The following provides a briefoverview of cases from 18 jurisdictions affecting important areasof insurance claim handling for 2010. In order to locate thesecases, we performed searches online through Westlaw. Searches were conducted to include all 50 states forthe year. Search topics included statute of limitations, damages,and coverage. Our case selection criteria hinged on two factors:where the case holding highlighted a change in the precedent orlaw; the second where the case holding reinforced a currentprecedent or law.

Medicaid Lien Recovery

• Florida – Scharba v. Evrett, 2010 WL1380121 (March 31). Because the Medicaid lien does not exceed 50percent of the amount recovered in the settlement, the FloridaAgency for Health Care Administration is entitled to recover thefull amount of the lien.

Expert Testimony

• Delaware – Hudson v. Old Guard Ins.Co., 3 A. 3d 246 (September 1). Reaffirms that there is alimit to the knowledge about which an expert can testify. An expertcannot testify about a subject that falls within the purview of alayperson's knowledge.
• Connecticut – Utica Mut. Ins. Co. v.Precision Mechanical Services, Inc., 998 A. 2d 1228 (July 13).Also reaffirms that there is a limit to the knowledge about whichan expert can testify. An expert cannot testify about a subjectwhen a jury would have common knowledge.

Punitive Damages

• North Dakota – McElgunn v. CUNA Mut. Ins.Society, 700 F. Supp. 2d. 1141 (March 22). Holding $6 millionin a punitive damages award against the insurer for breach ofcontract and bad faith, which was greater than compensatory damagesaward by ratio of 30:1 exceeded due process limits and was reducedto ration of 8:1, or $1.6 million.
• Ohio – Neal-Pettit v. Lahman, et al,928 N.E.2d 421 (May 4). Public policy prevents insurance contractsfrom insuring against claims for punitive damages based upon aninsured's malicious conduct. However, attorney fees awarded as aresult of punitive damages in automobile negligence action couldfall under the general coverage of defendant's insurance policy for“damages [that] an insured person is legally obligated to pay”because of “bodily injury.”
• West Virginia – Camden-Clark MemorialHospital Corp. v. St. Paul Fire and Marine Insurance Co.,(June 7). The federal court applied two principles certified by thestate upreme court in 2009, which were:

1. Where insurer has no duty to defend and the insured hascontrolled the defense, the insured has the burden of proof toestablish proper allocation of the jury verdict between covered andnot covered; and
2. Where the insurance policy does not exclude punitive damagesand there is no duty to defend, an insured who has controlled thedefense in a case resulting in a punitive damage award and whoseeks allocation of the award has the burden of proving that theclaims on which the punitive damage award is based is covered bythe terms of the policy.

• District of Columbia – Nkpado v. StandardFire Insurance Co., 697 F.Supp. 94 (March 24). Insured whoengaged in negotiations with insurer past the one-year contractualdeadline for filing suit on the policy is time-barred. Punitivedamages can only be awarded where the alleged breach merges withand assumes the character of a willful tort.

Uninsured Motorist – Phantom Vehicle

• Wisconsin - Zarder v. Humana Ins. Co.782 N.W. 2d. 682 (May 14). Holding that where a vehicle that struckinsured minor bicycle rider and left the scene without the driverproviding identifying information was a hit-and-run vehicle underterms of policy and thus policy provided coverage.

Statute of Limitations

• Oregon - Snyder v. Espino-Brown, 230P.3d 122 (April 28). Insurer for defendant made advance payment forproperty damage to plaintiff's husband, a joint owner of thevehicle, without giving notice of the date upon which the statuteof limitations would run as required by statute. Therefore, thestatute was tolled and plaintiff's case was not time-barred.

This case can provide guidance for 18 other states, all of whomhave similar requirements in their Unfair Claims SettlementPractices Acts and/or regulations. This case demonstrates theeffect of the failure to advise an unrepresented claimant of thedeadline imposed by the statute of limitations.

• Nebraska - Perez v. Stein, 777 N.W.2d545 (January 15). The personal representative's sole task in awrongful death action is to distribute any recovery to thebeneficiaries. Therefore, the statute of limitations on a legalmalpractice action by the children is tolled by their minority eventhough mother/personal representative's malpractice action for herdamages is time-barred.

