Articles Posted in Insurance Law

Insurance.jpgAshanti Green v. Michael Johnson, 2014-0292 (La.10/15/14), with Justice Hughes writing for the Louisiana Supreme Court, held that since the Allstate auto policy at issue contractually included UM coverage, the express provisions of the policy (or contract) governed whether UM coverage existed for the accident, and statutory UM coverage under La. R.S. 22:1295 was not at issue.

Plaintiff co-owned a motorcycle with a friend. When plaintiff was killed by an underinsured motorist, his beneficiaries filed a claim for UM benefits against the co-owner’s Allstate auto policy. The express terms of the Allstate auto policy did not provide for bodily injury liability coverage, but did provide for UM coverage.

In granting summary judgment in favor of Allstate, the lower courts relied on jurisprudential language holding that, “it is well-settled that a person who does not qualify as a liability insured under a policy of insurance is not entitled to UM coverage under the policy” as a basis for finding that there was no UM coverage for the accident at issue under the co-owner’s Allstate policy. The Louisiana Supreme Court reversed, holding that this jurisprudential language is limited to the provision of “statutory” UM as required by La.R.S. 22:1295, and does not apply to UM that is actually provided for in the insurance policy (or contract). Thus, the Louisiana Supreme Court concluded that even when an insurer is not required by law to provide UM coverage because the policy does not provide liability coverage, the insurer is nevertheless free to contract to provide UM coverage.

After analyzing the Louisiana Supreme Court jurisprudence, the Supreme Court articulated that when the existence of UM coverage under a policy of automobile insurance is at issue, Magnon v. Collins, Succession of Fannaly v. Lafayette Insurance Company, Filipski v. Imperial Fire & Casualty Insurance Company, and Cadwallader v. Allstate Insurance Company demonstrate a two-step analysis:

(1) the automobile insurance policy is first examined to determine whether UM coverage is contractually provided under the express provisions of the policy; and

(2) if no UM coverage is found under the policy provisions, then the UM statute (La.R.S. 22:1295) is applied to determine whether statutory UM coverage is mandated.

See also Bernard v. Ellis, 11-2377 (La. 7/2/12), 111 So.3d 995, 1000 (recognizing that an automobile insurance policy must first be examined for contractual UM coverage, and if contractual coverage is absent, “if a plaintiff is insured under the auto liability coverage, he is entitled to UM coverage” (citing Magnon v. Collins and Filipski v. Imperial Fire & Casualty Insurance Company)). If there is express contractual UM coverage in the policy, it is unnecessary to apply the UM statute to determine whether UM coverage is statutorily mandated.

In this case, the Allstate auto policy provided UM coverage to the plaintiff because he met the definition of an “insured person” since he was a “person while in, on, getting into or out of an `insured auto’ with [the policyholder’s] express or implied permission.” The co-owned motorcycle qualified as an “insured auto” for purposes of UM coverage since it was an after-acquired “land motor vehicle” as set forth in the policy.

The motorcycle did not qualify as an “insured auto” for purposes of liability coverage since it was not an after-acquired “four wheel” auto as set forth in the policy.

Thus, the distinction between the UM provisions and the liability provisions vis-à-vis coverage was that the UM provisions included within the definition of “insured auto,” for coverage as an after-acquired vehicle, a “land motor vehicle,” which would encompass a motorcycle, while the liability provisions included within the definition of “insured auto,” for coverage as an after-acquired vehicle, only a “four wheel” auto, which would exclude liability coverage for a motorcycle.

The Louisiana Supreme Court found no ambiguity in this Allstate policy; the parties clearly intended to extend greater UM coverage to after-acquired vehicles, by defining an “insured auto” to encompass any “land motor vehicle” (with only three listed exceptions), than for liability coverage, which was limited to “four wheel” autos. The inclusion in the policy of differing definitions for “insured auto” in differing coverage sections produced no absurd consequences, and the policy was applied as written.
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The Louisiana Supreme Court held that a patient has (1) an implied private right of action for damages against a health care provider under the Health Care and Consumer Billing and Disclosure Protection Act, La. R.S. 22:1871, et seq., “Balance Billing Act”); and (2) an express direct right of action under La. R.S. 22:1874(B) based on the assertion of a statutory medical lien in accordance with La. R.S. 9:4752. Yana Anderson v. Ochsner Health System and Ochsner Clinic Foundation, 2013-2970 (La. 7/1/14).

