Is the Independent Medical Exam Landscape about to Change in Pennsylvania?

The Pennsylvania Supreme Court has granted the Third Circuit’s petition for certification of a question of law that has puzzled insurers and their attorneys. The issue is whether an insurer can mandate that claimants undergo an unlimited number of medical exams by a doctor of the carrier’s choosing  — without a court order — before they can receive first-party medical benefits.

Insurance companies such as Allstate have been including contractual provisions in their motor vehicle insurance policies that requires insured to submit to independent medical examinations by a physician selected by the insurer, “when and as often as the insurer may reasonably require,” as a condition precedent to the payment of benefits. The problem is that these provisions may conflict with the Motor Vehicle Financial Responsibility Law (“MVFLR”), 75 Pa.C.S. Section 1796(a), which gives courts the authority to order such examinations.

In Sayles v. Allstate, U.S. District Judge A. Richard Caputo of the Middle District ruled that Allstate’s policy provision conflicted with the state MVFLR because the plain language of Section 1796 prohibits precisely this type of provision. The plaintiff in Sayles argued that Allstate violated the MVFLR because it never petitioned the court to compel the independent medical exam. Allstate argued that the MVFRL does not mandate a court order and it only suggests when a court may order a person to submit to an IME.  But there is no prohibition in the MVFLR that requires court intervention before an insurer requests medical examinations before paying 1st party benefits.

Once the Pennsylvania Supreme Court rules on this question of law, both auto insurers and insurance attorneys will know how to proceed with respect to independent medical examinations, and whether court intervention will be necessary in advance of every such examination.

Lowering the Bar? (NY)

The Appellate Division, Second Department, recently took up the issue of whether a plaintiff involved in a motor vehicle accident may recover damages for lost earnings despite failure to prove a serious injury as defined by Insurance Law § 5102(d).

In Gore v. Cardany 2018 NY Slip Op 08632 (2d Dep’t 2018), plaintiff was rear-ended by the defendant while stopped at a red light. Plaintiff then commenced an action to recover damages for personal injuries allegedly sustained to his neck, back and left shoulder. At the time of the accident, plaintiff was in the course of his employment as a bus driver, and sought additional damages for past and future lost earnings in light of his inability to work following the accident. Plaintiff was granted summary judgment on the issue of liability and the case proceeded to trial on the issue of damages.

A Westchester County jury found that plaintiff’s injuries did not meet any of the threshold categories under Insurance Law § 5102(d), awarding him nothing at all for pain and suffering. Despite concluding that plaintiff had not sustained a serious injury, however, the jury awarded plaintiff for past lost earnings in the amount of $156,000 and future lost earnings in the amount of $750,000 (over 15 years.) Defendant thereafter moved to set aside this portion of the jury verdict. The trial court agreed, setting aside the verdict as to all damages.

On appeal, the Appellate Division reinstated the award for past lost earnings in the sum of $156,000, finding that plaintiff had established these damages with “reasonable certainty,” and as such, plaintiff had satisfied his burden of proof (see Lodato v. Greyhawk N. Am., LLC, 39 AD3d 494, 495; Harris V City Of New York, 2 AD3d 782, 784). Relying on provisions of the Insurance Law, the Court held that “a plaintiff is not required to prove that he or she sustained a serious injury as defined by Insurance Law §5102(d) in order to recover for economic loss exceeding $50,000 incurred as a result of a motor vehicle accident (see Insurance Law § 5104[a].” (Internal citations omitted). Thus, plaintiff’s own testimony that he had been unable to work because of the injuries sustained in the accident, together with submission of his W-2 forms, was sufficient to meet his burden of proof. By contrast, plaintiff failed to provide any competent medical evidence that he would be unable to perform any work in the future, and therefore failed to prove his damages for future lost earnings with the required reasonable certainty. Nevertheless, plaintiff was permitted to recover $156,000 for lost earnings despite failure to prove that he had sustained a serious injury under the Insurance Law.

Thanks to Tyler Rossworn for his contribution to this post.

Geico—15 Minutes Could Save You 15% or More on Car Insurance (PA)

On January 23, 2019, the Pennsylvania Supreme Court overturned numerous published decisions consisting of decades of precedent deciding that the “household vehicle exclusion” found in many auto policies. The Gallagher v. Geico Indemnity Company decision shows how the Court reasoned that the “household vehicle exclusion” conflicted with the UM/UIM stacking provision codified in the Pennsylvania Motor Vehicle Financial Responsibility Law (“PMVFRL”).

