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.

Opposition to MSJ Requires Rebuttal Evidence, not just Rebuttal Allegations (PA)

American Southern Insurance Company, Inc. was victorious recently when its summary judgment decision regarding a contractual indemnification dispute was upheld on appeal. In American Southern Ins. Co. v. James A. Halbert , et al., PA Superior Court, No. 504 MDA 2018, the Pennsyvlania Superior Court upheld the trial court’s granting of summary judgment in favor of American Southern.

The underlying case involved a performance surety bond for public improvement in North Cornwall Township, PA.  Back in 2006, American Southern had entered into an indemnity agreement with the Halbert family (on behalf of the Oaklea Corporation) wherein the Halberts agreed to indemnify American Southern from any claim or liability arising from the issuance of a performance bond.  Subsequently, American Southern issued a performance bond in favor of North Cornwall Township to secure completion of improvements for local development by the Oaklea Corporation.  In July 2016, the Township informed American Southern that Oaklea refused to respond or perform certain improvements that were demanded by the Township.  The Township demanded compensation from American Southern, who in turn, demanded indemnification from the Halberts.  The Halberts responded that the improvements demanded by the Township were unnecessary.

In October 2017, American Southern moved for summary judgment asserting that there were no genuine issues of material fact in dispute and that American Southern was entitled to indemnification against the Halberts, as a matter of law.  In response, the Halberts cited their Answer and defense that the improvements were unnecessary and also argued that the indemnification agreement was an unconscionable contract of adhesion.  The trial court concluded that Halbert failed to show that the improvements were unnecessary and that the agreement was not a contract of adhesion. The Halberts appealed.

On appeal, the Superior Court explained that the Pennsylvania rules governing summary judgment explicitly prohibit a non-moving party from merely relying on the allegations or denials of the pleadings, thus rendering the Halberts’ position deficient.  The Halberts conceded that an operative provision of the indemnification agreement granted American Southern the exclusive right to determine whether claims such as the ones brought by the Township should be settled or defended; thereby nullifying Halberts’ repeated defense that the demanded improvements were not necessary.  Furthermore, while the court entertained the Halberts affirmative defense that the indemnification agreement was a contract of adhesion, it concluded that the Halberts failed to cite to any evidence detailing the circumstances that would support their assertion that the contract was, in fact, a contract of adhesion.

Ultimately, the Superior Court denied the Halberts appeal and affirmed the granting of summary judgment in favor of American Southern, emphasizing the Halberts’ failure to cite evidence of record that would support their claims.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

Natural Accumulation is Key to Application of “Hills and Ridges Doctrine” (PA)

On January 24, 2019, the Superior Court of Pennsylvania affirmed an entry of summary judgment in favor of Turkey Hill Minit Markets, the Kroger Co., and D670 Kroger C Stres/Turkey Hill/Minit Mr’s (Collectively “Appellees”) in Brock v. Turkey Hill Minit Markets.  The case stems from a slip and fall, when plaintiff Rebecca Brock was walking toward the entrance of the Store when slipped and fell on ice in the parking lot.  However, whether the slipping hazard was man-made or made naturally became a point of contention.

The “Hills and Ridges Doctrine” precludes liability “where the accident occurred at a time when general slippery conditions prevailed in the community as a result of recent precipitation.”  However, the hills and ridges doctrine can only be applied in cases where the snow and ice complained of are the result of an entirely natural accumulation following a snowfall.  Therefore, on appeal, Appellant attempted to argue that the accumulation of ice in the parking lot was due to employees of the Appellees plowing and salting the parking lot.

The defendant-appellees produced an expert report, which cited that the snow/ice was the result of natural accumulation — and this report was unopposed by the plaintiff-appellant.  As such, the Court affirmed the lower court’s ruling.  Still, the underlying argument in this case is a reminder that a court reading the phrase “natural accumulation” very narrowly could pose problems for defense counsel. Thanks to Garrett Gittler for his contribution to this post.  Please email Brian Gibbons with any questions.

Plaintiff’s Suit against Golf Course Not Up to Par (NJ)

Plaintiff, a New Jersey resident, visited Greenbrier golf course in West Virginia after seeing advertisements during golf events broadcast on national network television  and in nationally circulated golf magazines. While staying at Greenbrier, plaintiff slipped and fell on the golf course, suffering significant injuries. He treated for his injuries in New Jersey and New York City.

Plaintiff sued Greenbrier in New Jersey, and Greenbrier subsequently moved to dismiss based on lack of jurisdiction. During discovery, Greenbrier asserted it had no direct advertisements on any New Jersey television stations or in any New Jersey magazines. Its advertisements were limited to nationally televised media sources, national golf magazines, and social media pages. Greenbrier’s only direct contact with New Jersey was through letters and e-mails sent to New Jersey residents who had previously stayed at Greenbrier.

Following discovery exchange, Greenbrier renewed its motion to dismiss for lack of jurisdiction in New Jersey. The trial court, upon reviewing Greenbrier’s position, granted the motion and dismissed plaintiff’s claim because Greenbrier did not have any direct contact with New Jersey, and there was no evidence of the minimum contacts required from Greenbrier to permit New Jersey Courts to exercise jurisdiction over the golf course located in West Virginia.