La.R.S. 22:1874, in pertinent part, prohibits a health care provider from collecting or attempting to collect amounts from an insured patient in excess of the contracted reimbursement rate. The title of the Act, La. R.S. 22:1871, et seq., is the “Health Care Consumer Billing and Disclosure Protection Act.” While it is silent as to a private cause of action for violations of the Balance Billing Act, this language makes clear that the legislature enacted this statutory scheme with protection of the consumer in mind. The Louisiana Supreme Court reasoned that it is difficult to envision a law denying recourse to individuals when that law’s principle aim is individual protection. Further, the Supreme Court found that when taken as a whole, the Balance Billing Act reveals an intent to make the burden on the violator more onerous, not less. The Supreme Court concluded that: “it would be incongruent to rule that a law intended to punish violators and protect consumers would operate in a manner that prohibits an individual’s access to the courts to redress the very violation that is proscribed.”

The Supreme Court also held that the La.R.S. 22:1874 provides an express direct right of action against a healthcare provider who attempts to balance bill by assertion of a medical lien on a patient tort recovery in accordance with La. R.S. 9:4752, which allows for a “medical lien” in favor of health care providers who provide services to an “injured person.”

In Anderson, a personal injury automobile accident victim who was insured by UnitedHealthcare, received medical treatment at an Ochsner facility. Pursuant to a member provider agreement, UnitedHealthcare contracted with Ochsner to secure discounted charges or healthcare rates for its insureds. Despite its contractual agreement with UnitedHealthcare, Ochsner refused to file a claim with the patient’s health insurer. Instead, Ochsner sent a letter to the patient’s personal injury attorney, asserting a statutory medical lien for the full amount of undiscounted charges on any tort recovery the patient received for the underlying automobile accident. The patient filed a putative class action suit against Ochsner for its statutorily prohibited conduct.
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While insurance policies are executed for the benefit of all injured persons, such protection is limited by the terms and limits of the policy. On July 1, 2014, the Louisiana Supreme Court in a 4-3 decision, held that the reporting provision in a claims-made-and-reported policy is a permissible “term and limit” on the insurer’s liability as to third parties and does not violate the Louisiana Direct Action Statute, La.R.S. 22:1269, which affords a victim the right to sue the insurer directly when a liability policy covers a certain risk. Joyce Gorman v. City of Opelousas, 2013-1734 (La.7/1/14). Under a claims-made-and-reported policy, the event and peril insured against is based on making and reporting of the claim within the period specified by the policy.

In Gorman, a personal injury and wrongful death lawsuit arising out of a wrongful act that occurred in September 2009 was timely filed against the City of Opelousas in September 2010. After discovering the identity of the City’s liability insurer in discovery, the plaintiff filed an amended petition for damages in September 2011, naming Lexington Insurance Company as a defendant pursuant to the Louisiana Direct Action Statute. The Lexington liability insurance policy at issue was effective from April 17, 2010 – April 17, 2011, and had a retroactive date of April 17, 2005. The pertinent terms of the policy obligated Lexington to pay claims on behalf of the City if three conditions occur:

1) the wrongful act occurs on or after the retroactive date of the policy, but before the end of the policy period – (this condition was met);
2) the claim for the wrongful act is first made against the City during the policy period – (this condition was met); and 3) the claim is reported to Lexington in writing during the policy period (this condition was not met because the CIty failed to notify Lexington of the claim).

