Decision on Appeal:
1. PIP.  Trial court erred.  KFBM could intervene or arbitrate on its PIP. Fact that the underlying claim had settled did not deprive them of their claim.  Instead of dismissing PIP claim, Court should have granted summary judgment awarding KFBM the $10K in PIP since KFBM submitted an affidavit in support of PIP paid and Geico did not respond with any EVIDENCE to rebut it (argument w/o facts not sufficient).

2. Dismissal of Reimbursement Claim.  Affirmed.  KFBM never amended it's pleadings to assert a reimbursement claim for moneys paid for UIM.

2000-SC-000495-DG.pdf
Size: 958 kb
Date: 3/18/2003

published

(1) Mable Raines ("Raines") incurred damages of $219,071 .00 as a result of a two-vehicle accident caused by Lecia True ("True"), who had liability coverage of only $100,000.00 . Raines, who was driving her own automobile at the time of the collision, had a $50,000.00 UIM policy, and Ted Rice ("Rice"), with whom Raines lived in a residence they jointly owned, had UIM coverage of $50,000.00 under a separate policy.  Although Rice's policy did not list Raines as a named insured, Raines was listed on Rice's policy as a driver "residing in your household ." Was Raines entitled to recover UIM benefits under Rice's policy? Because Rice's policy was clear and unambiguous in its UIM coverage, and Raines was neither a named insured nor otherwise covered by Rice's policy while driving her own automobile, we hold that Raines was not entitled to recover UIM benefits under Rice's policy .

(2) During the trial of this case, True's insurer, Kentucky Farm Bureau Mutual Insurance Company ("Farm Bureau"), offered to settle with Raines for the $100,000 policy limit. However, to preserve its subrogation rights, Raines's UIM insurer, Preferred Risk Mutual Insurance Company ("Preferred Risk"), agreed to make the $100,000 .00 payment to Raines itself and thereby substitute its own funds for Farm Bureau's . The jury determined Raines's damages to be $219,071 .00 . Was True relieved from all liability in excess of her $100,000 .00 liability coverage by virtue of Preferred Risk's substitution of funds? While Preferred Risk's substitution of funds operated to release True from any further personal liability to Raines, the substitution preserved Preferred Risk's subrogation rights against True and thereby subjected True to personal liability to Preferred Risk for any amount it paid to True under its UIM coverage."

Commentary/Analysis:  This is a must-read case for personal injury lawyers doing car accidents.  The first issue addressed stacking of UIM policies (which analysis will apply with equal force to UM policies).  Specifically, the Supremes continue the first and second class insured analysis without specificially referencing that concept previously followed in its earlier opinions.  This case is not about anti-stacking or exclusions of coverage, but is rather one of contract interpretation as to the coverage purchased.  The driver was not a named insured, spouse, or resident of household to qualify as an insured under the other vehicles of the policy.  Therefore, the permissive driver who happened to be a listed driver did not arise to any of the three categories of insureds who get the benefits of a stacked policy.  She was only a permissive user deriving UIM benefits on the car she was driving.  Being a "listed driver" under the policy does not make you the equivalent of a first class insured - named, spouse, or resident. 

The second issue addressed a long-unanswered question regarding the advancement of UIM funds under Coots v. Allstate.  Think about it, the plaintiff is willing to accept $100,000 in settlement of her claims against defendant driver.  A settlement agreement has effectively been reached subject to the UIM carrier's right to preserve its subrogation rights for any UIM benefits paid to the plaintiff.  The UIM carrier advances the defendant tort-feasor's liability limits (or a lesser amount is possible per statute and Metcalf v. Liberty Mutual).  No release is usually given, and the trial goes forth against the defendant tort-feasor driver who continues to be defended by her liability carrier (since the duty to defend and the duty to indemnify are separate).  At trial, there are three separate possibilities with a verdict. 

