Articles Posted in Insurance Claims

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A Circuit Court judge ruled on a provision in an insurance policy claim that arose out of a 2003 Chicago porch collapse. At issue was whether or not the death and injuries of several individuals was the result of a single occurrence. The judge decided in favor of the defendant insurance company, which contended that the injuries arising out of the porch collapse constituted a single occurrence in Jean Ware, et al. v. First Specialty Insurance Corp., 10 CH 10841.

The 2003 porch collapse that is the subject of Ware occurred in Chicago’s Lincoln Park neighborhood. The various plaintiffs were outside on a third story porch when it collapsed; thirteen individuals died while many others suffered severe injuries. The building was insured by First Specialty Insurance Corp.; therefore, the injured plaintiffs brought a claim against the insurance company for the personal injuries and wrongful deaths that arose out of the porch collapse.

The current issue deals with the fact that the First Specialty Insurance policy had a limit of $1 million per occurrence and a $2 million aggregate limit for multiple occurrences. While the plaintiffs argued that their injuries constituted multiple occurrences since the related deaths happened at different times, the defendant argued that the claim constituted one occurrence because all the injuries arose out of the porch collapse. If the judge ruled in favor of the plaintiffs, then there would be a $2 million policy cap; whereas if the judge ruled in favor of the defendant, then there would only be a $1 million policy cap.

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While it is somewhat common for two vehicles involved in an Illinois car accident to be covered by the same insurance company, it is very rare that both those vehicles are covered under the same insurance policy. In Progressive Premier Insurance Company of Illinois v. Kocher, No. 5-07-0468, both vehicles involved in an Illinois motorcycle accident were owned by the same family and covered on the same insurance policy. The case was brought to the Illinois Appellate Court to help shed light on what to do in these unusual circumstances.

The Illinois auto accident occurred when Nick Kocher’s motorcycle collided with his father’s ATV. Luke Kocher was a passenger on the ATV at the time of the crash and sustained severe head injuries. Luke required a lengthy hospitalization and recovery, which resulted in a large amount of medical bills.

The Kocher family turned to Progressive Insurance Company of Illinois, their auto insurer, for payment of the bills that were a result of the motorcycle accident. Both the motorcycle and ATV were insured on the same policy, along with a third vehicle. The policy coverage included limits of $100,000 per person and $300,000 total for each vehicle.

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A recent Illinois workers’ compensation decision, Interstate Scaffolding, Inc. v. Illinois Workers’ Compensation Commission, No. 107852, 2010 WL 199914 (Ill.Sup.Ct.), examined whether a worker was entitled to temporary total disability (TTD) benefits following his termination. The Illinois Supreme Court reversed the Illinois Appellate Court’s decision, thus siding with the Illinois Workers’ Compensation Commission’s assessment.

The facts of the case involved a union carpenter who suffered serious injuries to his head, neck, and back when he fell on his head en route to the hospital after suffering heatstroke on the job. Over the next two years, the Illinois carpenter was unable to return to his normal duties at Interstate Scaffolding, Inc. During this period he fluctuated between not working at all and times of working light duty per his doctor’s instructions.

Under Illinois workers’ compensation law, the injured worker received TTD workers’ compensation benefits from Interstate Scaffolding, Inc. when he was not working at all. Yet when he was working light-duty, the employee was eligible for an Illinois workers’ compensation maintenance benefit to account for the difference in his pay as a carpenter and his light-duty wage.

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In September 2008, a Illinois First District Appellate Court decision ordered Zurich American Insurance Company to cover a Illinois wrongful-death lawsuit against its insured Key Cartage and Terry Washington. Zurich American Insurance Co. v. Key Cartage, 2008 WL 4445122 (1st Dist., Sept. 30). The Illinois Supreme Court has agreed to hear this appeal in the case where Rose Services, an affiliate of Key Cartage, had leased the truck from Franklin Truck Group to haul waste.

It had been argued that Zurich should be obligated to provide co-primary insurance coverage because it issued a trucker’s insurance policy to Rose Services. Zurich argued that coverage was barred because a reciprocal coverage provision in its policy meant that unless it provided coverage to Franklin, Zurich was not obligated to provide coverage to Key.