The majority held that the City’s Lexington insurance policy was not effective because the claim had not been reported to Lexington within the applicable policy period. Brushing aside the harsh penalty faced by the City’s personal injury and wrongful death victim due to the City’s blatant failure to timely notify its insurer of the pending claim, the majority reasoned as follows:

We recognize that an injured third party rarely has knowledge of the identity of the insurer of the party responsible for an injury, making it nearly impossible for an injured third party to give notice to the insurer. Rather, the injured third party generally has to rely on the insured, which has an interest in ensuring the availability of the coverage it purchased, to comply with the reporting provision in its policy. Although we can contemplate no logical reason why the City would not report a claim for which it apparently purchased insurance coverage, we decline, under the facts of this case, to hold the insurer liable for the City’s failure to report the claim as required by the Lexington policy. A contrary finding would, where there is no evidence of fraud or collusion, punish the insurer for the inactions of its insured.

The three dissenters did not believe that a claims-made insurer should be able to raise, in an action by the victim of the insured’s tort, the defense of a non-prejudicial failure of the timely notified insured to give notice to the insurer during the policy period. The dissenters believed that the notice provision was not a “term and limit” of the policy and believed that a third party victim, who is denied coverage under a claims-made policy because the timely notified insured failed to notify the insurer timely, should be able to resort to the public policy provisions of the Direct Action statute to obtain coverage. The notice requirement conflicts with the public policy and intent of the Direct Action statute and effectively restricts the vested rights of injured parties by allowing coverage to be defeated in an otherwise timely and valid claim when an insured without good cause blatantly fails to give notice to its insurer:

The provision in the Direct Action statute prohibiting compliance with terms and limits “in violation of the laws of this State” likewise restricts the ability of the contracting parties to limit the tort victim’s right of action against the insurer. Here, the notice requirement coupled with the insured’s blatant and unjustified failure to provide notice would not only limit, but effectively destroy the tort victim’s right of action in an otherwise timely filed suit, and as such, it should be void as against the public policy provisions of our Direct Action statute.

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No person can insure against his own intentional acts. Public policy forbids it. But public policy does not forbid one to insure against the intentional acts of another for which he may be vicariously liable.

If the exclusionary language in the personal liability insurance policy applies to the intent of “the” insured, then only the intent of “the” person for whom coverage is sought for his/her vicarious liability under the policy will be dispositive, rather than the intent of the intentional actor for whom the person for whom coverage is sought is vicariously liable, and coverage will not be excluded. However, if the exclusionary language in the policy applies to “an” or “any” or “one or more” insureds, then the intent of the intentional actor will be dispositive and coverage will be excluded.

See McBride v. Lyles, 303 So. 2d 795 (La.App. 3d Cir. 1974) (“the” insured); Lamkin v. Brooks, 498 So.2d 1068 (La. 1986) (“any” insured); Travelers Ins. Co. v. Blanchard, 431 So.2d 913 (La.App. 2d Cir.1983) (“an” insured); and Leslie v. Andrews, 905 So.2d 368 (La.App. 4th Cir. 2005), writ denied, 901 So.2d 1077 (La.2005) (“one or more” insureds).

The intentional injury exclusion for injuries of a “a different kind or degree” or sustained by a “different person or property, than intended or expected” in personal liability insurance policies is enforceable and excludes coverage even if the seriousness of the injury is not intended expected or if a different person is injured than intended or expected. See Simpson v. Angel, 598 So.2d 584 (La.App. 4th Cir.), writ denied, 605 So.2d 1091 (La.1992).

When determining whether the intentional injury exclusion — “willful and malicious acts of any insured” — will preclude coverage in a personal liability insurance policy, it is immaterial whether the insured intended the actual resulting injuries.

The act is “willful” if the actor has intentionally done an act of unreasonable character in reckless disregard of the risk known to him, or so obvious that he must be taken to have been aware of it, and so great as to make it highly probable that harm would follow. It is usually accompanied by a conscious indifference to consequences, amounting almost to a willingness that harm should follow.

“Malicious” is characterized by, or involving, malice; having, or done with, wicked or mischievous intentions or motives; wrongful and done intentionally without just cause or excuse.

