Posts Tagged ‘insurance’

Sandy was seriously hurt in a motor vehicle accident which was not her fault. Sandy went to an attorney recommended to her by one of her friends. The attorney promised to represent her and attempt to settle her case and, if necessary, file suit. As months passed by Sandy became very frustrated as the attorney neither returned her calls or kept telling her that he was keeping track of things and was attempting to settle her case. Finally, Sandy had enough with the delay and found out that the attorney that she had gone to had never filed a suit within the two years in which she was allowed, under the law, to bring the suit. Sandy was furious and decided she was going to sue her lawyer.

ISSUE: Sandy quickly found out that her lawyer had no legal malpractice insurance and she wondered if a lawyer can practice without legal malpractice insurance.

ANSWER: Yes. Legal malpractice insurance is not required in Pennsylvania. Nevertheless, a lawyer that does not carry professional liability insurance, is required to inform all new clients, in writing, that he or she does not have professional liability insurance or at least $100,000.00 per occurrence or $300,000.00 total. This is required under the rules of professional conduct. It has also been in effect for about three years.

Disclaimer: The above article is for instructive purposes only and each case is fact sensitive. Consultation with an attorney should be obtained instead of reliance upon the legal issues discussed in this column.

Many times in litigation one party, during a court proceeding, will object to a question stating that the requested answer is hearsay. Hearsay is an out-of-court statement by another party offered to prove the truth of the matter that is then being asserted. More times than not, it is a statement made by an individual who is not present in court and, thus, cannot be cross-examined by the party to whom the statement is intended to be used against. There are many exceptions to the hearsay rule.

Amy sought to recover benefits for the death of her husband under an accidental death rider to an insurance policy. Amy’s husband was killed in an airplane accident. Soup and Salad Insurance Company claimed that the rider in the policy they had written for Amy’s husband excluded death in an airplane crash and, therefore, refused to pay the claim.

Under the applicable law, it was necessary for Soup and Salad Insurance Company to show that Amy’s husband was aware of the exclusion and understood its ramifications. Amy offered evidence of numerous statements made by her husband while he was alive that he was never aware that any such exclusion existed in the policy he had with Soup and Salad Insurance Company.

The court held that Amy’s husband’s awareness and understanding are states of mind, and thus the court held that Amy’s husband’s statements were admissible under the “state of mind” exception to the hearsay rule. Thus, even though the insurance company would never have the opportunity to examine him on that issue, Amy’s husband’s lack of knowledge of the exception would be part of the evidence in the trial. In all likelihood, Amy will succeed in forcing Soup and Salad Insurance Company to pay the death benefits.

Disclaimer: The above article is for instructive purposes only and each case is fact sensitive. Consultation with an attorney should be obtained instead of reliance upon the legal issues discussed in this column.

In Brethren Mutual Insurance Company v. Cynthia McKernan, et al., the Superior Court of Pennsylvania ruled that an insurance company which provided home owner’s insurance to an insured was responsible to defend and provide coverage to a woman who fatally stabbed her boyfriend with respect to civil claims asserted by the boyfriend’s Estate against her. In addition, the Court held that the insurance company was responsible for satisfying a restitution award for funeral expenses ordered against the woman in the criminal proceedings against her arising out of the fatal stabbing.

Generally, intentional criminal acts will not be covered under a homerowner’s insurance policy. There is always an exclusion for such acts in homeowner’s insurance policies. However, in the McKernan case, the insured was not convicted of any intentional crimes as a result of the killing. Rather, she was convicted of reckless endangerment and simple assault by negligently causing bodily injury to another with a deadly weapon. The insured had grabbed a steak knife to defend herself from her abusive boyfriend. When she swung the knife intending to frighten her boyfriend away, she accidentally struck him in the chest and pierced his heart.

Because the insured’s actions were not intentional, the insured acknowledged that the insured’s conduct qualified as an occurrence under the policy language for which coverage was applicable. However, the the insurance company disputed whether it had an obligation to satisfy the restitution award of funeral expenses assessed against the insured by the judge in the criminal proceedings against her. The Court stated that the policy language did not limit claims to those made in the course of civil proceedings. The Court further held that a restitution award in a criminal proceeding qualifies as “damages” to which coverage is applicable under the policy.