Gallagher was driving his motorcycle when the driver of a truck ran a stop sign. The truck crashed into Gallagher and he sustained serious injuries as a result. Importantly, Gallagher had two separate Geico auto policies. The first policy insured only the motorcycle and provided $50,000 in UIM coverage. The second Geico policy provided coverage for two of Gallagher’s other vehicles. It contained limits of $100,000 UIM coverage for each vehicle. In their analysis, the Court relied on the fact that Gallagher did not sign a specific waiver form to reject stacking. Instead, Gallagher actually paid higher premiums for stacked UIM coverage under the second Geico policy. Gallagher eventually settled the claim against the truck driver. However, he did not receive sufficient funds with respect to the serious nature of his injuries. Consequently, Gallagher sought $250,000 in UIM coverage from Geico.

Geico tendered its entire UIM policy limit of $50,000 pursuant to its first motorcycle policy but denied coverage with respect to its second auto policy as it contained a “household vehicle exclusion.” Geico filed a MSJ, citing applicable precedent which argued that Courts consistently enforce the exclusion. Upon application to the Supreme Court of Pennsylvania, Gallagher argued that the household vehicle exclusion acted as a de facto waiver of stacking – which, pursuant to the PMVFRL, required a specific waiver form to be enforceable. Gallagher further argued – and the Court emphasized – that he specifically paid additional premiums for stacked coverage. The Court agreed that the household vehicle exclusion was a de facto waiver of stacking and thus violated provisions of the PMVFRL.

However, the Court did provide several other statements that appear to be glimpses of possible trends with respect to the “household vehicle exclusion”. First, Geico provided all relevant policies. The Court did admit this may change insurance underwriting practices. However, it emphasized here that Geico possessed all information regarding his insurance policies and collected higher premiums from him for stacked coverage.  Second, the Court, in a footnote, argued that any insurer could likewise be on notice of multiple policies, even from different carriers. The Court stated “[f]or example, when multiple policies or insurers are involved, an insurer can require disclosure of all household vehicles and policies as part of its application process.” Ostensibly, while the Court states multiple times that this case is unique as Geico provided all policies, this footnote is an ominous sign of changes to come.

Thanks to Matthew Care for his contribution to this post.

Police Escort in Funeral Procession Does Not Trigger “Emergency Doctrine” Defense (NY)

In State Farm v. County of Nassau, State Farm sought recovery for property damage as part of a subrogation claim, where its insured driver, Licata was driving when he came to a full stop at a “T” intersection. There was bumper to bumper traffic on both his right and left due to a funeral procession. After looking in both directions he started to make a left hand turn. During his turn, he was struck by a police car. Mr. Licata said that the police car did not have its siren or lights on. The police officer contradicted this account. He stated that he had his lights and sirens on because he was proceeding from the back of the funeral line to the front to help escort the vehicles through the intersection.

The court was presented with the question of whether the negligence or reckless disregard standard applied. The court held that no emergency existed when the police officer was escorting the funeral procession. Therefore, the ordinary negligence standard applied. The court noted that the police officers testimony was extremely credible and that they believed him when he said he had his siren and lights on prior to the impact. Unfortunately, for him it did not matter.

The takeaway from this case is a simple one. Not every time an officer has his or her lights and sirens on will it automatically be considered an emergency situation. It is going to depend on the specific facts and circumstances of the occurrence. Here, the court made it clear, a police officer escorting a funeral procession is not considered an emergency.

This case also has a thorough and interesting analysis pertaining to issues of law (applicability of emergency doctrine) and issues of fact (apportionment of fault.)   Thanks to Marc Schauer for his contribution to this post.  Please email Brian Gibbons with any questions.

Defense’s Biomechanical Expert Gets “Fryed” (NY)

In Imran v. R Barany Monuments Inc, the Appellate Division, Second Department applied the Frye standard in precluding an expert’s trial testimony and set aside a defense verdict.  The Plaintiff was involved in a four-vehicle collision, where she sustained injuries to the cervical and lumbar regions of her spine and both knees. At trial, the defendants presented testimony of a biomechanical engineering expert, who testified regarding the change in velocity of a vehicle during a collision (“delta-v forces”). Relying on photographs of the plaintiff’s vehicle, and a crash test involving the same make and model of vehicle, the expert concluded that the impact of the second front-most vehicle to plaintiff’s vehicle would not have caused the plaintiff’s injuries to the lumbar region of her spine or her knees.

The jury returned a verdict in favor of the defendants on the issue of damages, finding that the plaintiff did not sustain a serious injury under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d) as a result of the accident. Subsequently, the plaintiff moved to set aside the jury verdict on the issue of damages in the interest of justice and for a new trial, arguing, inter alia, that the expert’s testimony on causation should have been precluded. The Supreme Court granted the motion, and the defendants appealed.

