attorneys fees related to the initial filing of the complaint and costs. When the offer is rejected, if the plaintiff recovers less than the cure offer at trial, the plaintiff will not be entitled to attorneys fees, treble damages, or costs that it would otherwise be entitled to under the Consumer Sales Practices Act.

From a practical standpoint, the statute creates the opportunity for consumer sales practices defendants to insulate themselves from ongoing litigation fees and costs in a jurisdiction that does not otherwise recognize “offers of judgment.”—From Ohio State Chapter Member Nicole M. Koppitch

TENNESSEE

Proof of Guardianship

In Hood v. Jenkins, the Eastern Section Court of Appeals affirmed a judgment against a life insurance company in favor of the minor beneficiary of a life insurance policy for failing to make sure a court order was in proper form complying with Tennessee law before tendering death benefits.

In this case, the insurance company insisted on a financial guardianship order. The guardian, the beneficiary’s sister, complied and obtained an order from the juvenile court. The insurance company obtained verification that the order was authentic and distributed $100,855 to the guardian. Eight months later, the entirety of the funds was depleted. According to the allegations, the guardian spent the money on restaurants, liquor, home renovations, and “sex enhancement products.”

The beneficiary brought suit against the guardian and insurer. The insurer filed a motion to dismiss, alleging that it was entitled to rely on a valid order appointing the sister as beneficiary, and it acted in good faith in disbursing the proceeds. The trial court found the reliance not to be in good faith because the order did not comply with Tennessee law.—From Tennessee State Lead Chair Jim Wright

NEW JERSEY

Protection Under Litigation Privilege

In Buchanan v. Leonard, the New Jersey Superior Court, Appellate Division held that the litigation privilege did not shield an attorney from a legal malpractice suit brought by his former client based upon the attorney’s alleged improper communications with the client’s liability carrier.

Leonard, the attorney retained by Buchanan’s insurance company, submitted a form to the carrier seeking authorization to settle the underlying litigation, which referenced a letter from Buchanan to his clients in which he admitted committing bankruptcy fraud. Thereafter, the insurance carrier unsuccessfully attempted to disclaim coverage, and Buchanan sued his attorneys, alleging they violated the duty to maintain his confidence.

While the trial court granted summary judgment for defendant attorneys based on the litigation privilege, the appellate division reversed, holding that the litigation privilege did not serve as a bar to a legal malpractice claim.— From New Jersey State Co-Chair Karen P. Randall

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About The Authors
Bevrlee J. Lips

Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.  blips@claimsadvisor.com

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