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

 In GEICO v. Quine, Watkins was a fault free passenger injured in a 3 car collision. Her medical bills were $9,000 and she was paid $13,000 from the tortfeasor. GEICO waived its subrogation rights and Watkins sought policy limits of $100,000 for her injuries. GEICO declined to pay policy limits and offered between $6,000 and $11,000 to settle Watkins’ claim. Watkins rejected the offers but demanded that GEICO was required to tender the “undisputed” portion of the UM policy. GEICO declined to make any payment without a release and filed a declaratory judgment action. 

Based on the facts and following the doctrine of stare decisis, the court answered the certified legal question in the negative.

In reaching its decision, the Supreme Court relied heavily on Garnett v. GEICO, 2008 OK 43, 186 P.3d 935. Watkins received compensation from the tortfeasor's insurer in excess of her economic/special damages. GEICO, through its evaluation, determined that Watkins was entitled to some amount of UIM benefits under the GEICO policy for the noneconomic/general damage element of her claim. The distinction between these two damage elements is especially germane under the facts of this case. The parties could not agree on an appropriate value for Watkins' general damage claim; thus, a legitimate dispute arose. GEICO's refusal to issue an advance payment on Watkins' UIM claim presents a scenario far different than one involving a request for partial payment needed to satisfy unpaid medical expenses, lost wages, or other economic/special damages--cases where the impact of the loss is direct, immediate, and measurable with reasonable certainty.See, e.g., Weinstein v. Prudential Prop. & Cas. Ins. Co., 233 P.3d 1221, 1229-1231, 1241 (Idaho 2010) (finding sufficient evidence to support bad faith verdict where insurer unreasonably delayed payment of UM proceeds for unpaid medical bills). The only portion of her claim remaining after payment from the tortfeasor were those indeterminate sums attributable to general damages, and accordingly, the facts of this case are governed by our prior decision.

The court concludes:

that an insurer's refusal to unconditionally tender a partial payment of UIM benefits does not amount to a breach of the obligation to act in good faith and deal fairly when: (1) the insured's economic/special damages have been fully recovered through payment from the tortfeasor's liability insurance; (2) after receiving notice that the tortfeasor's liability coverage has been exhausted due to multiple claims, the UIM insurer promptly investigates and places a value on the claim; (3) there is a legitimate dispute regarding the amount of noneconomic/general damages suffered by the insured; and (4) the benefits due and payable have not been firmly established by either an agreement of the parties or entry of a judgment substantiating the insured's damages.

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In Jones v. UPS, the Tenth Circuit ruled that an award of $2 million in punitive damages was too big.  The jury had awarded $630,000 in compensatory damages on a retaliatory discharge claim, in addition to the $2 million in punitive damages.  The determination of the constitutionality of an award of punitive damages is reviewed de novo.  Citing State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003), and finding it a “close question,” the court found the award of punitive damages was excessive.  The jury awarded Plaintiff a substantial amount of actual compensatory damages, in light of the injuries suffered.  As a result, while the ratio of punitive to actual damages was not per se unconstitutional, the jury’s punitive damage award was grossly excessive and therefore in violation of UPS’ due process rights.  The court states:

    having considered the degree of reprehensibility, the size of the punitive damage award compared to the compensatory damage award, and comparable cases, we conclude that the jury’s award of $2 million was constitutionally excessive.

So, the case was sent back down for the plaintiff to choose between a new trial on punitive damages or remittur as ordered by the trial court.



 

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In DISH Network Corporation, et. al. v. Arch Specialty Insurance et. al., Dish filed a lawsuit against Arch (insurers) for failure to defend and indemnify against a patent infringement claim.  DISH reasoned that the patent infringement suit was equivalent to an “advertising injury” which the insurers had a duty to defend and indemnify. The district court granted summary judgment to the insurers because the underlying complaint did not allege an “advertising injury” under the policies issued to DISH.

 The insurers disputed whether a claim for patent infringement can ever constitute “advertising injury” within the relevant policy language.  The Court of Appeals concluded that it can.  The Court also considered whether the specific allegations in this case brought the underlying suit within the policy language.  The Court relied on several courts decisions that held where an advertising technique itself is patented, its infringement may constitute advertising injury.  See, Hyundai Motor Am. v Nat. Union Fire Ins. Co. of Pittsburgh, Pa., 600 F.3d 1092, 1102 (9th Cir. 2010); Amazon.com Int’l, Inc. v. Am. Dynasty Surplus Lines Ins. Co., 85 P.3d 974, 977 (Wash. Ct. App. 2044).

The Court used a causation analysis to identify the alleged injury and its origin. The Court determined that the infringement occurred in the advertising itself and reversed and remanded the grant of summary judgment.

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In Blumenthal v. New York Life Insurance, Blumenthal cancelled his universal life insurance policy with New York Life after  discovering the policy’s cash value and death benefit would be zero between 13 and 17 years.  The district court granted New York Life’s motion for summary judgment on the ground that the claims were barred by Oklahoma’s statutes of limitation.  Written materials relating to the policy were enough to put Blumenthal on notice of the basis of any claim he may have against New York Life.  Blumenthal appealed.  The Court of Appeals affirmed the district court’s ruling. It was an undisputed fact that Blumenthal received information that would put a reasonable person on notice that the anticipated premiums might be insufficient to maintain the policy until its maturity date. Blumenthal admitted that he never would have bought the policy if he had read the information when it was provided to him.

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In Lucas v. Liberty Life Assurance Company,  Lucas was injured at his job and received 24 months of disability under the company’s long-term disability plan. The company’s policy required that the employees eligible to receive benefits for the first 24 months not be able to perform substantial and material duties of his own occupation. After the expiration of 24 months, Lucas applied for additional disability benefits.  Liberty Life, the company’s plan administrator and insurer, denied  Lucas’ application.  To be considered disabled and eligible to receive benefits after the first 24 months, one must  “... not be capable of performing substantial and material duties of any occupation comparable to his former position.” After losing an administrative appeal, Lucas filed suit against Liberty Life for violating the Employee Retirement Income Security Act of 1974 (ERISA).  The district court entered judgment in favor of Liberty Life and Lucas appealed. The appellate court considered whether the determination to deny benefits was arbitrary and capricious. The court explained that a decision is arbitrary and capricious only if it lacks a reasoned basis. The Court found that Liberty Life had a reasoned basis for denying the claim based on the following: three separate reviews of the claim; extensive citation to medical records and investigative  surveillance; and Lucas’ securing a full-time university teaching position.

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Giant African snails are invading Miami.  The snails can grow up to 8 inches in length; and eat not only vegetation, but stucco and concrete; which could damage homes.  But these types of damages are usually not covered under homeowners policies which view pest problems as maintenance issues.

MSNBC has the article and a video. 

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