The Appellate Division, Second Department, relied upon the Frye (293 F 1013, 1014) standard and agreed with the lower court’s decision to grant plaintiff’s motion.   Pursuant to established New York law, an expert’s opinion must be based on facts in the record or personally known to the witness. The accepted techniques, when properly performed, must generate results accepted as reliable within the scientific community generally. Courts will generally admit expert testimony that’s deduced from well-recognized scientific principles or discovery, as long as the thing from which the deduction is sufficiently established to have gained general acceptance in the particular field in which it belongs.  Finding that a proper foundation was lacking for the admission of the expert’s testimony, the court found that the expert should have been precluded from testifying because he did not calculate delta-v forces of all vehicles involved, the crash tests he used differed from the accident, and the simulations used dummies with different weights than plaintiff.  A new trial was ordered.

It is easy to focus on the favorable conclusion proffered by your own expert, but a seasoned litigator will focus not only on the results, but the process.  Having a keen understanding of presentment of the expert at trial can avoid the consequence of calling an expert that reached an unreliable conclusion.

Thanks to Margaret Adamczak for her contribution to this post.

 

GEICO Challenges Deemer Statute in New Jersey

Geico has challenged a New Jersey State Statute requiring auto policies issued out of state to provide a minimum amount of bodily injury liability coverage when the insured drivers are involved in accidents in New Jersey.  The case is Guerline v. Brian v. Richards, case number 081799, in the New Jersey Supreme Court.

As of December 7, 2018, the New Jersey Supreme Court justices had granted Geico’s petition for certification of a state Appellate Division panel’s August ruling directing the insurer to provide a minimum of $15,000 in bodily injury liability coverage for claims against its Florida-based policyholder who was involved in a motor vehicle accident in Newark, NJ in 2013.

Even though the Florida-based policyholder’s auto policy did not include any bodily injury coverage, the appellate panel found that, under a decades old New Jersey law dubbed the “Deemer statute,” Geico was still required to supply the minimum amounts of such coverage included in a standard auto policy issued in the Garden State ($15,000 per person or $30,000 for more than one person per accident).

The Supreme Court justices will decide the following question: Does the Deemer statute apply to an automobile insurance policy written in Florida for a Florida resident who had an accident in New Jersey, where the Florida policy did not include any bodily injury liability coverage?

The Supreme Court of New Jersey’s decision will have a major impact on motor vehicle litigation in New Jersey. Thanks to Jon Avolio for his contribution to this post.  Please email Brian Gibbons with any questions.

 

 

 

 

Workers’ Compensation Carriers can Subrogate against tortfeasor, even though Plaintiff Couldn’t (NJ)

On December 14, 2015, David Mercogliano, an NJ Transit employee, was driving a car owned by NJ Transit when he was struck by another motorist. As a result of the accident, Mr. Mercogliano only suffered minor injuries and therefore his injuries did not overcome the verbal threshold.  He was barred from suing the other driver. However, he was still able to receive workers’ compensation benefits through NJ Transit’s workers’ compensation carrier. They paid out a total of $33,625 as compensation for his medical bills and indemnity benefits.

In an effort to recoup the money that was paid out, the workers’ compensation carrier filed a subrogation action against the driver of the other vehicle. A Superior Court judge granted summary judgment against the workers’ compensation carrier, ruling that the Automobile Insurance Cost Reduction Act barred the subrogation claim. The workers’ compensation carrier appealed this decision and the Appellate Division overturned the lower court’s ruling.

Last week, the three-judge panel held that even though Mr. Mercogliano could not recover benefits from his own automobile insurance or sue the other driver for non-economic damages, the workers’ compensation carrier had the right to file a subrogation claim.

Their rationale was all about legislative intent. The court said that the Workers’ Compensation Act applies, not the Automobile Insurance Cost Reduction Act. And if the legislature wanted to bar these claims they would have included that language in the AICRA, which was drafted 87 years after the WCA, but they didn’t.

What does this ruling mean? Well, if it is determined that a plaintiff’s injuries do not meet the verbal threshold in NJ, that doesn’t mean the insurance carrier is in clear. Yes, the insurance carrier won’t need to pay out non-economic damages to the plaintiff, but if the plaintiff was in the scope of his employment at the time of the accident, the motor vehicle insurance carrier needs to be aware of a potential subrogation claim from his employer’s worker’s compensation carrier.

Thanks to Marc Schauer for his contribution to this post.  Please email Brian Gibbons with any questions.