Plaintiff filed a motion for reconsideration, arguing general jurisdiction, rather than specific jurisdiction, permitted their claims against Greenbrier in New Jersey courts. Even with the change in plaintiff’s legal position, Delgatto v. Greenbrier that general jurisdiction required systematic and continuous activity in New Jersey, and plaintiff failed to demonstrate such activity.  Thanks to Steve Kim for his contribution to this post.  Please email Brian Gibbons with any questions.

A Potential (and Rare) Loss for a New England Patriot

New England Patriots defensive end, Deatrich Wise, Jr., filed suit against Lloyd’s of London for breach of his policy, which was designed to protect him from any loss of value in his capacity as an up-and-coming professional football player. Wise is claiming he is owed $600,000 after missing time due to injuries sustained on the field.

Lloyd’s contends that Wise Jr. never missed any full games, therefore, he is not eligible for coverage.  The basis for Wise’s claim is that due to the games he missed in his final season of college, as a result of hand and shoulder injuries, he signed a $3 million dollar contract with Patriots — substantially less then he would have made if he had not been injured in his final season in college.

Wise claims Lloyd’s is obligated to make up the difference between the $3 million and the $3.6 million trigger line in the policy.

Lloyd’s moved for summary judgment claiming that Wise misinterpreted the policy to account for how many plays he missed in his final college season. Lloyd’s claims that the amount of plays Wise Jr. missed is of no moment as the policy is only triggered by missed games and Wise Jr. did not miss a single game in his final season in college.  Wise Jr’s attorney stated that Wise missed 312 defensive plays during the season, a sum he asserted amounts to “5.2 games.”

Lloyd’s policy requires that the insured “be unable to participate for at least 28 days and in three regular and/or postseason games” to be eligible for coverage. Therefore, Lloyd’s claims that Wise Jr. did not satisfy the requirements under the policy, therefore Lloyd’s did not breach the contract.

The suit alleges that Wise Jr’s pre-season accolades projected him to be a first round draft pick and due to the injuries he dropped out of the first round to fourth round and lost a significant amount of money.  We suspect Wise Jr. has an uphill battle to survive a motion to dismiss.   Perhaps he can take solace in his championship ring for SB LIII.   Thanks to Jon Avolio for his contribution to this post.  Please email Brian Gibbons with any questions.

 

Plaintiff’s Death, before his Deposition, also Fatal to His Estate’s Cause of Action (NY)

The death of a plaintiff can be devastating to that decedent’s cause of action — especially where the decedent dies before being deposed, as in Thompson-Shepard v. Lido Hall Condominiums.  This 2019 First Department decision granted defendant’s motion for summary judgment because there was no way for the cause of plaintiff’s un-witnessed accident to be surmised.

Decedent was allegedly injured when he fell on the stairs at defendant’s premises.  His pre-deposition death, unrelated to the unwitnessed fall, precluded plaintiff’s estate from asserting a conclusive the cause of the accident.

Plaintiff attempted to remedy this defect by submitting an expert affidavit claiming that the irregular and excessive riser heights coupled with plaintiff’s testimony that she saw decedent’s leg lodged in a riser showed that the defective riser heights caused decedent’s accident.  The court found that the expert failed to raise an issue of fact as there was no witness to link the claimed defect to decedent’s accident as there was no sworn statement or testimony by decedent claiming he fell due to riser height.

It is crucial to remember in trip and fall cases that a plaintiff’s cause of action hinges on the cause of the accident.  When plaintiffs are unable to conclusively determine what caused them to fall, there is no way for defendants to be on notice.  As a practice point, locking in inconclusive testimony as to proximate cause is fatal to a plaintiff’s negligence action.   Thanks to Mehreen Hayat for her contribution to this post.  Please email Brian Gibbons with any questions.

Forman Decision Cited by First Department in Allowing Defendant’s Expert Access to Plaintiff’s Social Media (NY)

Last year, Wade Clark Mulcahy won a significant victory, both for our client and for the defense bar in general, in Forman v. Henkin In a unanimous reversal of the underlying First Department decision, the Court of Appeals held that a plaintiff’s social media posts are discoverable, so long as the defendant demonstrates some need for the materials therein.  The Court of Appeals held that social media relevancy trumps privacy interests, which thereby created new law in New York, and a new means for defendants to gauge plaintiffs’ damages claims.

Since the Forman decision in February 2018, we have been keeping tabs on how the various appellate divisions have been applying the new law.   Last week, the First Department not only followed Forman, but actually broadened a defendant’s rights, in Vasquez-Santos v Mathew.  The plaintiff in that case claimed an injury, and defense counsel became aware of photos of plaintiff playing basketball, which were posted on social media after the accident.  Plaintiff testified that even though the photos were posted after the accident, they had actually been taken before the accident, and therefore, were not relevant to damages.

