Abell's Kentucky Law Blog

BRB Coverage Comes Before Med Pay Coverage, Court of Appeals Rules

Does BRB coverage come before med pay coverage in an auto policy? The answer made a difference to whether the statute of limitations had lapsed on a tort claim in Cole v. Fagin, No 2012-CA-797 (April 19, 2013), where the Court of Appeals ruled that BRB coverage came first and reversed a summary judgment.

Susan Cole was wise and bought plenty of auto insurance; she had a policy with Grange Insurance that included $10,000 in basic reparations benefits (BRB) coverage, $5000 in Med Pay as well as underinsured and uninsured motorist coverages.  She was injured in an auto accident on July 1, 2009, and received treatment for injuries at a hospital.  Grange mailed her a BRB application the next day.  A week later, Grange's adjuster wrote Cole's lawyer and informed him that "payment for her medical expenses" would be under the Med Pay coverage "since there is a one year statute on that coverage."  Cole later mailed the adjuster her completed BRB application.  There was some further correspondence between Cole and Grange but, according to the Court of Appeals, "nothing else in the record ... indicates what coverage the parties was being utilized while Grange was paying Cole's medical expenses from August 6, 2009 to October 22, 2009, which totaled $3,976.57."  

Cole filed suit on October 13, 2011, against Fagin for negligence and against Grange for only partially paying her claim for Med Pay and BRB benefits under her policy.  Both Fagin and Grange moved to dismiss on statute of limitations grounds where the circuit court sustained.  

The Court of Appeals framed the issue as follows: "whether Cole received $3,976.57 from Grange for her medical expenses due to her Med Pay or BRB coverage." The Court of Appeals reversed the circuit court finding that BRB coverage applied before Med Pay coverage and explained as follows:

An auto accident tort claimant "has no tort claim whatsoever for any element of damages to the extent that those damages have been paid, or could have been paid, through BRBs under her existing coverage." ... Because the MVRA requires Cole's accrued medical expense reimbursements of $3,976.57 to be considered BRBs at the end of any tort litigation, (i.e., for the purpose of determining her damages), to avoid absurdity it follows that the MVRA likewise requires Cole's accrued medical expense reimbursements of $3,976.57 to be considered BRBs at the beginning of any tort litigation (i.e., for the purpose of the statute of limitations codified at KRS 304.23-230)."

Robert L. Abell
www.RobertAbellLaw.com  

Questions Arising from Richie Farmer Prosecution

It sure seems that Richie Farmer has made a real mess of the practically limitless goodwill that comes from being a UK basketball player and having your jersey hung from the Rupp Arena rafters. The federal criminal indictment is the latest shoe to drop. 

That said, though, one can see the potential mischief possible in using the federal criminal statute under which Farmer is charged, one that makes it possible to criminally charge a government or elected official who "misapplies" government funds. This would seem a point subject to endless argument, and one best resolved at the ballot box. 

So I discussed these concerns in greater length in a column published in the Lexington Herald-Leader, In Farmer Case, We Could Push So Far As to Criminalize Politics.

Robert L. Abell
www.RobertAbellLaw.com 

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The Most "Pro-Business" Supreme Court Since World War II

"Corporations Find A Friend In the Supreme Court" reports Adam Liptak in the New York Times. The article draws heavily on a study published in the Minnesota Law Review, How Business Fares In the Supreme Court, and written by, among others, long-time federal appeals court judge Richard A. Posner.  

Robert L. Abell
www.RobertAbellLaw.com 

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The Floodgates of Litigation: Is It Possible to Have Too Much Justice?

Adam Liptak in his Sidebar column for the New York Times writes of the proliferation of "flood" and "opening the floodgates" concerns in Supreme Court opinions and arguments these last few years in Fearing Deluge of Litigation, Supreme Court Works the Floodgates. The concern, in some instances, is valid but, as Mr. Liptak poses, "If a legal theory is sound, is it a problem if it produces too much justice?"

Robert L. Abell
www.RobertAbellLaw.com 

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"Systematically Poor Resident Care" At Erlanger Nursing Home; Meanwhile, Kentucky Senate Passes Tort Reform Benefiting Nursing Homes

An Erlanger nursing home, Villaspring Health Care, will pay $350,000 to settle a lawsuit claiming that it defrauded Medicare and Medicaid from 2004 to 2008 by providing "systematically poor resident care."  During this time period, five residents at the nursing home died and others were injured, as reported in the Lexington Herald-Leader, Erlanger Nursing Home to Pay $350,000, Enhance Care. 

