UNITED STATE SUPREME COURT

ERISA - ADMINISTTRATOR - CONFLICT OF INTEREST - DISCRETIONARY BENEFIT DETERMINATIONS

READ THE CASE: Metropolitan Life Ins. Co. v. Glenn (2008), 544 U.S. ____.

On June 19, 2008, the United State Supreme Court issued its opinion AFFIRMING the 6th Circuit decision rendered in Metro. Life Ins. Co. v. Glenn.

HOLDING OF THE COURT:

1. Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, sets out
four principles as to the appropriate standard of judicial review under
§1132(a)(1)(B):
(1) A court should be “guided by principles of trust
law,” analogizing a plan administrator to a trustee and considering a
benefit determination a fiduciary act, id., at 111–113;
(2) trust law principles require de novo review unless a benefits plan provides otherwise, id., at 115;
(3) where the plan so provides, by granting “the administrator or fiduciary discretionary authority to determine eligibility,” “a deferential standard of review [is] appropriate,” id., at 111,115; and
(4) if the administrator or fiduciary having discretion “is operating under a conflict of interest, that conflict must be weighed as a ‘facto[r] in determining whether there is an abuse of discretion,’ ” id.,
at 115. Pp. 3–5.

2. A plan administrator’s dual role of both evaluating and paying
benefits claims creates the kind of conflict of interest referred to in
Firestone. That conclusion is clear where it is the employer itself that
both funds the plan and evaluates the claim, but a conflict also exists
where, as here, the plan administrator is an insurance company. For
one thing, the employer’s own conflict may extend to its selection of
an insurance company to administer its plan. For another, ERISA
imposes higher-than-marketplace quality standards on insurers, requiring
a plan administrator to “discharge [its] duties” in respect to
discretionary claims processing “solely in the interests of the [plan’s]
participants and beneficiaries,” 29 U. S. C. §1104(a)(1); underscoring
the particular importance of accurate claims processing by insisting
that administrators “provide a ‘full and fair review’ of claim denials,”
Firestone, supra, at 113; and supplementing marketplace and regulatory
controls with judicial review of individual claim denials, see
§1132(a)(1)(B). Finally, a legal rule that treats insurers and employers
alike in respect to the existence of a conflict can nonetheless take
account of different circumstances by treating the circumstances as
diminishing the conflict’s significance or severity in individual cases.

3. The significance of the conflict of interest factor will depend upon
the circumstances of the particular case. Firestone’s “weighed as a
‘factor’ ” language, 489 U. S., at 115, does not imply a change in the
standard of review, say, from deferential to de novo. Nor should this
Court overturn Firestone by adopting a rule that could bring about
near universal de novo review of most ERISA plan claims denials.
And it is not necessary or desirable for courts to create special burden-
of-proof rules, or other special procedural or evidentiary rules, focused
narrowly upon the evaluator/payor conflict. Firestone means
what the word “factor” implies, namely, that judges reviewing a benefit
denial’s lawfulness may take account of several different considerations,
conflict of interest being one. This kind of review is no
stranger to the judicial system. Both trust law and administrative
law ask judges to determine lawfulness by taking account of several
different, often case-specific, factors, reaching a result by weighing all
together. Any one factor will act as a tiebreaker when the others are closely balanced. Here, the Sixth Circuit gave the conflict some
weight, but focused more heavily on other factors: that MetLife had
encouraged Glenn to argue to the Social Security Administration that
she could do no work, received the bulk of the benefits of her success
in doing so (being entitled to receive an offset from her retroactive
Social Security award), and then ignored the agency’s finding in concluding
that she could do sedentary work; and that MetLife had emphasized
one medical report favoring denial of benefits, had deemphasized
other reports suggesting a contrary conclusion, and had
failed to provide its independent vocational and medical experts with
all of the relevant evidence. These serious concerns, taken together
with some degree of conflicting interests on MetLife’s part, led the
court to set aside MetLife’s discretionary decision. There is nothing
improper in the way this review was conducted. Finally, the Firestone
standard’s elucidation does not consist of detailed instructions,
because there “are no talismanic words that can avoid the process of
judgment.” Universal Camera Corp. v. NLRB, 340 U. S. 474, 489.
Pp. 8–13. 461 F. 3d 660.

