Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Ball v. Wilshire Insurance Company, the court ruled that a loaned vehicle exclusion which excluded coverage for those using the car with the owner’s permission was unenforceable, since Oklahoma public policy requires that the general public be protected up to the minimum amount of legislatively mandated coverage.  The court also ruled, however, that there was no duty to defend under the policy, since such a duty was not required to fulfill the public policy behind mandatory minimum liability coverage.  The court also determined that Wilshire did not act in bad faith in delaying UM payment to Ball, since the law was unsettled. 
 

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After the Olahs sued him for malpractice, Dr. Baird filed bankruptcy. The Olahs asked the trustee of  Dr. Baird’s bankruptcy estate to “sell” them Dr. Baird’s right to consent to settlement under his medical liability insurance policy. The trustee balked,  writing that by the terms of the insurance contract he did “not believe that there  was any asset which the trustee could assume and assign to” the Olahs. The Olahs then sought a declaration that the “right to settle”  was indeed part of the estate. When the trial court refused to so hold, they appealed.  The Tenth Circuit ruled that the liability policy is properly part of the estate, and that the trustee has discretion to exercise Dr. Baird’s rights under  the policy (including the consent to settle) or to assign those rights to the Olahs. 

There were some interesting arguments made in this opinion.  The insurance company argued that making the consent to settle clause assignable would “drastically impact the risk and burden on [it].”  The Tenth Circuit didn’t buy it, noting that the insurance company had the right and duty to defend the claim, and that no one could force the insurance company to settle.  If the insurance company and the plaintiffs negotiated a mutually agreeable settlement, then it would be in the insurance company’s interest to have the plaintiffs and not Dr. Baird exercise consent.  Further, since Dr. Baird’s liability was discharged in bankruptcy, he had nothing to lose and everything to gain from frustrating a settlement.

In re Baird, Case No. 07-4282




 

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The Oklahoma Supreme Court has ruled that private citizens may sue for unsolicited faxes.  In MLC Mortgage Corporation,  the plaintiff had received various unsolicited faxes from the defendants.  In an issue of first impression in Oklahoma, the court held that  private parties may pursue violations of the Telecommunications Consumer Protection Act (TCPA), 47 U.S.C. §227 (2005), in Oklahoma courts.

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When an Oklahoma resident is injured in Oklahoma by an uninsured motorist, you might expect Oklahoma law to apply.  But not if the UM policy was issued or delivered in another state on a vehicle registered or principally garaged in another state.  In Bernal v. Charter County Mutual Insurance Co., the Oklahoma Supreme Court said that Oklahoma's UM statute only applies to vehicles registered in or principally garaged in Oklahoma.  Thus, even though the accident occurred in Oklahoma, and the insured was from Oklahoma, Texas law would apply because that was where the vehicle was registered. Since Oklahoma law does not apply, there was no need to do a choice of law analysis -- and really, who wants to do that?  

The court says that Oklahoma's statute applies solely to cars registered or garaged in Oklahoma.  It then concludes that this a legislative mandate to use the law of the state of the policy or where the car is garaged and/or registered. 

There is no discussion as to whether there is any choice of law provision in the policy, and whether that would make any difference.  Certainly, under Oklahoma (and most other states laws), the parties may choose to be governed by a specific state's laws.  Whether and to what extent this may affect other types of insurance is not yet known.

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In Sizemore v. Continental Cas. Co,   the Oklahoma Supreme Court said that if a workers compensation insurer refused to pay benefits when due, the employee could get a certification from the workers comp court about the amount of benefits due.  From there, the employee could either (1) file a certified copy of the certification order, with the award attached, in the district court as a judgment and proceed to execution pursuant to section 42(A) or (2) the claimant may file a claim in tort for the insurer's bad faith -- in which case, the amount of unpaid benefits would be part of the damages.  

But what about the employee who was ordered to receive treatment, which the insurance company did not provide?  That is the situation in SUMMERS v. ZURICH AMERICAN INSUR. CO.,just decided by the Oklahoma Supreme Court. Since there is no monetary award to garnish, the court decides that the only recourse for a worker in that situation is to proceed directly with a bad faith action.

A claimant who has obtained an order certifying that non-monetary benefits have not been provided as ordered does not have the option of enforcing the award as a judgment in the district court. See Okla. Stat. tit. 85, § 42(A). That claimant's remedy is to proceed with a tort claim for bad faith in district court.

The "bad faith conduct by a workers' compensation insurer in refusing to pay an award of benefits to an injured worker is judged by the same standard as bad faith conduct by any other insurer." Id. citing Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 28, 121 P.3d 1080, 1094 ("the minimum level of culpability necessary for liability against an insurer to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against said insurer").

It should be noted, however, that the workers comp insurer is only liable for bad faith after notice and a hearing in the workers comp court.  In Summers the court found that there were fact issues precluding dismissal.

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The Oklahoma legislature has not embraced arbitration.  In fact, it seems somewhat hostile towards it.  Thus, there has been some tinkering with Oklahoma’s arbitration act by the legislature.  First, it said that the only types of insurance agreements that could be arbitrated were those between insurers, which would, of course, include reinsurance agreements.  But then the statute changed to delete the exception which permitted arbitration between insurance companies.  Then, it changed again to permit it.  It was during these changes that Mid-Continent sued GenRe for failure to pay under the reinsurance contracts. 

The trial court said that the arbitration clause was unenforceable, and that therefore, the suit could proceed.  GenRe appealed, claiming that the arbitration clause was enforceable.  It was after the trial court’s ruling and before the Tenth Circuit’s ruling that the law changed again to permit arbitration between insurance companies.  The Tenth Circuit found the arbitration clause was enforceable, and that the change applied retroactively, since it was a procedural and not a substantive change. 

Read the opinion:
Mid-Continent Casualty Co. v. General Reinsurance Corporation, Case No. 07-5050

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Our friends at Reed McClure in Seattle have published their latest insurance law newsletter.   The cases discussed include issues such as parental immunity, what type of business is covered under a business coverage clause, and a case which held that certified mail is not mail.  For these and other reasons, you should check out the latest Washington Insurance Law Letter.

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A New Jersey judge who allowed a lawyer to plug an evidentiary gap with a Wikipedia page has been reversed on the ground that the online encyclopedia that "anyone can edit" is not a reliable source of information.

http://www.law.com/jsp/legaltechnology/pubArticleLT.jsp?id=1202430073269

This may be a good opinion where there is a hotly contested fact. But then, I don't think that judicial notice is appropriate for any hotly contested fact.  A study compared Wikipedia with the Encyclopedia Britannica for accuracy, and considered  them to be equal.

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