One - trial verdict is less than the liability limits(or more precisely, the amount advanced by the UIM carrer).  The result is risk born by UIM carrier with plaintiff keeping the full amount advanced and the UIM carrier eating the difference it paid.  

Two - trial verdict is greater than amount advanced but less than the total UIM benefits.  The result is that the plaintiff keeps the advanced sums and is paid up to the UIM benefits from her own carrier with the UIM carrier having a claim for the advanced sums and a claim for UIM benefits paid (are these subrogation vs. indemnity claims?  go figure.  The bottom line is the advanced sums will/should be paid by the defendant's liability carrier, and the excess is a claim against the defendant tort-feasor.

Three - trial verdict exceeds both liability and UIM benefits.  This is the new one.  Per Raines now, the underinsured defendant gets a release from the plaintiff for the money's advanced per agreed settlement, but is still liable for the UIM benefits paid by the UIM carrier to the plaintiff.  The UIM carrier recovers the advanced amounts from the defendant's liability carrier, and has a claim for the UIM benefits against the defendant.  This leaves the sum in excess of the UIM + liability amounts which is nobody's claim.  That risk is born by the plaintiff and the UIM carrier.

A settlement was reached but for the UIM's advancement.  Plaintiff agreed to accept a set sum in exchange for a complete release of the defendant BUT FOR the UIM carrier.  The fact the money comes from the UIM carrier rather than the liability carrier does not affect the agreement between defendant and plaintiff who has waived any claim for the excess.  Coots advancements should be documented in writing that the amounts are advanced, the amounts of UIM and liability coverage, plaintiff agrees to cooperate and subordinate his/her claim against the defendant for the advanced amount so the UIM carrier gets paid first, and the plaintiff will not impede the UIM's subrogation rights.

"As KFB points out, the "cardinal rule" of construction that applies to this case is that in the absence of ambiguity, a written instrument must be enforced according to its terms and the words of the agreement given their plain meaning. Grey v. Wilson, Ky. App., 554 S.W.2d 867, 869 (1977). It is simply unmistakable to the reader of the plain language of the policy that upon the death of the insured, coverage is limited to the surviving spouse or to the executor in the course of estate business. The Collins family argues that the policy must be interpreted to afford UIM coverage to Metcalf. While we are not without sympathy for Daniel Metcalf’s family, we also do not find the arguments advanced in favor of such an interpretation to be persuasive. The essence of the Collins family’s argumet is that the UIM coverage for all family members could not have ceased on the death of the insured, because the insured pre-paid for the coverage. We are not persuaded that such an interpretation is correct under Kentucky law. While Collins cites Dupin v.Adkins, Ky. App., 17 S.W.3d 538 (2000), for the proposition that UIM coverage is personal to the insured and not connected to a.particular vehicle, we are not persuaded that the Dupin case applies to this case in the way suggested by Collins."

Here is the thought.  The notice to the UIM carrier is designed to allow the UIM carrier the opportunity to protect its subrogation rights against the underinsured tortfeasor.  What if it turned out that the underinsured tortfeasor was judgment proof so that the subrogation rights were effectively worth nothing?  Result -  UIM carrier has not been "really" prejudiced as it relates to subrogation, but has lost the opportunity to advance the settlement and keep the underinsured tortfeasor in the lawsuit.  However, we venture down a slipper slope here since the prejudice is the lost opportunity and not the value of the lost opportunity. Prejudice is not the issue.  CA reached the right result.

For those followers of appellate trends, the CA (consisting of Guidugli, Rockingham and Tacket) sent us another 'aside' on appellate practice and procedure about the proper inclusions of exhibits and the technical application of the rules, to wit:

"Prior to addressing the merits of the appeal, we must first address a procedural matter regarding documents Pope attached as exhibits to her brief. Pope attached three letters regarding the settlement between herself and Shelter, the last being an August 24, 2001, letter from Pope's counsel to Ms. Nicole M. Mignone of Allstate regarding the proposed $17,000 settlement. Pursuant to CR 76.12(4)(c)(vii), only materials or documents included in the certified record on appeal may be included in the appendix to a brief. The three documents were not introduced in the circuit court nor were they included in the certified record on appeal, and therefore should not have been included as exhibits to Pope's brief. Accordingly, we shall disregard the letters dated August 17, 2001, August 21, 2001, and August 24, 2001, as well as any citations to the documents in Pope's brief. Croley v. Alsip, Ky., 602 S.W.2d 418 (1980)."