As in any claim against an insurance company over coverage issues, the language of the policy will ultimately dictate the result. The Court’s decision in McKernan scrutinized the policy language in reaching its decision. McKernan is another decision from the Pennsylvania appellate courts in recent years which re-emphasizes a trend towards compelling insurance coverage for criminal conduct which results in serious injuries or death. The key component of these decisions is that coverage will only be found if the conduct was not intentional, although it can be criminal.

John P. Finnerty, Esquire

In a rare move, in Sackett v. Nationwide Mutual Insurance Company, the Pennsylvania Supreme Court has decided to re-consider its earlier ruling which held that each time an insured adds a new vehicle to an existing auto insurance policy, the insurance company must obtain from the insured a new waiver form which rejects stacked UM/UIM coverage. In the absence of a new waiver from which rejects stacked UM/UIM coverage each time an insured adds a new vehicle to an existing policy, the Supreme Court’s earlier ruling would result in the insured being deemed to have stacked UM/UIM coverage on their auto policy (even if the insured did not pay for such coverage). Legal observers were shocked by the Court’s decision to re-consider its original decision in Sackett as almost all decisions of the Supreme Court are final.

Nationwide had requested re-argument and re-consideration of the Supreme Court’s earlier ruling because of the hardship it imposes on insurance companies. The Supreme Court will most likely decide the case before the end of the year. In the meantime, the Pennsylvania Legislature should re-examine the Pennsylvania Financial Responsibility Motor Vehicle Law (75 Pa.C.S.A. 1701 et seq.) and possibly vote to amend the Law to eliminate any ambiguity regarding this issue.

John P. Finnerty, Esquire

Does your homeowner’s insurance policy cover damages caused by flooding?  You should be aware of the answer to this question before a potential disaster strikes.  Don’t end up like so many of the victims of Hurricane Katrina who are faced with the disastrous problem of not having any insurance coverage to reimburse them for the damages they suffered to their homes and personal belongings.

In New Orleans, much of the damage was caused by the levees failing, not directly from the rain and wind of the Hurricane.  Several lawsuits were filed on behalf of victims of the levee flooding against their homeowner’s insurance companies.  Unfortunately, a Federal Court in Louisiana has ruled the insurance companies do not have to pay any claims because the policies provide a clear exemption of coverage for damages caused by flooding.  The victims will be appealing this decision.

If you reside in an area which could be flooded if a dam or a levee fails, your damages will only be covered if you have flood insurance.  Check your insurance policy for this coverage before a tragedy occurs.  Contact your insurance agent to confirm you have it and/or to obtain this coverage if you do not currently have it.

If you have any questions regarding your insurance policies or coverages, contact the DLP of Pennsylvania Personal Injury Attorneys for a free consultation.

John P. Finnerty, Esq.

In Tannenbaum v. Nationwide Insurance Company, 919 A.2d. 267 (Pa.Super. 2007), the Pennsylvania Superior Court ruled that an insurer is not entitled to a credit for private disability benefits received by an insured against an award of underinsured (UIM) motorist benefits to the insured.  The Court held that benefits derived from self-paid disability coverage do not duplicate benefits payable under a UIM insurance policy.

Prior to the arbitration hearing in Tannenbaum, the insurance company submitted a motion in limine seeking to preclude the Claimant from introducing evidence relating to amounts paid or payable from two personal disability policies subscribed to Claimant, and one group policy supplied by his employer under an earned employee incentive program, all three of which were issued by the same company, UNUM. The motion was granted, and after a hearing the arbitrators credited and/or set off $984,432.52 against their award of $1,875,000.00, leaving a net amount of $890,567.48.  The Claimant’s petition to vacate the arbitrators’ decision was granted after a hearing, and the insurance company appealed to the Pennsylvania Superior Court.