Attorney-Client Privilege Potentially Under Siege (NY)

The Appellate Division, Fourth Department, recently issued a decision that will have severe ramifications on insurance carriers. In Rickard v. New York Cent. Mut. Fire Ins. Co., a supplementary UIM claim, the injured party served a notice to produce for New York Central Mutual’s entire claim file, including the portions of the file that were generated after the action was filed. New York Central Mutual, claiming that the material from after the action was filed is protected, moved for a protective order, or in the alternative, for an in-camera review of the materials. The trial court denied New York Central Mutual’s motion and granted Rickard’s cross-motion to compel the entire claim file. As a result of the trial court’s decision, New York Central Mutual appealed to the Appellate Division, Fourth Department.

The Fourth Department discussed how New York Central Mutual’s objection in response to Plaintiff’s notice to produce was overly broad, in that NYMC should have identified which specific document requests were “palpably improper” instead of asserting that all materials in the claim file generated after the commencement of this action were protected. In the end, the court held that New York Central Mutual failed to meet its burden to secure the protection they requested because of the breadth of the objection. The court said, deciding what parts of a claim file are protected is a fact-specific determination. They added that this will most likely result in an in-camera review.

This case goes against the prior holding of Lalka v. ACA Ins. Co., a 2015 Fourth Department case, where the court held that all documents in the claim file created after an action has commenced are protected from disclosure.

The concern going forward is that the courts will continue to chip away at the attorney-client privilege between insurance carriers and their attorneys. For now, when objecting to demands by citing attorney-client privilege, insurers and their attorneys would be well advised to note specific bases for their objections, rather than issue blunderbuss objections to all such demands.   Thanks to Marc Schauer for his contribution to this post.  Please email Brian Gibbons with any questions.

WCM Wins Rare Defense Verdict in Hit in the Rear Accident Trial

After a three day trial in Supreme Court, New York County, Wade Clark Mulcahy’s Michael Bono and Dana Purcaro obtain a rare defense verdict on liability in a hit in the rear accident case in Smyth v. Murphy, Index number 157795/2013.

Plaintiff testified to being involved in at least ten on the job accidents spanning over two decades. In each accident, plaintiff injured his cervical and lumbar spine and received medical treatment for those injuries, often filing related lawsuits.

Defendant Murphy testified that on the date of the accident, she tapped Smyth’s sanitation vehicle in the rear while he was stopped at a yellow light on the West Side highway during light snowfall. There was one scratch on Mrs. Murphy’s vehicle and no evidence of any damage to plaintiff’s vehicle. Despite the light impact, plaintiff called an ambulance and was taken to the hospital for treatment of his long standing cervical and lumbar spine injuries.  Sometime later, plaintiff underwent cervical and lumbar surgeries by Dr. Lattuga.

During the trial, the defense raised a number of credibility issues, including the apparent failure of plaintiff to inform his physicians about the number of prior accidents he had been involved in, including multiple accidents close in time to the 2013 accident at issue.  In addition, the defense presented proof that a prior MRI scan was the same as a scan taken shortly after this accident.  After brief deliberations, the jury returned a  verdict in favor of the defendants.  Please write to Mike Bono if you have any questions or wish to discuss this case further.

Supplemental Bill of Particulars Not an Unusual or Unanticipated Circumstance (NY)

In Drapper v Horan, 2018 WL 4623041, 2016 N.Y. Slip Op. 06330 (1st Dep’t September 27, 2018), the First Department affirmed a lower Court’s denial of a motion to vacate a note of issue and compel a medical examination of an injured plaintiff despite the service of a supplemental bill of particulars for new treatment relative to a traumatic brain injury.

Plaintiff in this matter stated that he suffered injuries, including a traumatic brain injury, when the car he was driving was rear-ended by the defendants.  Following plaintiff’s disclosures that he was suffering headaches and that an MRI of his head revealed traumatic injury, plaintiff filed a note of issue.  Defendants, thereafter failed to notice a physical examination, and then filed an untimely motion to vacate, which was denied.

Prior to trial, plaintiff filed a supplemental bill of particular that stated plaintiff received additional medical treatment for his traumatic brain injury.  Thereafter, defendants renewed their motion to vacate and compel plaintiff to appear for a medical examination.

The defendants failed to offer an excuse why they originally failed to notice a medical examination before the note of issue was filed, and also failed to demonstrate how the additional treatment was an “unusual or unanticipated circumstance” to warrant vacatur and a medical examination. As such, the 1st Department affirmed the lower court’s denial of a motion to vacate a note of issue and compel a medical examination of an injured plaintiff.

Although this case leaves open the possibility of further discovery after a supplemental bill of particulars is made prior to trial, this case is also an example of why experienced defense counsel do not rely on curing their missed deadlines based on later filings, but make sure to adhere to discovery and motion deadlines.  Both, failing to timely notice a medical examination and timely file a motion to vacate a note of issue can be detrimental to defending the case and difficult, if not impossible, to cure prior to trial.

Thanks to Jonathan J. Pincus for his contribution to this post.