It was just a few months ago that another CA (consisting of Johnson, Guidugli, and Knopf) as opposed to this CA (consisting of Buckingham, Guidugli, and Tacket) laid down the law and ignored documents putatively attached to briefs involving Allstate (Powell v. Allstate).

Bottoms was injured in MVA and party liable was insured with Kentucky Farm Bureau (KFBM) for $50,000 in liability coverage.  Bottoms also had underinsurance and PIP with Kentucky National Ins. Co.  Kentucky National paid $10,000 for benefit of Bottoms covering his medicals.  Bottoms then settled with KFBM for $45,000 with $10,000 going to Kentucky National for PIP so Bottoms pockets $35,000.  Bottoms then obtains a jury verdict against Kentucky National for $59,668,26, and trial judge awards Bottoms the difference between the verdict and the liability limits ($59,668.26 - $50,000 = $9,668.26).  Kentucky National argues on appeal it is entitled to $10,000 PIP set-off against this amount since part of Bottoms medicals awarded by jury was paid by Kentucky National and would constitute double recovery.  Trial judge and CA rejected this argument.  The UIM was a contractual claim and Kentucky National had already recovered its PIP payments.  Therefore, no double recovery to Bottoms who recovers uncompensated damages in excess of liability limits.

"We begin our analysis by reviewing Philadelphia Indemnity Insurance Co. v. Morris, Ky., 990 S.W.2d 621 (1999), which involved a closely related issue, that of whether workers' compensation benefits should be set off against underinsured policy limits. In Philadelphia Indemnity, the insurance contract, like the one before this court presently, reduced coverage for "[a]ll sums paid or payable under any workers' compensation, disability benefits or similar law ... [.]" Id. at 625.
The Kentucky Supreme Court held the setoff provision void in regard to policy limits as it violated the public policy of broad UIM coverage in Kentucky. Id. at 627. While Philadelphia Indemnity is not controlling on the precise issue before us, we are compelled to follow the principles of it."

"Workers' compensation is not an exclusive remedy wherein the real party in interest is not the employer. Id. Instead, a " 'suit to recover UIM coverage is a direct action' against the UIM carrier and 'the [UIM] carrier alone is the real party in interest in UIM cases.' " Id. at 625 (citing Coots v. Allstate Ins. Co., Ky., 853 S.W.2d 895, 903 (1993)). Because Samples, like the employee in Philadelphia Indemnity, brought an action directly against the UIM carrier, not the employer, the exclusive remedy provision of KRS 342.690(1) is not controlling. Instead, KRS 342.690(1) protects only the employer and its workers' compensation carrier, not a separate UIM carrier."

KRS 342.700(1) provides that "Whenever an injury for which compensation is payable under this chapter has been sustained under circumstances creating in some other person than the employer a legal liability to pay damages, the injured employee may either claim compensation or proceed at law by civil action against the other person to recover damages, or proceed both against the employer for compensation and the other person to recover damages, but he shall not collect from both....  This statutory provision merely establishes a right of subrogation to the employer or its workers' compensation carrier. See Great American Insurance Companies v. Witt, Ky.App., 964 S.W.2d 428, 430 (1998). The phrase "the other person in whom legal liability for damages exists" in this subrogation statute "quite clearly refers to the third-party tortfeasor who is liable at common law." Fireman's Fund, 550 S.W.2d at 557. Thus, KRS 342.700(1) only prohibits a double recovery as between the employer and the tortfeasor. Cincinnati Insurance is neither, and KRS 342.700(1) is not properly applied in this instance."

