Posts Tagged ‘policy’

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

Medicare has adopted a new policy whereby it will no longer pay hospital costs incurred by patients due to medical errors.  The policy is designed to force hospitals to take responsibility for their own mistakes.  The policy also obviously seeks to reduce the amount Medicare pays out in the form of medical bill payments.  However, Medicare’s new policy may ultimately result in patients who are victims of medical error being victimized twice in that the hospitals will now seek payment directly from the patients when Medicare denies payment for their medical treatment.  In circumstances where a hospital requires pre-treatment authorization of payment, Medicare’s new policy may also result in patients who are the victims of medical error being denied treatment required to remedy the medical error.

Medicare’s new policy excludes from coverage the extra costs of treating preventable errors, injuries and infections that occur in hospitals.  Among the conditions that will be affected are pressure ulcers and bedsores, injuries caused by falls, and infections resulting from the prolonged use of catheters in blood vessels or the bladder. In addition, Medicare’s new policy will deny payment for treatment of “serious preventable events” like leaving a sponge or other object in a patient during surgery and providing a patient with incompatible blood or blood products.

If you were the victim of a medical error caused by a hospital or doctor, call the DLP team of Pennsylvania Personal Injury Attorneys for a free evaluation of your right to compensation, including your right to payment for medical treatment caused by the medical error.

John P. Finnerty, Esquire

(2/8/07) – The Eastern District Court of Pennsylvania has ruled that a bad faith claim can be brought against an insurer of a business owner who provided the business owner with a homeowner’s policy for a commercial property. The Court ruled that the business owner can bring a breach of contract and bad faith action against the insurer after it denied coverage when the commercial property was damaged by fire.

In Scarpato v. Allstate (1/23/07), the memorandum opinion of the Court indicated that Raymond Scarpato owned seven commercial properties in Philadelphia and sought insurance for them from his insurance agents.  Scarpato advised the agents this real estate was commercial in nature and that although he sometimes slept in the buildings, his home was in New Jersey and insured by another company.  He allowed the agents to determine how these properties would be insured and began making premium payments to the insurance carrier, Allstate.

In August of 2004, Scarpato’s commercial property was damaged by fire.  When he reported a claim to Allstate, the insurer denied coverage because, as he did not reside at the property, it was not covered by the homeowner’s policy that had been issued for it.  Scarpato did not learn the agents had written the property’s policy as homeowner’s until after the fire, apparently because that was the only way Allstate could provide coverage for all of Scarpato’s commercial real estate.

Scarpato then brought suit against Allstate and its agents based on improper cancellation of his policy and the refusal to pay the fire damages, alleging various theories of liability including ibreach of contract, reckless misconduct, and a violation of the Unfair Claims Practices Act.  Allstate filed a instant motion for judgment on the pleadings, seeking dismissal of Scarpato’s breach of contract and bad faith complaints.

The District Court denied the insurer’s motions and found that Scarpato could bring action against Allstate on the contested counts.  It held that, in an instance where an insured advises an agent of the desired coverage and that agent fails to abide by that requested provision, the insurer cannot utilize this mistake in avoidance of the policy and that since Allstate’s motion was not one for summary judgment, it would be premature to hold that Scarpato would not be able to provide clear evidence that Allstate acted in bad faith in later proceedings.

Source: Pennsylvania Trial Lawyer’s Association, News and Case Notes, February 8, 2007

Thomas P. Cummings, Esq.  ([email protected])

David S. Smacchi, Esq. ([email protected]).