Defense counsel wasn’t buying plaintiff’s account, and although counsel’s motion to compel was denied at the trial level, the First Department wasn’t buying it either.  The First. Department unanimously reversed the trial court, citing cited Forman in its decision.   The Court took the additional step of granting defendant access, through a third-party data-mining company, to plaintiff’s devices, email accounts, and social media accounts, to assist in defendant’s damages evaluation.

The fact that Forman is being followed and even broadened — particularly by the First Department — is welcome news for the defense bar, and illustrates the significance of WCM’s victory at the Court of Appeals last year.  Please call Mike Bono or Brian Gibbons with any questions about the Forman decision, and its impact on personal injury litigation.

Insurer Burned by Duty to Defend Following Gasoline Fire (PA)

The Pennsylvania Superior Court recently reversed a trial court’s granting of summary judgment in favor of an insurer in a declaratory judgment action and ruled that coverage was owed to an insured following a fire at a vehicle dismantling facility in Harrisburg.  In Tuscarora Wayne Ins. Co. v. Hebron, Inc., 2018 PA Super 270; No. 1591 MDA 2017, the court ruled in favor of the insured, Hebron, following Hebron’s appeal of summary judgment.

The underlying declaratory judgment action involved Hebron, a named insured on a commercial liability policy issued by TWIC.  Hebron dismantles and strips vehicles of their parts at a facility in Harrisburg, PA.  In May 2014, a fire broke out at Hebron’s facility when an employee was attempting to add fuel to a company truck that hauled broken down vehicles to Hebron’s plant, causing damage to Hebron’s facility.  The TWIC policy included an endorsement that excluded coverage for designated ongoing operations, including “vehicle dismantling.”  “Vehicle dismantling” was not defined in the policy.  TWIC filed a DJ action seeking a determination that coverage.  TWIC moved for summary judgment based on the exclusion, which Hebron opposed and also filed its own motion for summary judgment contenting that the plain language of the exclusion did not relieve TWIC of its coverage obligation.  The trial court granted TWIC’s motion for summary judgment and declared that defense and indemnity were not owed based on the “vehicle dismantling” exclusion because the refueling of a truck used to transport vehicles to Hebron’s facility to be dismantled was “incidental to the vehicle dismantling business.”  Hebron appealed and argued that the trial court committed errors of law in awarding summary judgment in favor of TWIC.

In its opinion regarding Hebron’s appeal, the court noted that, in Pennsylvania, courts will give effect to the plain language of a contract if the policy’s language is clear and unambiguous.  If, however, the language of the policy is ambiguous, the provisions must be construed in favor of the insured against the insurer and when an insurer bases a denial of coverage on a policy exclusion, the insurer bears the burden of establishing the exclusion’s application.  The Superior Court, viewing the facts in the light most favorable to Hebron (the non-moving party), also opined that the fire was not caused by the vehicle dismantling process itself, but rather it arose as a result of a faulty extension cord connected to a pump that sparked while Hebron’s own vehicle was being refueled.  Hebron was not actually dismantling a vehicle at the time of the fire and the dismantling process had already ended for the day, therefore the refueling of the truck was not “incidental to the vehicle dismantling business.”

Thus, the Superior Court concluded that the trial court had committed an error of law and reversed the granting of TWIC’s motion for summary judgment.  The Superior Court went even further and also concluded that, because fire did not occur in the course of the vehicle dismantling process, the exclusion did not apply, and Hebron was entitled to defense and indemnity under the policy.  The court then granted Hebron’s motion for summary judgment declaring that TWIC was required to defend and indemnify Hebron under the policy.

This case illustrates the importance of clearly and unambiguously defining operative terms in commercial liability policies in order to avoid potentially adverse interpretations of exclusion language.  Moreover, we suspect Hebron retained a solid cause and origin expert to make the cause of the fire clear to the Court, and prompt coverage.   Excellent foresight.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

Insurer Attempts to “Sack” Coverage of Trademark Suit based on “Financial Quarterback” Term (PA)

Erie Insurance Exchange filed a complaint Monday alleging that it has no duty to defend or indemnify a financial planning company facing claims in federal court for willfully infringing a rival’s marketing slogan trademarks. According to Erie, their policy explicitly precludes coverage for claims of infringement of copyright, patent, trademark or trade secret. Jalinski Advisory Group, Inc. has been marketing itself as “the financial quarterback” since 2009, and it formally registered “financial quarterback” as a trademark in April 2010.

However, Franklin Retirement, Erie’s insured, started to brand itself as “your financial quarterback,” which Jalinski alleges is indirect violation of the trademarks. Erie agreed to represent Franklin under a reservation of its rights; however, Erie ultimately denied coverage.  Now, Erie seeks a Pennsylvania state judge to free it from providing coverage.

With regard to trademark litigation, it’s all about the litigation fees, since defense of trademark infringement is very fact-specific, time-consuming, and expensive.  (Dennis Wade’s “This and That” from January 4, 2019 also focused on trademark litigation, and the ensuing expense.)

Does use of the term “Your Financial Quarterback” constitute copyright infringement?   The only certainty is that the answer to the question will be expensive.   Thanks to Melisa Buchowiec for her contribution to this post.  Please email Brian Gibbons with any questions.

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.