When determining whether the intentional injury exclusion — “expected or intended from the standpoint of the insured” — will preclude personal liability insurance coverage, the subjective intent of the insured, as well as his reasonable expectations as to the scope of his insurance coverage, will determine whether an act is intentional. An act is intended if the perpetrator desires the results of his action or he believes that the results are substantially certain to occur. The insured’s subjective intent or expectation must be determined not only from the insured’s words before, at the time of, and after the pertinent conduct, but from all the facts and circumstances bearing on such intent or expectation. Breland v. Schilling, 550 So.2d 609 (La.1989). See also, Great American Ins. Co. v. Gaspard, 608 So.2d 981 (La.1992). In Breland, the Louisiana Supreme Court held:

We hold, therefore, that when minor bodily injury is intended, and such results, the injury is barred from coverage. When serious bodily injury is intended, and such results, the injury is also barred from coverage. When a severe injury of a given sort is intended, and a severe injury of any sort occurs, then coverage is also barred. But when minor injury is intended, and a substantially greater or more severe injury results, whether by chance, coincidence, accident, or whatever, coverage for the more severe injury is not barred. Whether a given resulting bodily injury was intended “from the standpoint of the insured” within these parameters is a question of fact. Such factual determinations are the particular province of the trier of fact, in this instance the trial jury. Breland, 550 So.2d at 614.

Louisiana Revised Statute 22:1269 (formerly La.R.S. 22:655), provides for a direct action against a liability insurer in two instances:

1) where the policy or contract of liability insurance was issued (domestic insurer) or delivered (foreign insurer) in Louisiana; or

2) where the accident or injury occurred in Louisiana.

The Louisiana Direct Action Statute does not create an independent cause of action against the insurer. It merely grants a procedural right of action against the insurer where the plaintiff has a substantive cause of action against the insured. The Louisiana Direct Action Statute affords a victim the right to sue the insurer directly when the liability policy covers a certain risk. The statute does not extend the protection of the liability policy to risks that were not covered by the policy or were excluded thereby (at least in the absence of some mandatory coverage provisions in other statutes)

The injured person or his or her survivors or heirs, at their option, may bring the action against the insured or against the insured and the liability insurer. The action may be brought against the insurer alone only when:

a) the insurer has been adjudged a bankrupt by a court of competent jurisdiction or when proceedings to adjudge an insured a bankrupt have been commenced before a court of competent jurisdiction;

b) the insured is insolvent;

c) service of citation or other process can not be made on the insured;

d) when the cause of action is for damages as a result of an offense or quasi-offense between children and their parents or between married persons;

e) when the insurer is an uninsured motorist carrier; or
f) the insured is deceased.
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Louisiana Revised Statute 9:5639 provides that actions for the recovery of damages sustained in motor vehicle accidents brought pursuant to UM provisions in motor vehicle insurance policies are prescribed by two years reckoning from the date of the accident in which the damage was sustained.

A timely filed suit against the tortfeasor interrupts prescription against the UM insurer because they are solidary obligors. Hoefly v. Government Employees Ins. Co., 418 So.2d 575 (La.1982).

A liability insurer and a UM insurer are not solidary obligors, so suit against the liability insurer does not interrupt prescription against the UM insurer. Rizer v. American Sur. & Fid. Ins. Co., 669 So.2d 387 (La.1996).
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Louisiana’s No Pay / No Play statute, provides that an owner or operator of a motor vehicle who fails to own or maintain compulsory motor vehicle liability security can not recover for the first $15,000 of bodily injury damages and for the first $25,000 of property damage caused by a motor vehicle accident, unless the driver of the other vehicle:

(i)  Is cited for a violation of R.S. 14:98 (DWI/DUI) as a result of the accident and is subsequently convicted of or pleads nolo contendere to such offense.

(ii)  Intentionally causes the accident.

(iii)  Flees from the scene of the accident.

(iv)  At the time of the accident, is in furtherance of the commission of a felony offense.
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