Affirmed.

(Bold emphasis added by blog administrator)

CHANGES IN THE LAW REGARDING: Stranger-Originated Life Insurance (STOLI) Transactions In The Ohio Life Insurance Market

On June 11, 2008, Governor Strickland signed HB 404,which protects Ohio seniors by limiting Stranger-Originated Life Insurance (STOLI) transactions in the Ohio life insurance market. The new law takes effect on September 11, 2008.

WHAT IS STOLI?

"STOLI involves investment firms inducing certain wealthy
seniors to obtain life insurance. These come-ons often include
promises of “free life insurance” and other incentives—
sometimes including payments in the six figures. The
investment firms fully finance the transaction and continue
paying premiums throughout the life of the contract. Two
years into the contract, the investment firms—speculators—
purchase the policy and stand to profit from the death
benefits from policies on lives of strangers."
Stoli Alert, March 2007.

The important implications of this new law are summarized as follows:

ACT SUMMARY

· Requires viatical settlement providers, as a condition of licensure, to provide information concerning their use of life expectancy information and to meet financial responsibility requirements for licensure.

· Requires a business that is licensed as a viatical settlement broker to maintain at least one individual who individually is licensed as a viatical settlement broker.

· Requires individuals who are licensed as viatical settlement brokers to complete continuing education requirements.

· Exempts certain attorneys, certified public accountants, financial planners, and insurance agents from viatical settlement provider or broker licensure requirements.

· Allows a viatical settlement provider or viatical settlement broker to assign, transfer, or pledge a viaticated policy to a viatical settlement purchaser or a qualified institutional buyer.

· Allows the Superintendent of Insurance to refuse to issue, suspend, revoke, or refuse to renew a license because the licensee was the subject of administrative action by the Department of Commerce, Division of Securities.

· Revises the definition of "viatical settlement contract" and identifies ten specific situations or arrangements that are not viatical settlement contracts.

· Requires viatical settlement providers or viatical settlement brokers to disclose additional information to a viator.

· Requires the Superintendent to disapprove a contract or disclosure form if it does not meet the specified requirements for disclosures.

· Requires all premium finance companies to disclose premium finance agreements relating to life insurance policies to the insurer.

· Under specified situations, prohibits a viator from entering into a viatical settlement contract within five years, rather than two years, of the date of issuance of the insurance policy.

· Specifies that a viator is prohibited from entering into a viatical settlement contract prior to the application for or issuance of the policy and from promoting a policy for the purpose of selling the policy.

· Redefines the possible situations (exceptions) under which a viator could enter into a viatical settlement contract within the required waiting period after the issuance of the insurance policy.

· Allows the Superintendent to develop or approve a form requesting verification of coverage of a viator by an insurer and requires insurers to accept an original or facsimile or electronic copy of that form.

· Allows a viatical settlement broker, in addition to a viatical settlement provider, to request verification of coverage from an insurer and allows an insurer to indicate in its response to such a request that it intends to investigate possible fraud.

· Redefines the escrow agent's role in the process of viaticating a policy.

· Prohibits, in advertisements, the use of certain words indicating that a life insurance policy is "free" unless true.

· Adds additional fraudulent viatical settlement acts including actions regarding stranger-originated life insurance (STOLI) and defines STOLI.

· Requires life insurance companies to adopt procedures to detect and prevent stranger-originated life insurance.

· Specifies that a prevailing party in a civil action is not entitled to attorney's fees if the prevailing party provided information of the party's own fraudulent viatical settlement acts.

· Requires antifraud initiatives to include a description of the procedures used to review the accuracy of life expectancies.

· Relieves an insurer that issued a policy being viaticated from liability for any act or omission of a viatical settlement broker or viatical settlement provider unless the insurer receives compensation for the placement of a viatical settlement contract.

· Requires the Superintendent to consider certain factors in determining the nature, scope, and frequency of examinations of licensees.