The motion in limine was based on the theory that because Claimant had already received disability benefits in the form of payments from UNUM, receipt of UIM payments without set-off would constitute duplicate recovery, or “double dipping,” a practice the Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S.A. § 1722, was specifically designed to prevent. That section provides:

§ 1722. Preclusion of recovering required benefits

In any action for damages against a tortfeasor, or in any uninsured or underinsured motorist proceeding, arising out of the maintenance or use of a motor vehicle, a person who is eligible to receive benefits under the coverages set forth in this subchapter, or workers’ compensation, or any program, group contract or other arrangement for payment of benefits as defined in section 1719 (relating to coordination of benefits) shall be precluded from recovering the amount of benefits paid or payable under this subchapter, or workers’ compensation, or any program, group contract or other arrangement for payment of benefits as defined in section 1719.

On appeal the insurance company assigned error to the trial court’s determinations that: 1) that § 1722 does not prevent Claimant’s receipt of benefits from both his UIM coverage and his disability policies; and 2) that Claimant should be able to plead and prove the amount of benefits paid or payable from his personal policies where a dispute still existed as to whether the group policy was paid for by Claimant or his employer.

The insurance company argued essentially that § 1722 must be construed to regard any benefit payments other than those received pursuant to UIM coverage as, by definition, duplicative. In so arguing, the insurer confused double recovery, which the Act does not permit, with recovery of excess benefits, for which the Act makes provision. See 75 Pa.C.S.A. § 1719(a).^FN2

FN2. 75 Pa.C.S.A. § 1719. Coordination of benefits

(a) General rule.-Except for workers’ compensation, a policy of insurance issued or delivered pursuant to this subchapter shall be primary. Any program, group contract or other arrangement for payment of benefits such as described in section 1711 (relating to required benefits) 1712(1) and (2) (relating to availability of benefits) or 1715 (relating to availability of adequate limits) shall be construed to contain a provision that all benefits provided therein shall be in excess of and not in duplication of any valid and collectible first party benefits provided in section 1711, 1712 or 1715 or workers’ compensation.

The crux of the insurer’s argument was that “ § 1722 does not exempt plans because of the source of the payment and to adopt such an approach would defeat the very purpose of the MVFRL.” (Appellant’s Brief at 24). Specifically, the insurer insisted that Claimant having himself paid for his personal disability policies does not entitle him to benefits under both that coverage and his UIM policy, since such recovery would undermine the intent of the statute to prevent duplicate benefits. The Court noted however that it was not persuaded, as a review of case authority in the area revealed a clear intent to acknowledge the legitimacy of excess benefits.^FN3

FN3. The insurer’s challenge to the order was based almost entirely on Austin v. Dionne, 909 F.Supp. 271 (E.D.Pa.1995), which, as a Federal District Court decision, is both non-binding on this Court, and prior in time to the controlling authorities discussed herein.

The Court noted that preliminarily the disability policies at issue on their face stated, as § 1719(a) requires, that they were in excess of first party benefits available under the MVFRL. Excess clauses have long been understood to “provide protection to the insured in addition to other coverage which might be available to him.” Connecticut Indemnity Company v. Cordasco, 369 Pa.Super. 439, 535 A.2d 631, 633 (1985) (citation omitted). Our Supreme Court in Panichelli v. Liberty Mutual Insurance Group, 543 Pa. 114, 669 A.2d 930, 932 (1996), addressed the question of whether sick pay and social security benefits were deductible in calculating actual loss of income under the MVFRL. The Court made clear that benefits for which an employee has paid, either “in the form of lower wages for the sick leave benefits and in the form of payroll deductions for the social security benefits,” id., are not duplicative, since “the reference in § 1719(a) to § 1712(2) ^{FN4 shows an intent on the part of the Legislature to allow excess recovery of wage benefits payable under any program, group contract, or other arrangement.” Id. (emphasis added).FN4. § 1712. Availability of benefits}

^{An insurer issuing or delivering liability insurance policies covering any motor vehicle of the type required to be registered under this title … shall make available for purchase first party benefits with respect to injury arising out of the maintenance or use of a motor vehicle as follows:}

^{(2) Income loss benefit.-Includes the following:}

^{(i) Eighty percent of actual loss of gross income.}

^{(ii) Reasonable expenses actually incurred for hiring a substitute to perform self-employment services thereby mitigating loss of gross income or for hiring special help thereby enabling a person to work and mitigate loss of gross income.}