Meanwhile, Senator Julie Denton, a Republican from Louisville, was introducing and the Senate was passing a tort reform bill, SB 9, which, as Sen. Ray Jones, "This is nothing more than an industry spending indiscriminately to shield its bad behavior." SB 9 would make it harder for people to bring lawsuits charging neglect or abuse in nursing homes in Kentucky. The Senate Health and Welfare Committee was so disinterested in anything approaching fair-mindedness that it voted to approve the bill before hearing any testimony or evidence against the bill, during which a number of Senators left the hearing room.

Read about it at kentucky.com: Slimy action on questionable bill; nursing homes aim to restrict lawsuits, Fighting the good fight to protect residents, not nursing homes.

Robert L. Abell
www.RobertAbellLaw.com 

 

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Rough Justice: Wisconsin Supreme Court Justices Worked In Fear of Physical Attack By Colleague

A previous post, Order in the Court! Wisconsin Supreme Court Justice Accused of Choking A Colleague, reported the disturbing allegations that Wisconsin Supreme Court Justice David Prosser had choked one of his colleagues, Justice Ann Bradley, in her office. Turns out, that's not the half of it.

Since the choking in June 2011, a judicial misconduct complaint was filed and an investigation conducted. Justice Prosser has requested that all of his colleagues be recused from considering the case. Justice Bradley, the victim of the choking, has agreed to recuse herself and issued a memo with her decision containing even more disturbing and shocking details:

• "what happened in my office on June 13, 2011 is not an isolated event. Rather, it is one event in a history of abusive behavior in our workplace that has escalated from tantrums and rages, to threats, and now to physical contact. (See Justice Patrick Crooks' statement to Dane County detectives describing the work environment history generally, pages 57-59)."

• "When Justice Prosser's behavior escalated to threats, I sent an email on February 18,2010, advising the other justices that 'a necessary step to address [our] dysfunction is to end these abusive temper tantrums.'"
  
  
• "In late March 2011—two months before the incident in my office—it appeared to me and others that Justice Prosser's behavior was becoming increasingly agitated. One newspapereditorial characterized his comments as "odd," "troubling" and "unsettling." A then, but now retired, Deputy Director of State Courts contacted me to warn of her concern that Justice Prosser may endanger my physical safety as well as that of the Chief Justice."
  
  
• "A plan was devised by law enforcement for enhanced security due to concerns that Justice Prosser's behavior posed a threat to our physical safety. Because the danger came from the inside and not the outside, the locked entry doors that limit public access to the area of the supreme court offices were not a sufficient protection. Both the Chief Justice and I were advised to take steps for personal security, including locking ourselves inside our personal offices when working alone at nights and on weekends."
  
  
• "Additionally, both of us were given as emergency contacts the personal cell, work cell, squad cell, and home phone numbers of Capitol Chief of Police Tubbs as well as the regular Capitol Police office numbers. The Chief Justice was advised to notify Capitol Police when she was coming to the office after hours to work and advised to notify them and, upon request, be accompanied when she left late at night. We were told that law enforcement would patrol the area with greater frequency."

This is mind-boggling: state Supreme Court justices taking precautionary measures, equipped with emergency law enforcement phone numbers because of fears and concerns that a colleague -- himself a state Supreme Court justice -- would physically harm them. Rough justice, indeed.

You can read Justice Ann Bradley's recusal memo.

Robert L. Abell
www.RobertAbellLaw.com

 

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Homeowners' Insurance Coverage: Can Coverage Be By Contract Implied In Fact?

Douglas Ramsey inherited his father's house when his father, Ralph Ramsey, passed away in August 2002. Ralph had kept up a homeowners insurance policy on this house with Allstate since 1993, and the premium payments were drawn from his back account.  After Ralph passed, Douglas kept paying the premiums only the payments were drawn from his account.  The house burned on June 26, 2008, and Allstate refused coverage, claiming that its policy on the home was still in Ralph's name (although it had been taking and keeping Douglas's money for going on 6 years). 

Douglas claimed that there existed a contract implied-in-fact between him and Allstate that provided coverage. A district court granted summary judgment to Allstate. But the Sixth Circuit reversed, ruling that there were factual issues regarding whether a contract implied-in-fact had been formed. First, the Court identified the two components for contract implied-in-fact analysis:

• the parties' meeting of the minds is shown by the surrounding circumstances, including the conduct and declarations of the parties, that make in inferable that the contract exists as a matter of tacit understanding
  
  
• a plaintiff must demonstrate that the circumstances surrounding the parties' transactions make it reasonably certain that an agreement was intended

The court noted that there was evidence that Allstate knew that Ralph had passed, because it had cancelled his auto insurance upon his death. Three things then made it possible to conclude that there was a contract implied-in-fact between Douglas and Allstate: (1) Allstate knew Ralph had died; (2) Allstate renewed the homeowners insurance policy each year; and, (3) Allstate took Douglas's money for payment of the premiums.