· Removes the authority of the Superintendent to conduct a market examination of an insurer.

· Requires the Superintendent to cooperate with an official from another state for the examination of a foreign or alien licensee as far as is practical.

· Revises the requirements for annual reports by viatical settlement providers.

· Requires the Superintendent to keep confidential and not a matter of public record all individual transaction data regarding the business of viatical settlements and data that could compromise the privacy of personal, financial, and health information of the viator or insured.

· Allows persons with knowledge of an insured's identity to disclose that identity if the disclosure is required to purchase financial guarantee insurance.

· Makes certain other conforming changes.

READ THE ACT: HB 404

READ THE OHIO DEPARTMENT OF INSURANCE PRESS RELEASE: Law Amendments Contain Strong Consumer Protection Elements

REVIEW STOLI LEGISLATION AND NEWS THROUGHOUT THE COUNTRY: National Association of Insurance and Financial Advisors - Stoli Alert

SUPREME COURT OF THE UNITED STATES OF AMERICA Reviews 6th Circuit Decision

ERISA - ADMINISTRATOR - CONFLICT OF INTEREST - DISCRETIONARY BENEFIT DETERMINATIONS

*NOTE:
SINCE THIS POST, THE SUPREME COURT HAS ISSUED ITS OPINION AFFIRMING THE 6TH CIRCUIT DECISION.
SEE UPDATED POST OF JULY 15, 2008 AND THE RECENT SUPREME COURT DECISION IN:
Metropolitan Life Ins. Co. v. Glenn, (2008) 554 U.S. ____.


The U.S. Supreme Court heard oral arguments on Wednesday, April 23rd, 2008 in the appeal of the Ohio case from the 6th Circuit: Metropolitan Life Ins. Co. v. Glenn, (6th Cir., Ohio 2006), Case No. 05-3918

The two questions to be addressed by the Supreme Court are stated as follows:

"If an administrator that both determines and pays claims under an ERISA plan is deemed to be operating under a conflict of interest, how should that conflict be taken into account on judicial review of a discretionary benefit determination?"

"Whether the Sixth Circuit erred in holding, in conflict with two other Circuits, that the fact that a claim administrator of an ERISA plan also funds the plan benefits, without more, constitutes a "conflict of interest" which must be weighed in a judicial review of the administrator's benefit determination under Firestone Tire & Rubber v. Bruch, 489 U.S. 101 (1989)?"

THE SIXTH CIRCUIT RULING:

The 6th Circuit ruled that the ERISA plan administrator had a conflict of interest, that when coupled with the other factors taken into account resulted in the determination that the denial of the petitioner's claim rose to a level of "arbitrary and capricious."

The 6th Circuit reviewed the administrator's decision under the highly deferential standard (i.e. arbitrary and capricious). They determined that the plan administrator’s determination to deny benefits to Glenn could not be sustained.

[The] obligation under ERISA to review the administrative record in order to determine whether the plan administrator acted arbitrarily and capriciously in making ERISA benefits determinations . . . inherently includes some review of the quality and quantity of the medical evidence and the opinions on both sides of the issues. Otherwise, courts would be rendered to nothing more than rubber stamps for any plan administrator’s decision as long as the plan [administrator] was able to find a single piece of evidence – no matter how obscure or untrustworthy – to support a denial of a claim for ERISA benefits.

The Court concluded that MetLife’s decision to deny long-term benefits in this case was not the product of a principled and deliberative reasoning process. MetLife acted under a conflict of interest and also in unacknowledged conflict with the determination of disability by the Social Security Administration. In denying benefits, it offered no explanation for crediting a brief form filled out by Dr. Patel while overlooking his detailed reports. This inappropriately selective consideration of Glenn’s medical record was compounded by the fact that the occupational skills analyst and the independent medical consultant were apparently not provided with full information from Dr. Patel on which to base their conclusions. Moreover, there was no adequate basis for the plan administrator’s decision not to factor in one of the major considerations in Glenn’s pathology, that of the role that stress played in aggravating her condition and, in the language of the MetLife policy, in preventing her return to “gainful work or service for which [she is] reasonably qualified taking into consideration [her] training, education, experience, and past earning.” Taken together, these factors reflect a decision by MetLife that can only be described as arbitrary and capricious.

