SJC seeks amicus briefs on MedPay question

The Supreme Judical Court of Massachusetts is seeking amicus briefs in Golchin v. Liberty Mut. Ins. Co., docket no. SJC-10794. According to the SJC's blurb,

This case presents important issues concerning the Commonwealth's coordination of benefits among health insurance, PIP and MedPay: whether the Commissioner of Insurance has properly mandated that insureds claiming MedPay must first make a demand on their health insurers, and may only make demand on MedPay after denial by health insurers, which denial must be provided to the MedPay insurer before any payment.

Why gun insurance won't work

The New York Times published an interesting letter to the editor last week.

To the Editor:

In “How Many Deaths Are Enough?” (column, Jan. 18), Bob Herbert recommends stricter licensing and registration of guns, more vigorous background checks and a ban on assault weapons. I agree.

And I have another suggestion: gun insurance. Mandatory liability insurance for gun owners sounds to me like an idea whose time has come. With this approach, we can respect what many interpret as a constitutional right to bear arms, while at the same time making those who possess and use weapons pay for the risk that they pose to the rest of us.

Caroline Herzenberg
Chicago, Jan. 18, 2011

While it's an interesting idea, I can see a number of problems with mandatory insurance for gun-owners. First, you can't get insurance for intentional acts. That's because insurance insures against risk -- meaning accidents -- while intentional acts are not risks, they are certainties. The standard Massachusetts auto policy, for example, insures only against "accidents," which it defines as as "an unexpected, unintended event." Thus, the insurance will provide coverage if the insured driver skids on ice and injures a pedestrian, but it will not provide coverage if the driver purposefully aims for the pedestrian and runs him down.

Gun insurance might provide coverage for a hunting accident, but it wouldn't provide coverage for intentionally shooting someone.

Even if there could be gun insurance for intentional assaults, the administration of it would be quite difficult. Would the insurance be purchased annually, like car insurance, as long as the person owned the gun? What about the large percentage of gun crimes that are committed with stolen guns? Would the original owner -- or the gun store -- be responsible for insurance ad infinitum after the gun was stolen?

Thanks to my friend Nomi Herbstrom for bringing the letter to my attention.

Appeals Court holds arbitrator exceeded authority in ruling underinsurance claim premature until third-party claim resolved

In 2001 Dorcas Weiner was involved in two separate car accidents. She sought underinsured motorist coverage from Commerce for both accidents. Those claims were consolidated and went to arbitration as required by the standard Massachusetts automobile insurance policy.

The arbitrator held that the compensation Weiner received from the other driver in the first accident was sufficient to cover her losses from that accident. He held that arbitration was premature as to the second accident because the claim against the other driver in that accident had not been resolved.

Weiner and her husband won a motion in Superior Court to vacate the arbitration award, on the ground that the arbitrator had exceeded his authority in deciding that arbitration for the second accident was premature.

The case was arbitrated again with a new arbitrator. The second arbitrator awarded damages for both accidents, and that award was confirmed by the Superior Court. Commerce appealed, arguing that the first arbitration award should not have been vacated and that the matter should have been submitted for reconsideration to the first arbitrator.

In Weiner v. Commerce Ins. Co., 78 Mass. App. Ct. 563 (2011), the Appeals Court affirmed.

The court held that the first arbitrator plainly erred when he concluded that the claim for the second accident was premature, because it is well settled that an insurer must arbitrate an underinsurance claim regardless of the pendency of a third-party claim. The arbitrator made clear an intention to rely on the damages award in the third-party claim, but the policy required damages to be determined by the arbitrator. He thereby exceeded his authority.

The Appeals Court also held that the Superior Court judge was allowed by statute to appoint the second arbitrator to determine the claim.

Superior court holds that insurer's mistaken belief that one policy period applies does not estop it from recovery under the correct policy period

Jacob Hanks suffered brain damage as a result of complications during his birth at UMass Medical Memorial Center, an affiliate of UMMHC. For some reason his parents filed three separate actions against UMMHC personnel in three different years. Those claims settled for $4.9 million. Defense costs totalled $1,034,140.

UMMHC had claims-made insurance policies. Its primary provider was CPAC, a captive insurer of UMMHC. UMHHC's excess policies were with other carriers.

In a claims made policy the policy providing coverage is the one in effect when the insurer was notified of the claim. (This is in contrast to an occurrence policy, in which the policy providing coverage is the one in effect when the underlying incident occurred.)

While the lawsuits were pending, UMMHC believed it had given notice of the claim to the excess insurers during the 2003-2004 policy period, when the CPAC policy had a limit of $5 million. It later came to light that the excess carriers may have been notified in the 2001-2002 policy period, when the policy limit was $2.5 million.

UMMHC then sued the excess carriers to recover the additional $2.5 million, the difference between the underlying limits of the two policy years.

In UMass Memorial Health Care, Inc. v. Lexington Ins. Co., 2010 WL 5071868 (Mass. Super.) the Massachusetts Superior Court ruled on the motion for summary judgment of excess carrier First Specialty.

First Specialty argued that UMMHC had suffered no loss within the meaning of the policies because between CPAC and the excess carriers it actually received more than the loss amount.

UMMHC responded that amounts paid by CPAC are not a recovery by UMMHC, because UMMHC funds CPAC itself and is essentially self-insured.

The court held that under the language of the policy, whether loss below the excess policy was paid by a captive insurer, self-insurance, or a regular insurer was irrelevant.

The court held, however, that indemnity under an underlying policy is not a recovery for the purposes of determining UMMHC's loss, because doing so would count the same amount twice -- first as the underlying policy limit and then as a recovery.

It also held that UMMHC did not "elect" to use the later policy period; it merely made a claim under the policy it believed applied. In fact, the earlier policy applied, and First Specialty's obligations needed to be determined under that policy.

Appellate Division holds that Medpay does not create a right to double recovery

Bernadette Lawton was in an automobile accident. Her auto insurer, Hanover, paid $2,000 in medical expenses under PIP. Her health insurer, Blue Cross, paid her remaining medical bills.

Lawton then sought $5,000 in medpay benefits from Hanover - as reimbursement for medical bills that had already been paid by Blue Cross.

In Lawton v. Hanover Ins. Co., 2010 WL 5238623 (Mass. App. Div.), the Massachusetts Appellate Division held that Lawton was not entitled to the medpay benefits: "Lawton's argument is inconsistent with both a rational construction of the standard automobile policy and the compensatory character of insurance proceeds."