The Illinois Appellate Court ruling, an issue of first impression, held that Zurich was required to provide omnibus coverage, which would extend the policy to any permissive driver of the truck. In their opinion the appellate court held that “[a]s a matter of public safety, Illinois public policy warrants mandatory omnibus coverage for commercial truckers that should not be limited by private agreement.”

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Under the Illinois Vehicle Code, every motor vehicle liability policy issued in Illinois must cover drivers who have expressed or implied permission from the insured. Recently, in a question of first impression, the Illinois Appellate Court was asked whether this statutory requirement for omnibus coverage applies to a liability insurance policy issued to a trucking company for commercial vehicles.

Based on State Farm Mutual Automobile Insurance Co. v. Universal Underwriters Group, 182 Ill.2d 240 (1998), the First District Court reversed a ruling for Zurich American Insurance Company and concluded that Zurich American was obligated to provide omnibus coverage under a trucker’s policy. Zurich American Insurance Co. v. Key Cartage, 2008 WL 4445122 (1st Dist., Sept. 30).

In this case, Zurich American had issued a trucker’s policy to Rose Cartage Services. One of the covered vehicles was a Kenworth tractor that Rose had leased from Franklin Truck Group and later loaned out to an affiliated company, Key Cartage.

Terry Washington was driving the vehicle for Key Cartage when it was involved in an Illinois truck accident that resulted in the other driver’s death. Both Key Cartage and Washington were sued for the wrongful death of the individual. They argued that they were entitled to coverage under the policy that Zurich sold to Rose Cartage.

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Illinois Appellate Court ruled that Illinois Insurance Guaranty Fund (IIGF) is responsible for paying Illinois workers’ compensation benefits to a worker who was injured on the job (Virginia Surety Co. v. Adjustable Forms, Inc.). This ruling came in spite of IIGF’s claims that the Chicago worker was also covered under Virginia Surety Co.’s policy and therefore it should be paying the Illinois workers’ compensation benefits.

Michael Hadrys, an Adjustable Forms employee, was injured while working on a construction project in Illinois called the River East Project. And as is typical in the construction industry, his insurance was an owner controlled insurance program (OCIP) meaning that it was covered through the owner of the job and not his direct employer. The OCIP was being covered by Reliance Insurance Co., who have since folded, and that’s when things get complicated.

Typically, when an insurance company folds all its claims are handled by the Illinois Insurance Guaranty Fund (IIGF), provided that there is no other insurance company involved to take over the claim. However, in this case because Hadrys’s employer, Adjustable Forms, actually also had its own insurance through a different provider, Virginia Surety Co. Therefore the IIGF argued that it was not responsible for paying Hadrys’s workers’ compensation claim, but that Virginia Surety Co. was. Yet the Illinois Appellate Court disagreed.

The case revolved around whether or not Virginia Surety Co. was actually responsible for insuring Hadrys at the time of his Illinois construction site injury. The IIGF said that it was because it was an alternate form of insurance for Hadrys’s employer. Virginia Surety Co. said that it was not because Adjustable Forms insurance policy stated that it would cover injured employees unless they had other insurance.

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A Kane County, Illinois trial court’s decision was reversed in a property damage case involving a car and two horses in what could be described as a two-horse crash. The issue in the case turned out not to be the horses, but the property damage to the car.

State Farm insured the vehicle that was damaged and filed suit against Pat Santucci for property damage only. Santucci was part owner of P.S. Coyote, a corporation that operated out of Santucci’s Illinois property, where he also individually owned the horses, outbuildings and barn involved in the accident. Statewide covered P.S. Coyote and Santucci under a commercial general liability policy.

Statewide agreed to represent Santucci even though he was insured only as related to his business. Statewide even issued a letter to Santucci stating that they reserved no rights and that they would insure Santucci regardless. However, that same day Statewide was declared insolvent. Santucci’s claim would now be handled by the Illinois Guaranty Insurance Fund.

The fund is created by the State of Illinois and is in place to take over some of the insurance claims for liquidated insurance companies. Unlike Statewide Insurance, when the fund took over Santucci’s case it did so with a reservation of rights. That is where Santucci’s claim gets complicated.

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It’s no secret that insurance companies sometimes put their own interests above that of their customers. Even if you make all your premium payments on time and promptly fill out your forms, you might still struggle to obtain payments from your insurer. And while the practice of denying claims and benefits is nothing new, the methods are.