THE UNITED STATES SUPREME COURT WILL DECIDE:

On April 23rd, the U.S. Supreme Court heard oral arguments, where it appeared as though the Court was first and foremost concerned with what weight was to be given the fact that an administrator (and fiduciary) has a clear conflict of interest. When reviewing an administrator's decision to deny benefits, the conflict of interest of that administrator is a factor to be considered. However, how much weight? and under what circumstances? were the Supreme Court's foundational concerns. For, how could they move on to addressing the specific factors of the case at hand until they knew what weight they were to give the conflict, and under what circumstances that conflict become a relevant factor. Does a conflict merely tip the scales when all other factors supporting the declination of benefits are equal? And, does a conflict always presuppose that the denial was based upon that conflict?

We will continue to follow this important case and supplement once the Opinion of the Court has been rendered.

READ THE UNITED STATES SUPREME COURT ORAL ARGUMENTS HERE.

READ THE 6TH CIRCUIT UNDERLYING DECISION HERE.

READ THE UNITED STATES SUPREME COURT ISSUES TO BE DECIDED HERE.

COURT OF APPEALS - 7th District ( Employment Intentional Tort Statute )

Ohio Employment Intentional Tort Statute - Held Unconstitutional

*Note: See blog archive from 9-25-2007 regarding Barry A.E. Steel, where the Cuyahoga County Trial Court held to the contrary, that statute was constitutional. However, the Court of Appeals in Barry A.E. Steel has reversed that Trial Court decision. The Barry case now also stands for the proposition that the employment intentional tort statute is unconstitutional.

Kaminski v. Metal & Wire Products,(March 18, 2008), Columbiana County App. No. 07-CO-15. READ THE CASE

HOLDING OF THE COURT:

Pursuant to the Ohio Supreme Court’s holdings in Brady … and Johnson … and consistent with Sections 34 and 35, Article II of the Ohio Constitution, we must conclude R.C. 2745.01 is unconstitutional.

Because of its excessive standard of requiring proof that the employer intended to cause injury, “it is clearly not ‘a law that furthers the “*** comfort, health, safety and general welfare of all employee[e]s.”’ Johnson, 85 Ohio St. 3d at 308, quoting Brady, 61 Ohio St.3d at 633, quoting Section 34, Article II of the Ohio Constitution.

Additionally, “because R.C. 2745.01 is an attempt by the General Assembly to govern intentional torts that occur within the employment relationship, R.C. 2745.01 ‘cannot logically withstand constitutional scrutiny, inasmuch as it attempts to regulate an area that is beyond the reach of constitutional empowerment.’” Id., quoting Brady, 61 Ohio St.3d at 634.

POST EDITOR'S COMMENTS:

As anticipated, the issue of the constitutionality of the employment intentional tort statute is far from decided. The above decision holds that Brady prevents the Ohio Legislature from enacting laws in the field of employment intentional torts.

Our reading of Brady is that The Ohio Supreme Court held that the General Assembly may not impose upon the common law EIT as such claims did not occur within the scope of employment. However, recently in Penn Traffic Co. v. AIU, (2003) 99 Ohio St.3d 227, the Ohio Supreme Court held that an EIT does, in fact, arise out of employment and occur during the course of employment. The above decision does not seem to interpret the Brady decision in this manner.

Rather, the Court has held that because of Brady, an employment intentional tort is not within the province of the legislature. It is our understanding that the statute that Brady was dealing with was one enacted within the confines of the workers' compensation statutes. As such, because the intentional tort was deemed to not arise within the employment relationship, the statute was beyond legislation within the context of workers compensation. The current employment intentional tort statute is not enacted within the workers compensation statutes.