^{Similarly, in Browne v. Nationwide Mutual Insurance Company, 449 Pa.Super. 661, 674 A.2d 1127 (1996), appeal denied, 545 Pa. 674, 682 A.2d 306 (1996), the Supreme Court found that payment under the MVFRL was not subject to offset for social security disability benefits because the source of the latter is the claimant himself. Id. at 1129. The Court noted as critical appellant’s having paid for the coverage out of his own pocket, and found that fact rendered the benefits recovered in excess of his UIM benefits, not in duplication.}

^{In Carroll v. Kephart, 717 A.2d 554 (Pa.Super.1998), the Supreme Court again concluded, after reviewing Panichelli and Browne, that sick pay, because of which the Claimant received lower wages, was not a reprise of wage loss benefits under the MVFRL: “benefits [] which a plaintiff has *271 paid for or earned through his employment are not within the purview of § 1722 and the receipt of those benefits do not constitute a double recovery.” Id. at 558.}

^{This view is further developed in Ricks v. Nationwide Insurance Company, 879 A.2d 796 (Pa.Super.2005), appeal denied, 587 Pa. 698, 897 A.2d 459 (2006). There the question involved whether the claimant’s recovery of uninsured motorist (UM) benefits under his own policy was duplicative of benefits received under his employer’s workers’ compensation coverage. The Court found that it was not, as the statute prohibits subrogation by a workers’ compensation carrier against a claimant’s personal UM insurance policy. Id. at 801 n. 8.}

^{In Standish v. American Manufacturers Mutual Insurance Company, 698 A.2d 599 (Pa.Super.1997), the Court considered the situation of a worker injured in the course of his employment while driving his personal vehicle. Because the automobile insurance premiums had been paid exclusively by the Claimant, the Court found that his receipt of benefits pursuant to his own automobile policy was not duplicative of workers compensation benefits, and therefore not subject to subrogation. Id. at 601.}

^{All of these cases involved types of personally paid insurance different than that of the Claimant in Tannenbaum, and the insurer insisted that the holdings in each were limited to the specific type of excess insurance considered. However, the Court was not persuaded, as the overarching principle remains constant: where the personal policies resorted to are both separate from UIM, or UM, coverage, and paid for exclusively by the claimant either directly, or through payroll deductions which result in lower wages, payments received from these coverages do not duplicate benefits under the MVFRL as they are fundamentally different from those benefits.}

^{The insurer also contended that the trial court erred in finding that Claimant should be allowed to plead and prove the amounts paid or payable from his disability policies. The error lies, the insurer insisted, because the information on these matters was not submitted to the arbitration panel which therefore did not resolve the question of whether the disability policy Claimant received through his employment was paid for by him or his employer. Again, the Court was not convinced.  The absent information was not provided to the arbitrators because they had, in granting insurer’s motion in limine, refused to receive it. As already noted, in so doing they erred. Given this circumstance, the argument that the trial court erred in ordering that Claimant “is permitted” to produce this evidence is one most charitably described as circular.}

^{In Ricks, supra, a panel of arbitrators was found by the Pennsylvania Superior Court to have prohibited the appellant improperly from “pleading proving and recovering” from his UM carrier the amount of worker’s compensation he had received, an amount deducted from his UM coverage. We determined that because the two payment streams were not duplicative under § 1722, “the arbitrators ‘had refused to hear evidence material to the controversy,’ such that their award should be vacated. 42 Pa.C.S.A. § 7314(a)(iv).” Id. at 801. The Court noted the arbitrators in this case made the same mistake.}

^{If you have any questions about UM or UIM coverage, or a UM or UIM claim, please contact DLP for a free consultation.}

^{John P. Finnerty, Esquire}

Allstate Corp. and Nationwide Mutual Insurance Co. have been subpoenaed by a federal grand jury investigating the insurance industry’s handling of Hurricane Katrina claims in Mississippi, the companies said.

Congress last year ordered an investigation into the way insurance claims were handled involving damage caused by Hurricane Katrina after officials said many insurers shifted the financial burden to the government by declaring that flooding, rather than wind, caused the destruction.

Source: http://www.insurancejournal.com/news/national/2007/05/21/79864.htm

Thomas P. Cummings, Esq.