Commercial General Liability Coverage

• Indiana – Sheehan Construction Co., Inc.v. Continental Cas. Co., 2010 WL 3823107 (September 30).Contractor's commercial general liability (CGL) policies couldprovide coverage for subcontractors' faulty workmanship. The contractor would then be liable forcosts to repair water damage.

Unfair Claim Settlement Practices

• Kentucky – Shaheen v. Progressive CasualtyInsurance Co., 2010 WL 561601 (February 10). The KentuckyUniform Claims Settlement Practices Act and Kentucky appellateopinions require an insurance company to deal in good faith with aclaimant, whether the claimant is an insured or a third party.While the insurer is obligated to obtain a full release of itsinsured, Kentucky does not believe that an insurer cannot logicallyowe a duty of good faith and fair dealing to the insured and afiduciary duty to an adversarial third party in the same matter.Kentucky law does not state that the insurer's duty to its insuredmust be favored over its duties to the claimant.

Bad Faith

• Idaho – Weinstein v. Prudential Property& Casualty Insurance Co., 233 P.3d 1221 (July 1). Theinsured suing the carrier on an uninsured motorist claim does nothave to present direct evidence that an officer or directorparticipated in or ratified the refusal of a claim handler to paymedical expenses before punitive damages can be awarded.
• Washington – Coleman v. American CommerceInsurance Co., 2010 WL 3720203 (September 17). The court ingranting insurer's motion for summary judgment confirms that in afirst-party context, there is no rebuttable presumption of harm.The insured must prove actual harm, and its damages are limited tothe amounts it incurred as a result of the bad faith, as well as general tort damages.

UM/UIM Stacking

• Nevada – Farmers Insurance Exchange v.Lawless, 680 F.Supp.2d 1238 (January 7). Anti-stackingprovisions related to underinsured motorist (UIM) coverage in threeautomobile insurance policies satisfied requirements of Nevadastatute governing insurer's ability to limit stacking of UIMcoverages, and thus insurer had obligation to provide UIM coverageonly under policy applicable to insured's vehicle that he wasdriving at time of accident, but no obligation to provideadditional UIM coverage under policies related to insured's othertwo vehicles; provision was clear and prominent in policies andinsured was charged separate UIM premiums under each policy, sinceeach policy covered a separate and unique risk.
• South Carolina – Nakatsu v. EncompassIndemnity Co., 2010 WL 3853067 (September 29). Plaintiff inUIM case who was driving her own vehicle and who was insured by onecarrier became a Class I insured under three policies issued by adifferent carrier to her sister with whom she resided. As such, shewas able to stack the UIM coverages of those policies.
• Missouri – Lynch v. Shelter MutualInsurance Co., 2010 WL 3922776 (October 7). Since there is nostatutory requirement in Missouri that drivers purchaseunderinsured motorist coverage, the limits of coverage and anystacking or anti-stacking provisions are determined by the contractentered into by the insured and the insurer. Therefore, as long asthe policy language disallowing stacking is unambiguous, theanti-stacking provisions will be enforced according to theirterms.

Auto – Regular Use Exclusion

• Pennsylvania – Costello v. GEICO,2010 WL 1254273 (March 25). Regular use exclusions that limitUM/UIM coverage on certain vehicles have been held valid and do notviolate public policy interests. 'The general purpose is to givecoverage to the insured while engaged in the only infrequent ormerely casual use of an automobile other than the one described inthe policy, but not to cover him with respect to his use of anotherautomobile that he frequently uses or has the opportunity to doso.

The regular use of other automobiles will bring the exclusionaryclause into operation. If the insured's employer assigns him onespecific automobile for regular use or a number of automobiles, anyone of which may be assigned for a particular trip, the result isthe same. An automobile is furnished the insured for regular use ineither event. The test for regular use does not consider how oftena vehicle, or fleet of vehicles, was actually used, but ratherconsiders whether this vehicle or group of vehicles was regularlyavailable for use on a usual, normal or customary basis.

Tim Lynch is the founding attorney of Lynch &Associates, P.C., a firm that focuses its practice on insurancedefense. He may be reached at 907-276-3222;[email protected], www.northlaw.com.

Stacey Stone is an associate attorney with Lynch & Associates,P.C. She may be reached at 907-276-3222; [email protected];www.northlaw.com.