See our prior post from October 4, 2007 WILL THE NEW EMPLOYMENT INTENTIONAL TORT STATUTE SURVIVE CONSTITUTUIONAL SCRUTINY, wherein we previously noted the following:

The General Assembly is charged with enacting laws in furtherance of the "comfort, health, safety and general welfare of all employees." In creating a monopolistic workers' compensation system, they have done that and tipped the scales in favor of employees in order to allow compensation. It would appear that the General Assembly also has the authority to enact a statute that deals with tort claims between those same parties (employers/employees)in order to balance those same and competing interests.

It is noted that previously, in Brady, The Ohio Supreme Court held that the General Assembly may not impose upon the common law EIT as such claims did not occur within the scope of employment. However, recently in Penn Traffic Co. v. AIU, (2003) 99 Ohio St.3d 227, the Ohio Supreme Court held that an EIT does, in fact, arise out of employment and occur during the course of employment. If this is true, then Brady may no longer be an obstacle for the Court in upholding R.C. 2745.01. For in Penn Traffic, the Court has acknowledged the General Assembly's right to legislate the EIT as they have those rights within the employment context.

Finally, if the less stringent standards contained in the new statute do not create an "insurmoutable obstacle to victims" of employment intentional torts, then there would appear to be a sufficient basis to find that the new R.C. 2745.01 is, indeed, constitutional.

The decision in Kaminski clearly states that the standard remains too high. Indeed, the 7th District reads the new statute as, in fact, creating an insurmountable burden on employees and creating an illusory cause of action.

The Ohio Supreme Court will likely be faced with this issue in the near future.

OHIO SUPREME COURT AGREES TO HEAR NEW INSURANCE CASE ("Other Owned Vehicle Exclusion")

**NOTE: THE OHIO SUPREME COURT HAS RULED ON THIS CASE. SEE BLOG UPDATE OF JANUARY 3, 2009

OHIO SUPREME COURT - Accepts appeal of case interpreting "Other Owned Vehicle" Exclusion.

2007-1760-Lager v. Miller-Gonzalez

Lucas County
Accepted by Ohio Supreme Court on December 12, 2007
Pfeifer, J., dissents

INSURANCE –
OTHER OWNED VEHICLE EXCLUSION –
“BECAUSE OF BODILY INJURY” VS. “FOR BODILY INJURY”

2007-1760-Lager v. Miller-Gonzalez

Lucas County
Accepted on December 12, 2007
Pfeifer, J., dissents

FACTS ON APPEAL

In 2003, Sara Lager died from injuries suffered while riding as a passenger in her own vehicle. The vehicle was insured by appellant Nationwide Mutual Fire Insurance Company. Her parents were also insured through a separate Nationwide policy. The parents filed a claim for Sara’s wrongful death under their own insurance policy.

The parents' policy purports to pay “compensatory damages…because of bodily injury suffered by you or a relative….” The other owned vehicle exclusion provides: “This coverage does not apply to anyone for bodily injury …While any insured operates or occupies a motor vehicle ….owned by….you or a relative, but not insured…under this policy.” The vehicle was owned by Sara and not insured under her parents’ policy.

The successful argument was the the parents wrongful death claim was derivative and clearly "because" of bodily injury, including death. The "other owned vehicle" exclusion only precluded direct claims "for" bodily injury, which did not include a derivative wrongful death action. Therefore, the claim was covered and not excluded.

The trial court granted summary judgment to the parents. The court of appeals affirmed.

ISSUE ON APPEAL

Appellant’s Position

Use of the language “because of bodily injury” in an insurance policy’s coverage section and the language “for bodily injury” in an exclusion does not create an ambiguity, because there is no rational distinction between two phrases. Claims for wrongful death are clearly claims “for bodily injury,” and thus not covered pursuant to the other owned vehicle exclusion.

Appellees’ Position

The language of the exclusion here does not apply to wrongful death claims. Wrongful death claims are not “for bodily injury,” although they may arise out of bodily injury. Appellees do not seek recovery for their bodily injury, but for the loss of their daughter. The courts should not rewrite insurance contracts.

*We will be sure to follow this case and provide an update once the Ohio Supreme Court renders its decision.