MetLife v. Glenn evaluates one of the new methods, specifically voiding a policy after a claim is filed and instead advising the insured to pursue benefits from other sources. Wanda Glenn sought judicial review after MetLife cancelled her disability benefits.

For two years Glenn had received disability benefits after being diagnosed with a heart condition and deemed unable to perform her job. During that time MetLife encouraged Glenn to apply for Social Security disability benefits. This required a review of her condition by an outside agency under stringent criteria. However, this agency found that Glenn not only was unable to perform her own job, but was unable to do any type of work- she was granted Social Security disability. Shortly thereafter her MetLife benefits came up for review. As a result of this review MetLife determined that Glenn was still unable to perform her old job, but was now capable of performing other jobs. Based on this determination MetLife cancelled her disability benefits.

The Supreme Court considered several factors when evaluating MetLife’s denial of benefits, including its conflict of interest. This conflict of interest was based on the fact that MetLife was authorized to determine whether a claimant was eligible for benefits and was also responsible for paying those benefits.

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Antonio Galvan, uninsured, sued Northwestern Memorial Hospital once he discovered that he was charged twice as much as an insured patient would have been for the same services. He alleged that the Chicago hospital’s practice of differentiating between uninsured and insured patients constituted unfair and deceptive conduct under the Illinois Consumer Fraud Act.

Plaintiff Galvan was taken to Northwestern Memorial Hospital in Chicago by ambulance after being injured in an automobile accident. Upon his discharge 15 days later he was presented with a hospital bill for $87,033. In his claim against Northwestern he alleged that their practice of billing uninsured patients twice the amount of insured patients was unfair and deceptive.

When measuring unfairness in Galvan, the Illinois Appellate Court considered “(1) whether the practice offends public policy; (2) whether it is immoral, unethical, oppressive or unscrupulous; and (3) whether it causes substantial injury to consumers.”

According to the court, Galvan failed to consider an important fact in his arguments- that there is an obvious difference between an insured and uninsured patient and that it is therefore reasonable to treat them differently. An insured patient pays insurance premiums and in return is awarded a lower service rate. The hospital offers this lower rate because they are guaranteed payment from an insured patient and his/her insurance company. Whereas there is no such guarantee from an uninsured patient.

An insured patient routinely pays for medical expenses in the form of insurance payments and is rewarded with reduced hospital bills. But an uninsured patient doesn’t have the added expense of insurance payments so is hit with a larger bill. The court felt this was a fair practice and that the amount charged by Northwestern did not qualify as “exorbitant”.

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A recent decision by an Illinois Appellate Court continued the debate regarding the interpretation of the construction statute of repose (Illinois Code of Civil Procedure, Section 13-214(b)).

The construction statute of repose states:

No action based upon tort, contract or otherwise may be brought against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property after 10 years have elapsed from the time of such act or omission.

The statute seeks to protect construction parties from having to defend against stale claims. Since its inception the statute has been a balancing act between the rights of the injured party and the rights of the party responsible for the construction. Illinois courts generally have limited the statute to apply to claims of construction or improvement to real property. However, where some courts differ is on claims brought as to duties of maintenance and inspection.

In Ryan v. Commonwealth Edison Co., Ryan, an electrician, was injured when a circuit breaker exploded. He claimed that ComEd was responsible for the electrical current flowing into the building and that the severity of his accident was increased by ComEd’s negligence regarding its ongoing maintenance duties. ComEd argued that the claim should be barred under the statute because the injury resulted from design flaws in the power system when it was installed 20 years ago, which would place it well outside the 10 year limit imposed by the statute. ComEd’s motion for summary judgment was granted, but the 1st District Appellate Court, Sixth Division, overturned this decision stating that the injury was the result of poor maintenance and inspection rather than design flaws in the original power system and therefore the statute does not apply.

This circuit’s decision focuses on the continuing acts related to the product, rather than the date of the original design of the product. That is significant in that the court looked beyond a hard and fast date of design and instead examined the entire fact background of the power system. The ruling is fair and just and may lead to decisions based on the facts, rather on a certain date of installation, design, sale or manufacture of a product. Motions for summary judgment will be denied where genuine issues of material fact are open for a jury to decide.

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