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.

• Email This
• Print
• Comments
• Trackbacks

In Houck v. Farmers Insurance Company, Inc., 2010 OK CIV APP 12, plaintiffs complained that Farmers used a claims management company to reduce the amount of medical payments made on claims.  The trial court granted class certification and Farmers appealed.

The trial court certified the following class:
All persons who made a covered claim pursuant to the Medical Payments Coverage of a private passenger automobile insurance policy written by [Farmers] where:
A. Zurich Services Corporation (“ZSC”) was utilized to review medical expenses;
B. Farmers applied ZSC’s RC 40 reduction to the medical expenses; and
C. The insurance policy was written in one of the following states:
1. Alabama;
2. California;
3. Idaho;
4. Illinois;
5. Indiana;
6. Iowa;
7. Montana;
8. Nebraska;
9. Nevada;
10. New Mexico;
11. Ohio;
12. Oklahoma;
13. South Dakota; and/or
14. Wyoming.

The listed states were states in which the same policy language was used.  The appellate court found all requirements for a class action were met, and affirmed the trial court’s ruling. 

• Email This
• Print
• Comments
• Trackbacks

Ellis fell through Spaniol’s deck and was injured.  She claimed that Spaniol’s insurer, Liberty Mutual, acted in bad faith when it failed to properly investigate and pay her claim.  The court held that Ellis, a stranger to the insurance contract, could not bring suit directly against Liberty, and had no claim for bad faith. 

The court states: “‘[T]he insurer’s duty to deal fairly and act in good faith is limited. It does not extend to every party entitled to payment from insurance proceeds. There must be either a contractual or statutory relationship between the insurer and the party asserting the bad faith claim before the duty arises.’ Roach v. Atlas Life Insurance Company, 1989 OK 27, ¶ 8, 769 P.2d 158, 161. The record does not reveal, and Ellis does not assert, a contractual or statutory relationship with Liberty Mutual. Her status was one of third-party claimant under the policy.”

Thus, Ellis’ status as a third party beneficiary is not sufficient to state a claim for bad faith against Spaniol’s insurer, Liberty.  

Ellis v. Liberty Mutual Insurance Co.

• Email This
• Print
• Comments
• Trackbacks