The CA deemed it important that "the UIM carrier is not also the workers' compensation carrier. Hence, Cincinnati Insurance was not required to compensate Samples under both. Instead, Samples's employer purchased the UIM policy, and paid separate premiums for UIM benefits. We think it is important to consider that BGM was not obligated to provide UIM benefits to Samples. This coverage was beyond that required by law. If BGM chose to pay premiums for UIM coverage, we see no reason it could not freely contract to so do and expect coverage for exactly that. UIM coverage is clearly optional. Flowers v. Wells, Ky.App., 602 S.W.2d 179, 181 (1980). BGM paid to have this additional benefit. In fact, the very purpose of UIM is to provide additional insurance coverage to those who had the foresight to contract for such."

"While courts routinely uphold exclusionary clauses in insurance contracts, we find that the exclusion at hand contravenes the statute as written as to whom UIM coverage applies. The coverage under the policy is for damages the insured is "legally entitled to recover from the owner or driver of an 'underinsured motor vehicle.' " KRS 304.39-320(1) defines "underinsured motorist" as a "party with motor vehicle liability insurance coverage in an amount less than a judgment recovered against that party ...." (Emphasis added.) Hence, the exclusion defeats the purpose of KRS 304.39-320. Nonetheless, the obvious argument against double recovery under KRS 304.39- 320 is that its coverage is for "uncompensated damages." However, "that term is limited in explicit and unmistakable terms." LaFrange, 700 S.W.2d at 413. As the legislature defined "uncompensated damages," it was specifically limited to the underinsured tortfeasor. The statutory language is clear and unambiguous, and we are compelled to apply it as written."

Comment:  THIS IS A MUST-READ CASE FOR PERSONAL INJURY LAWYERS.

As they say - this is a case of first impression and is very significant. 

• Some facts that help understand the damages at stake:  "Appellant, Raymond Samples, was injured in the scope of his employment while driving a van owned by his employer, BGM Equipment. Liability was not an issue and the negligent tortfeasor's carrier tendered it's $25,000 policy limits without any Coots advancement.  Samples' injuries included spinal fusion with screws.,  Samples then filed suit against Cincinnati Insurance Company, which had issued an insurance policy covering the BGM vehicle driven by Samples which included underinsured motorist (UIM) coverage with policy limits of $300,000.
• Samples also recovered workers comp benefits for his medicals, wage loss and impaired earning capacity with an award for his future disability (well in excess of the liability limits of $25,000). 
• Jury awarded Samples a judgment of over $300,000 against the UIM carrier which included medicals, wage loss, pain and suffering -past and future, future medicals, and impaired earning capacity.
• The decision is a tad vague since it never went and applied it's ruling to the actual numbers but rather remanded to trial court for action consistent with this decision. 
• The injured employee who makes a third party claim for his injuries is constrained by the double recovery provisions of the workers compensation law and AIK v. Bush when it comes to the workers compensation subrogation benefits.  
• However, UIM policy is personal to the insured and there is no offset for collateral source payments received.  The workers compensation carrier has no claim on the UIM benefits and cannot sue the UIM carrier for those subrogation payments.  But can the workers compensation carrier intervene AND assert a direct claim against the employee for those workers compensation benefits paid to the injured employee?  I have my thoughts but would appreciate some input from some w.c. lawyers.
• Does this mean, that injured employee is no longer limited to just recovering his pain and suffering from the tort feasor AND the UIM carrier?  Not any more.
• I also would suspect that even if the comp carrier and the uim carrier are one in the same that a separate premium for separate coverage would probably produce a similar result.

The CA held that the $25,000 in underinsured motorist's coverage existing on a second vehicle owned by Carolyn Morgan and insured by Progressive was not subject to the claims made by Kathy Jo's estate.

