Wednesday, October 29, 2014

It's a whole new ballgame in PIP litigation, thanks to an SJC decision

I have written before, here, about why it is difficult to sue PIP carriers who fail to pay claims.  PIP claims are by their nature small: generally not more than $2000 and never more than $8000.  The PIP statute provides that the insurer must pay the claimant's attorney's fees if a judgment against the carrier enters.  Up until now, an insurer could avoid paying those fees if it forced a claimant to file suit, conduct discovery and go to trial and then, minutes before judgment enters, paid the claim.  Of course if the claimant proved bad faith in the insurer's actions then attorney's fees were available under Mass. Gen. Laws ch. 93A, but bad faith is harder to prove than mere failure to pay a claim when due.  Although some wiggle room was found by various decisions of the Massachusetts Appellate Division (a court that does not set precedent), see here and here, PIP cases in general were simply a bad risk. 

The Supreme Judicial Court of Massachusetts has changed all that.

In Barron Chiropractic & Rehabilitation, P.C. v. Norfolk & Dedham Group, 469 Mass. 800 (2014), the SJC has held that an unpaid party who has brought suit may refuse the insurer's tender of PIP amounts due, proceed with suit, and obtain a judgment for those amounts as well as its costs and attorney's fees. 

The plaintiff, Barron Chiropractic & Rehabilitation, provided chiropractic services to Nicole Jean-Pierre after an auto accident.  Jean-Pierre's PIP carrier was Norfolk & Dedham. 

Jean Pierre's chiropractor at Barron and Norfolk & Dedham disagreed about the length of treatment made necessary by the accident and about the proper price for her treatment.  The disputed amount was $1,544.05. 

Barron sued Norfolk & Dedham in District Court.  Norfolk & Dedham determined that its anticipated litigation costs would substantially exceed the amount of the disputed medical fees.  Six days prior to trial it sent Barron a check for the disputed amount with an attached check stub that stated "full and final settlement."  Barron's counsel returned the check to Norfolk's counsel with a letter stating that its offer of settlement was rejected.

The SJC held that under contract law Barron was not required to accept the tender of settlement for the amount due after the time for payment under the PIP statute had passed.  It also held that it would be unfair and against the purpose of the PIP statute to allow the insurer to escape costs and attorney's fees by paying the PIP amount that was due after forcing the claimant to file suit. 

Thursday, October 23, 2014

Insurance and global warming

The New York Times has an article about the reaction (and non-reaction) of insurers to higher risk of property damage as a result of global warming.

My guess is that the government will find itself more and more in the property insurance business. Just as it entered the flood insurance market through the National Flood Insurance Program, the government will have to make a choice about whether to abandon owners of property now at high risk for hurricanes and other disasters or to subsidize them. 

My vote would be a gradually phased-out subsidy, perhaps with an income-based component.  Just as I don't think that taxpayers should have to pay to protect the houses of people who choose to build on unstable lands prone to falling into oceans or canyons, I don't think that over the long-term taxpayers should have to pay to protect property that is highly likely to be destroyed by relatively predictable weather disasters.  But I also don't want to see those property owners suffer a unilateral loss as a result of global warming, an event we have all caused and should all bear responsibility for.  And I want to see poorer people with more protections for their limited assets.   

Saturday, October 11, 2014

Appeals Court reminds us that when it comes to insurance, it's usually Buyer Beware

In Kleycamp v. USAA Casualty Ins. Co., 86 Mass. App. Ct. 1113, 2014 WL 4799608 (unpublished), the Massachusetts Appeals Court affirmed summary judgment to a defendant insurer that had not recommended that the plaintiffs purchase underinsured coverage with their auto policy.

The plaintiffs had never specifically inquired of the insurer about underinsured coverage, and the insurer never made any specific assertions or representations about the adequacy of the plaintiffs' coverage. 

The court noted that the general rule in Massachusetts is that insurers and their agents do not have a general duty to recommend insurance coverage, or to guarantee that insurance policies are adequate for a particular insured's needs.  There is an exception only for special circumstances, such as reliance on specific assertions or representations concerning the adequacy of coverage. 

In a footnote the court noted that the same analysis might not apply to homeowner's policies.

In my view, underinsured and uninsured coverages are among the most important insurance you can buy.  They can't protect you against the risk that another driver's carelessness will injure you; but they do protect you against the risk that that careless driver doesn't have enough insurance to cover your injuries.