The case is Ramsey v. Allstate Insurance Company, No 11-4347 (February 8, 2013). Judge Boyce Martin wrote the court's opinion joined by Judges Gilbert Merritt and Damon J. Keith.

Robert L. Abell
www.RobertAbellLaw.com 

Long-Term Disability Benefits: Is The Risk of Relapse A Continuing Disability?

Is the risk of relapse a continuing disability requiring payment of long-term disability (LTD) benefits? The First Circuit considered this question and decided the answer was "yes" in its recent decision, Colby v. Union Security Insurance Company, No. 11-2270 (January 17, 2013).

Julie Colby worked long hours as an anesthesiologist, suffered from severe back pain, and, as a result of her access to pain medication through her job developed a troubling opoid dependence.  After being discovered passed out by a colleague, she underwent in-patient substance abuse treatment at a facility in Atlanta, Georgia.   

Through her employment Colby had long-term disability insurance with Union Security Insurance Company (USIC). Colby was paid long-term disability benefits while she was at the facility but it refused to pay any benefits following Colby's discharge.  Colby claimed that the risk of relapse she faced was so substantial as to constitute a continuing disability, thus entitling her to long-term disability benefits. USIC steadfastly denied her claim, asserting that the mere risk of relapse could not constitute a continuing disability under the policy. 

Colby compiled substantial medical evidence and opinion that her returning to work as a physician invited a relapse into substance abuse and addiction, as the Court noted:

Copious evidence, including statements by her therapist, Patricia Dell–Ross, linked her opioid dependence to her back pain, her turbulent personal life, and the stresses of her job. Her professed inability to return to work thus contemplated not only enhanced physical and logistical exposure to her drug of choice but also the likely exacerbation of other triggering conditions. Cognizant of this nearly perfect storm, Dell–Ross, in a letter dated January 30, 2007, predicted that, should the plaintiff return to work, her “access to opiates, combined with the usual and unusual stressors of everyday life and work would make her relapse almost inevitable.” 

The First Circuit was troubled by the insurer's steadfast and categorical assertion that the risk of relapse could not be a continuing disability under the policy. The court found no such exclusion in the plan language and observed that "plucking an exclusion for risk of relapse out of thin air would undermine the integrity of an ERISA plan." Furthermore, "an ERISA plan must be read in a natural, commonsense way" and "it is a commonsense proposition that a substance-dependent individual's risk of relapse can swell to a critical mass of disability."

 The court also noted two other federal court decisions on the question, one by the Fourth Circuit upholding the insurer's denial of coverage, Stanford v. Continental Casualty Company, 514 F.3d 354, 360 (4th Cir.2008) (denial of LTD benefits to Fentanyl-addicted nurse anesthetist), and one ruling in the claimant's favor, Kufner v. Jefferson Pilot Fin. Ins. Co., 595 F.Supp.2d 785, 787–88 (W.D.Mich.2009) (overturning insurer's denial of continuing LTD benefits to opioid- and alcohol-dependent anesthesiologist).

There are two important take-aways from this case. First, Colby's job increased her risk of relapse: as a doctor she had access to the controlled substances that fueled her addiction to begin with. Second, the insurance company's categorical refusal to consider Colby's situation undermined its position.

Robert L. Abell
www.RobertAbellLaw.com 

 

 

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Kentucky Legal Malpractice: Lost Punitive Damages Not Recoverable Kentucky Supreme Court Rules

Are lost punitive damages recoverable in a Kentucky legal malpractice action? "No" answered the Kentucky Supreme Court addressing a question of first impression in its recent decision in Osborne v. Keeney, 2010-SC-397 (December 20, 2012).

Brenda Osborne sued her lawyer, Steven Keeney, after Keeney allowed the limitations period to lapse on her personal injury claims that arose after an airplane crashed into her home. A pilot, Quesenberry, experienced mechanical problems with his plane before taking off.  The plane's engine lost power not long after take-off and was crashed into Osborne's home, slicing "through her chimney, inflict[ing] significant damage to the second story and set[ting] the house afire[.]" Osborne heard noise from the crash, ran outside to see her house afire; she was not struck by any crash debris and suffered no physical injury  

Osborne hired Keeney about 6 months after the crash to represent her with on her claims. Keeney got a homeowner's insurance claim settled but allowed Osborne's claims against Quesenberry to lapse, as they were dismissed as untimely by a federal district judge, who criticized Keeney for this conduct of the case and bad-faith.  Keeney never told Osborne that her case had been dismissed.