"A vehicle owned by or furnished or available for the regular use of the named insured or a family member is not an "underinsured vehicle." The obvious reason for the exclusion is that the named insured can avoid the fact of under insurance by simply purchasing additional liability insurance coverage for his vehicle."

KISS or keep it simple stupid -
This case really stands for the proposition that you can't recover under the UIM provisions of a policy if there is another vehicle in the household available for the regular use of the residents, even if the vehicle is not insured.  It does not break new ground, but plows old ground.  However, here is . . . . 

Some Food for Thought
The Pridham v. State Farm Mutual Insurance, Ky.App., 903 S.W.2d 909 (1995) rule makes sense when the injured person receives the maximum benefits available.  For example, you have a 25/50 policy of liability insurance with 25/50 UIM on that car and another car in the household (such that stacking provides 50/100 in UIM coverage).  Your injuries exceed $25,000, and the liability carrierthrows in the limits to the passenger.  Now in the above James v. Progressive Max case, there is a twist since the policy's liability limits were exhausted on 4 claimants and the appellant/claimant only received $10,000.  

Now the James decision did NOT identify the language of the exclusion, but they do refer to the "regular use" exclusion which in Pridham stated that an "underinsured motor vehicle" does not include any vehicle:  ....  Owned by or furnished or available for the regular use of you or any "family member.""  Would it have been a great stretch of the imagination to have subjected the regular use exclusion to the minimum limits requirements that have been applied in other cases [e.g., Bishop v. Allstate Insurance Co., Ky., 623 S.W.2d 865 (1981)(disallowed household exclusion since the purpose and espoused policy of MVRA was to make compulsory certain minimum limits of insurance coverage and any exclusion which diluted or eliminated those minimum coverages was determined to be void and unenforceable) see also Mosley v. West American Insurance Co., Ky.App., 743 S.W.2d 854 (1987) ] to have 

     (i) provided uim coverage up to at least $25,000 aggregate so that the appellant in James received $10K in liability and $15K in UIM? 

     (ii) Provided UIM coverage on the other car in the insured household in which a separate premium was paid.  

It's one thing to say you can't recover on both the liability and the UIM coverages on the SAME vehicle, but if you pay a separate premium for UIM on each vehicle and the UIM coverage would have been available if you were injured in a non-owned car, then why not in an owned car which is separately insured? 

As Justice Wintersheimer stated in Nationwide v. Hatfield, 2001-SC-000969-DG.pdf  "The clear intent of the underinsured motorist statute is to allow an insured to purchase additional coverage so as to be fully compensated for damages when injured by the fault of another individual. The inability of a tortfeasor to respond in damages for whatever reason is of no consequence. We cannot interpret the language of the policy to prevent the extension of underinsured motorist benefits to an insured that specifically purchases the coverage for his or her protection. This would be clearly contrary to the expectation of the insured and the intent of the legislature in requiring that such coverage be provided to its citizens upon request."

The Progressive Max decision also did not address the mechanics of how a limited policy was divided among more than two claimants such that the per person max was reduced below the $25,000.  Did each claimant concur?  Hopefully, an insurer cannot cost a claimant the per person max AND then hide behind a regular use exclusion on UIM benefits?  Also, I am not submitting that the UIM coverage on the vehicle in which the liability coverage was impugned should be available but just simply that the UIM coverage on another vehicle in the household should come into play since the purpose of the no fault act and UIM coverage is to provide minimum coverage and to allow full compensation of injured parties - neither of these loft goals were satisfied when less the the per person max of liability insurer is paid.

Comment:  This case is lengthy but the issue is straightforward.  Many governments insure there vehicles even though they have sovereign immunity.  However, what happens if there is either inadequate or no liability insurance at all on the government vehicle.  Without addressing the sovereign immunity maze, let's just look at insurance.  Hatfield  provides simply that your underinsured motorist benefits policy (and presumably uninsured benefits too) come into the fray and allow the injured party to be compensated IF they have had the good fortune to protect themselves.