OHIO SUPREME COURT - Agrees to Hear New Insurance Dispute

**NOTE: THE OHIO SUPREME COURT HAS RULED ON THIS MATTER - SEE BLOG UPDATE OF JANUARY 3, 2009

WHEN DOES THE TIME START RUNNING UNDER THE TWO-YEAR NOTICE LIMITATION IN AN INSURANCE POLICY?

THE ISSUE:
Does the two-year limitation period contained in a policy for Uninsured/Underinsured Motorist Coverage start on the day of the accident or does the "Discovery Rule" apply to delay starting the two-year period until after the insured receives notice of the fact that the other driver was uninsured?

The Ohio Supreme Court has agreed to hear an appeal of the case: Angel v. Reed (March 9, 2007), Geauga App. No. 2005-G-2669.

FACTS ON APPEAL:
On June 14, 2001, appellee Theresa Angel was injured while riding in a vehicle driven by Eric Reed. At the time, Mr. Reed indicated that he was insured by Nationwide. On May 16, 2003, appellee filed suit against Mr. Reed. She voluntarily dismissed the suit on March 4, and on May 2, Mr. Reed’s attorney informed appellee’s attorney that Mr. Reed’s policy had been canceled three months before the accident.

On July 30, 2004, appellee made a claim for uninsured/underinsured motorist (“UM/UIM”) coverage. When her claim was denied, she filed this suit against Mr. Reed and appellant Allstate Insurance Company.

The trial court granted summary judgment to Allstate, because appellee’s suit was filed beyond the two-year limitation period contained in the policy: “Any legal action against Allstate must be brought within two years of the date of the accident.” The court of appeals reversed, adopting a discovery rule for the contractual limitations period.

Here are the stated positions of the parties before the Ohio Supreme Court.

Appellant (Insurance Company)Position:
A cause of action for UM/UIM benefits accrues on the date of the accident when the tortfeasor has no liability insurance on that date. The court of appeals effectively rewrote the contract language by holding that a cause of action does not “accrue” until the policy-holder becomes aware that the tortfeasor lacked coverage at the time of the accident. All a claimant needs to do to “discover” whether the tortfeasor is covered when the tortfeasor claims coverage, is to call that insurance company.

Where the facts giving rise to a cause of action are readily ascertainable, a court may not apply a “discovery rule” to extend a valid, contractual limitations period. A discovery rule may be applied where the elements of a cause of action cannot reasonably be uncovered or the injury does not appear until later. Here, there are no hidden or unforeseeable facts. A simple phone call or letter would have revealed the true facts.

Appellee (Insured) Position:
Where a policyholder cannot discover the tortfeasor’s true insurance status until after the two-year period has elapsed, a UM/UIM claim does not “accrue” until such discovery. When the claimant later learns that coverage does not exist, whether because the tortfeasor misled her or the insurer’s insolvency, the cause of action does not accrue until that notice. Until receiving the notice, appellee had no cause of action against Allstate.

There is no evidence that Mr. Reed’s insurance status was “readily ascertainable.” The court of appeals held that it was “essentially impossible” for appellee to discover that status within the two-year period.

Note: I will post futher on this issue once the Ohio Supreme Court rules.

Court of Appeals - UM / UIM - "Other Owned Vehicle Exclusion" - Valid

Appellant was injured while driving a car insured by appellee. Appellee issued three policies to appellant’s family, only one of which listed the vehicle involved in the accident in this case. Appellee agreed that it owed coverage, but only under the policy that listed the vehicle. Appellant claimed that coverage was owed under all three policies. The trial court found for appellee.

On appeal, the court found no error. The policies contained “other owned auto” exclusions that excluded coverage for injuries that occurred while occupying a vehicle that the insured owned that was covered under another policy. “Other owned vehicle exclusions are permitted to be included in automobile insurance policies regarding uninsured motorist coverage. In this matter, the language of the Cherokee and Cavalier policies was not ambiguous. Instead, the other owned vehicle exclusions contained in those policies specifically excluded coverage in instances where an accident occurs while an insured is operating a vehicle that she or a relative owned. The undisputed evidence is that Tiffany is an insured under the Cherokee and Cavalier policies, that she was operating the Contour at the time of the accident, and the Contour was owned by Spelich. Thus, the valid other owned vehicle exclusions in the Cherokee and Cavalier policies preclude Spelich from being eligible for uninsured motorist coverage under those policies.” Affirmed.