Osborne sued Keeney for legal malpractice. A jury returned a verdict in Osborne's favor as follows:  (1) $54,924.04 for loss of her personal property; (2) $500,000 for pain and suffering from the airplane crash; (3) $750,000 as punitive damages against Quesenberry; (4) $53,025.39 for legal fees paid to Keeney; (5) $250,000 for mental anguish resulting from Keeney's representation. And the jury awarded Osborne $3,500,000 in punitive damages against Keeney. 

 The Court reversed the verdict because of the trial court's reversible error in instructing the jury on Kentucky's case-within-a-case approach to legal malpractice cases, as was discussed in a previous post, Kentucky Legal Malpractice: The Case-Within-A-Case Approach.  It also abandoned the "physical impact" rule as a requirement for recovery of emotional distress damages, as another post discussed, Kentucky Abandons the Physical Impact Requirement for Recovery of Emotional Distress Damages.

The Court ruled that a Kentucky legal malpractice plaintiff could not recover damages covering the lost punitive damages that the malpracticing lawyer caused her to lose. The Court offered two reasons for this ruling: (1) "the argument that punitive damages can be recast as compensatory damages in a legal malpractice claim is flawed and unsuppoted by our case law"; and, (2) "the deterrence function of punitive damages would be completely written out of the law because the nexs between the attorney accused of malpractice and the actual wrongdoer is far too attenuated." However, the Court did state that punitive damages were recoverable based on the malpracticing attorney's actual conduct.

Justices Will T. Scott and Daniel J. Venters dissented from this holding; they would hold that lost punitive damages were recoverable by a legal malpractice plaintiff.

Robert L. Abell
www.RobertAbellLaw.com

 

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Kentucky Abandons The Physical Impact Requirement for Recovery of Emotional Distress Damages

Kentucky law has long barred recovery of damages for emotional distress in personal injury suits in absence of physical impact or contact. The Kentucky Supreme Court abandoned this rule recently in Osborne v. Keeney, No. 2010-SC-397 (December 20, 2012), a legal malpractice case that involved an underlying personal injury suit arising when an airplane crashed into Brenda Osborne's home. An earlier post discussed how Kentucky uses the case-within-a-case approach in legal malpractice suits, Kentucky Legal Malpractice: The Case-Within-A-Case Approach.

A pilot, Quesenberry, experienced mechanical problems with his plane before taking off.  But not long after take-off the engine lost power and the plane struck Osborne's home, slicing "through her chimney, inflict[ing] significant damage to the second story and set[ting] the house afire[.]" Osborne heard noise from the crash, ran outside to see her house afire; she was not struck by any crash debris and suffered no physical injury  

Osborne had some preexisting anxiety and depression problems, which, according to her treating doctor, were exacerbated by the destruction of her home and personal property.  She received treatment for what the Court described as an "extended period of time after the crash[.]" Part of her claim in her malpractice suit against her lawyer, Steven Keeney, was that she could have recovered from Quesenberry damages for the emotional distress she had suffered. Keep in mind that Osborne was not hit by any debris from the crash or physically injured due to the crash. This implicated the "physical impact" rule, long followed and long-derided in Kentucky.

The Court, after an extended discussion of precedent in Kentucky and other jurisdictions, abandoned the physical impact rule and announced the proof requirements as follows:

... the plaintiff must present evidence of the recognized elements of a common law negligence claim: (1) the defendant owed a duty of care to the plaintiff; (2) breach of that duty; (3) injury to the plaintiff, and (4) legal causation between the defendant's breach and the plaintiff's injury. ...  to ensure plaintiffs' claims are genuine ... recover should be provided only for "severe" or "serious" emotional injury. A "serious" or "severe" emotional injury occurs where a reasonable person, normally constituted, would not be expected to endure the mental stress engendered by the circumstances of the case. Distress that does not significantly affect the plaintiffs' everyday life or require significant treatment will not suffice.  And a plaintiff claiming emotional distress damages must present expert medical or scientific proof to support the claimed injury or impairment.

 The Court's decision suggests a question that it does not address: must every plaintiff in every type of case present medical or scientific proof to support the claimed injury?  Kentucky law has not previously imposed such a broad and burdensome rule.

Robert L. Abell
www.RobertAbellLaw.com