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

BOHOT V. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, 2012 Ark. 22, No. 11-881 (1-26-12)

The Arkansas Supreme Court, affirming summary judgment for an insurer, upheld an exclusion to medical payments coverage contained in its policy which stated, “THERE IS NO
COVERAGE FOR AN INSURED . . . IF ANY WORKERS’ COMPENSATION LAW OR ANY SIMILAR LAW APPLIES TO THAT INSURED’S BODILY INJURY.” The exclusionary language applied to preclude coverage for medical bills incurred in a motor vehicle accident while working, despite the fact that workers’ compensation benefits did not cover all bills, as physical therapy bills were denied since they were not ordered by the claimant’s authorized treating physician.

Justice Danielson rejected arguments that medical payments coverage applied to cover the unpaid bills, noting that an insurer may exclude certain risks, and while there is statutory language authorizing such things as intentional acts, commission of a felony or evasion of arrest, in Ark. Code Ann. § 23-89-205, the Court has held that is not an exclusive list.

The Court pointed out by a previous decision, Aetna Insurance Co. v. Smith, 263 Ark. 849, 568 S.W.2d 11 (1978), it has upheld a similar occupational exclusion. In that case, the exclusion read, “This coverage does not apply to bodily injury (a) sustained by any person to the extent that benefits therefor are in whole or in part paid or payable under any workmen’s compensation law, employer’s disability law or any similar law.”

The Court explained its earlier ruling:

“Therefore, the exclusion clearly applied in all scenarios where workers’ compensation benefits either had been paid in whole or in part or could be paid in whole or in part. In other words, the exclusion this court upheld in Aetna would have applied even had workers’ compensation not covered the medical bills in full, and there is no distinction between it and the exclusion at issue in the instant case.”

The Supreme Court rejected arguments that it should overrule the Aetna case, citing case law supporting stare decisis “unless great injury or injustice would result.” The Court declined to
rewrite precedent with this case.

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Ohio Casualty, Ins. Co. v. Cloud Nine (10^th Circuit, applying Utah law)

Edizone sued the insureds after the insureds continued to use Edizone’s patent to create and sell products after the insureds’ licensing agreement with Edizone ended. During the relevant time frame (about 4 ½ years) the insureds had policies from Ohio Casualty and Unigard. There was a six month gap in insurance coverage between the two insurers’ policies. 

The insureds asked Ohio Casualty and Unigard to defend them in the Edizone action. Ohio Casualty declined and filed a declaratory judgment action. Unigard agreed to defend under a reservation of rights and then intervened in the dec action. Unigard got partial summary judgment, which required Ohio Casualty to share the defense costs equally with Unigard. Ohio Casualty appealed, and the Tenth Circuit certified the following question to the Utah state courts:

Should the defense costs in the Edizone case be allocated between Ohio Casualty and Unigard under the “equal shares” method set forth in the “other insurance clause” of Ohio Casualty’s policy, or, in the alternative, because the policies were issued for successive periods, should those defense costs be allocated using the time-on-risk method described in Sharon Steel Corp. v. Aetna Casualty & Surety Co., 931 P.2d 127, 140 (Utah 1997)?

Ohio Cas. Ins. Co. v. Unigard Ins. Co., 564 F.3d 1192, 1194 (10th Cir. 2009).

In Sharon Steel, the court added up all the limits for all the years and apportioned defense costs accordingly. If there were uninsured periods, the insured would be allocated part of the defense costs. In this case, however, the Utah court said apportion defense costs as in Sharon Steel, but don’t make the insured pay since the insurers get to control the defense. The “other insurance clause” simply does not apply to successive risk insurers, but only to concurrent risk insurers. 

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In Cornwell v. Union Pacific, Mrs. Cornwell was killed at a railroad crossing when she was struck by a train.  The trial court excluded various experts based on Daubert, and the jury found for the railroad.  An appeal followed. 

The trial court's rulings were affirmed.  For one thing, the accident reconstructionist apparently trespassed on Union Pacific property when the reconstruction was filmed.  But, more importantly, the vehicle used in the accident reconstruction was not the same type of vehicle in the accident.  Another expert was properly excluded because he was not qualified and kept changing his opinions. 

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