Spelich v. State Farm Ins. Co. (Slaby) Appeal from the court of common pleas for Summit County. 2007-Ohio-7128 (12/28/07)

Read the Case: Spelich v. State Farm Ins. Co.

Court of Appeals - Life and Disability - Proof of Claim - Statute of Limitations

Appellant purchased a car from a dealership that was financed through Bank One. Bank One issued a life insurance and disability policy to appellant through appellee to cover the payments. When appellant became disabled, he notified appellee. Appellee denied coverage, stating that it had not been initiated because his loan terms did not meet their requirements. The trial court determined that no coverage existed.

On appeal, the court found error. Appellee did not provide notice that the coverage would not be afforded until after the disability arose. Further, appellant sent notice of the claim with in the limitations period of the insurance agreement. “UULIC improperly denied coverage in both 1999 and 2001. The record reflects that Fazenbaker provided notice of his disability ‘within 30 days after the disability [began] or as soon after that as [was] reasonably possible.’ However, because UULIC maintained that it had properly denied coverage, it did not send Fazenbaker claim forms within 15 days as set forth in the Rules. The Rules provide that if claim forms are not sent to the insured within 15 days after UULIC receives notice of the disability, there is no minimum time period for filing proof of the disability.” Reversed and remanded.

Midland Funding NCC-2 Corp. v. Fazenbaker (Moore) Appeal from the court of common pleas for Summit County. 2007-Ohio-7041 (12/28/07)

Read the Case: Midland Funding NCC-2 Corp. v. Fazenbaker

Court of Appeals - Intentional Act - Homeowner Policy - Severability Clause

Supervising and Controlling Other Insureds

Severability Clause Creates Coverage Ambiguity for Negligent Supervision and Control by "other" insureds.

Insured's son stabbed a teen girl while she was jogging. His parents were sued for negligent supervision and tendered coverage to their homeowner’s policy. The policy excluded coverage for injuries caused by the intentional conduct of an insured. The policy also contained a severability of insurance clause, which stated that “this insurance applies separately to each insured.” The trial court concluded that the severability clause rendered the exclusion ambiguous.

The court of appeals agreed. In so finding, the appellate court recognized that Ohio public policy did not preclude coverage for the negligent claims. The court then held that the injury was an occurrence under the policy. While occurrence was defined as an accident, the conduct of the parents was alleged to have been negligent, even though the actual injurious conduct was intentional.

The court concluded that the intentional act exclusion was rendered ambiguous by the severability of insurance clause. “When reading the severability condition in conjunction with the exclusions in the Safeco policies, we hold that the exclusions are ambiguous. Construing that ambiguity in favor of the insureds, in light of the policyholder expectation recognized in Doe, we hold that the exclusions for intentional conduct do not apply to insureds who have been merely negligent, when the policies contain language indicating that coverage applies ‘separately to each insured.’”

Safeco Ins. Co. v. Federal Ins. Co. (Dinkelacker) Appeal from the court of common pleas for Hamilton County. 2007-Ohio-7068 (12/28/07)

Read the Case: Safeco Ins. Co. v. Federal Ins. Co.

Court of Appeals - UM/UIM Employer Policy

Drive Other Car Coverage - Named Individuals (Endorsement)

The court of appeals (dealing with the pre-H.B. No. 261 version of R.C. 3937.18(A))concluded that the insurer in this case owed coverage for the adult son of an employee who was injured in a accident involving a car that was not a company car. The insurance policy contained a DOCC endorsement that included as insured “An individual named in the Schedule and his or her ‘family members’ are ‘insured’ while ‘occupying’ or while a pedestrian when being struck by any ‘auto’ you don’t own.” The employee was named in the schedule.

Hans v. Hartford Fire Ins. Co. (Hildebrandt) Appeal from the court of common pleas for Hamilton County. 2007-Ohio-7064 (12/28/07)

Read the Case: Hans v. Hartford Fire Ins. Co.