In a ruling highly favorable to injured plaintiffs, in Sackett v. Nationwide Mutual Ins. Co., PICS Case No. 07-0594 (April 17, 2007), the Pennsylvania Supreme Court held that an insurance company is required to obtain a new executed waiver of stacking from from a named insured every time the named insured adds a vehicle to an existing auto insurance policy.  An insurance company’s failure to obtain a new executed waiver of stacking form signed by a named insured will result in the insured being deemed to have stacked UM/UIM coverage.  The policy will be deemed to provide stacked UM/UIM coverage even though the insured never paid for such coverage because the insured must be given an opportunity to waive stacked coverage. 

If you have been injured in a motor vehicle accident and have a question regarding the amount of UM/UIM coverage on your policy, contact DLP team of Pennsylvania Personal Injury Attorneys for a free consultation.

John P. Finnerty, Esquire  

According to a Delaware County Court of Common Pleas judge, a homeowner’s insurance carrier acted in bad faith when it failed to defend and indemnify its insured against a wrongful death and survival action stemming from a shooting death in which the insured pled guilty to voluntary manslaughter. Over $2 million in compensatory damage was awarded to the estate of the deceased and $6 million in punitive damages was awarded to the insured plus court costs and attorney fees.

In Pennsylvania National Mutual Casualty Insurance Co. v. Johnson, Duane Johnson and Sami Toler were involved in an altercation in which Toler was shot and killed.   A court accepted Johnson’s voluntary manslaughter plea and the estate of Toler filed a Wrongful Death and Survival complaint against Johnson alleging several reckless actions, one of which being Johnson did not intend to kill Toler.  When Johnson’s homeowner’s carrier Penn National was notified of the action, it denied the claim because the policy did not provide coverage for bodily injuries “expected or intended by the insured.”  This language is similar to standard exceptions found in most homeowner’s insurance policies which exclude coverage for intentional acts or harm caused by insureds. The insurer later filed a Declaratory Judgment action seeking a ruling that it never had a duty to defend or indemnify Johnson. The Court of Common Pleas denied the insurer’s complaint, finding the actions of Penn National to be “at best offensive, but at worst repulsive” and levying the $6 million punitive award in hopes it would “register in [the insurer’s] corporate conscience.”

This decision is in keeping with two recent decisions of the Pennsylvania Superior Court.  In Donegal v. Baumhammers (Pa.Super. Feb. 2006), a couple was sued for negligence after their mentally disturbed adult son murdered five (5) people and severely wounded another during a shooting spree in April 2000.  The couple’s insurance company denied coverage under their homeowner’s policy on the basis that the injuries and damages caused by the insured couple’s son were intentional acts.  However, the Pennsylvania Superior Court determined that the couple’s insurance company did have a duty to provide coverage because the couple’s conduct in failing to properly secure the guns in the house fell within the definition of an “occurrence” under the policy for which coverage applied. Similarly, in QBE Insurance Corp. v. M & S Landis Corp. (Pa.Super. 2007), a bouncer at Fat Daddy’s Nightclub smothered a man to death in the process of throwing the man out of the bar.  The man’s family then sued the bar for wrongful death.  The bar’s insurance company denied coverage based on an exclusion in the policy for intentional conduct in the nature of an “assault and battery”.  However, because the allegation against the bar was that it was negligent in the training and supervision of the bouncer, and this conduct would be considered an “accident”, such conduct qualified as an “occurrence” under the policy, thus triggering coverage.  The Court explained that although the most immediate cause of the man’s death was the bouncer’s intentional conduct, the bar’s negligent conduct can also be considered a cause of the man’s death.The lesson to be learned from the Johnson, Baumhammers and the M & S Landis Corp. cases is that just because the most immediate cause of injury or death may have been through an intentional act, there may still be insurance coverage available to pursue if there was a secondary cause of injury or death which facilitated the intentional conduct which could be characterized as negligent, reckless or accidental.  If you or loved one were injured due to the intentional or negligent conduct of another, we at DLP invite you to contact us for a free evaluation regarding whether you have a legitimate claim for damages.

John P. Finnerty, Esquire