NOT TO BE PUBLISHED

"As the Allstate insurance policy is not in the record, we think it clearly improper for Powell [the appellee] to include it in the appendix of his brief. See Croley v. Alsip, Ky., 602 S.W.2d 418 (1980). Moreover, we observe that the insurance policy in the appendix of the brief is missing pages. It is well-established that the burden is on the appellant to ensure that this court is supplied with a sufficient record to decide the appeal. See Fanelli v. Commonwealth, Ky., 423 S.W.2d 255 (1968), reversed on other grounds, 455 S.W.2d 126 (1969). We are to assume that that portion of the record not before us supports the decision of the circuit court. See Colonial Life & Accident Insurance Co. v. Weartz, Ky. App., 636 S.W.2d 891 (1982). As such, we must assume that the Allstate insurance policy did not contain a pertinent setoff provision. Without such a setoff provision, we are compelled to conclude that Allstate is not entitled to set off workers’ compensation benefits against UM benefits owing under its policy."

CA relied upon Hamilton Mutual Insurance Company v. United States Fidelity & Guaranty Company, Ky.App., 926 S.W.2d 466 (1996) and Dupin v. Adkins, Ky.App., 17 S.W.3d 538, 643 (2000), among others.

PUBLISHED

The co-executors of the estate "appeal from a judgment . . . which dismissed an uninsured motorist (UM) claim and awarded a partial recovery on an underinsured motorist (UIM) claim against Kentucky Farm Bureau Mutual Insurance Company (KFB). The estate primarily argues that the trial court erred by instructing the jury to apportion fault between the settling tortfeasor and an unknown defendant who had been constructively joined as a party. We agree with the estate that KRS 411.182 does not permit apportionment of fault against a nominal party who is not subject to personal liability or has not settled with the plaintiff. Hence, we vacate the judgment, and we remand for entry of a new judgment."

The facts of this case are instructive of the interplay of UM, UIM, settlement, and unknown defendants. The fatality occurred when the insured defendant (Ashby) was passing a car on the interstate when a motorcyclist veered out in front of him and Ashby crossed the median to avoid the motorcyclist.  Ashby then hit the car in the on-coming lanes killing the plaintiffs' decedents.  The motorcyclist did not make contact with any vehicle and left the scene.

Prior to suit, the estate settled with Ashby for his policy limits.  The estate sued Kentucky Farm Bureau under the decedent's own insurance policy for underinsured motorist benefits (UIM).  KFB filed a third party complaint against the unknown motorcyclist and constructively served him/her via warning order attorney.  The estate then amended its complaint to assert a UM claim against KFB for the negligence of the unknown motorcyclist.  The matter proceeded to trial, and a directed verdict was eventually entered dismissing the UM claim against KFB since there was no physical contact with the motorcyclist (the hit and run rule's continued viability was recently affirmed by the Supremes in Burton v. Kentucky Farm Bureau Ins. Co. )   However, the matter went to the jury with an instruction to apportion fault between Ashby the settling defendant and the unknown motorcyclist (even tho the UM claim was gone).  The jury apportioned fault 50/50 between the Ashby and the motorcyclist.  (Presumably, KFB did not advance the UIM under Coots v. Allstate since KFB was a named party and Ashby was not).  It turned out that Ashby was not considered an "underinsured motorist" on one of the claims since his per person limits covered the damages for one of the decedents after apportionment.

The CA stated the apportionment statute applies to contractual UIM claims since they do sound in tort.  Judge William Knopf, writing for a unanimous court (Judges Barber and Combs) noted that KRS 411.182 allows allocation of fault to only two classes of tortfeasors: parties to the action, including third-party defendants, and persons who have been released from liability through an agreement with the claimant.  CA rejected KFB's arguments, among which were decisions in which apportionment was allowed when the defendant/party was personally served but dismissed for reasons other than fault and the civil rules for constructive service over unknown parties.  CA then noted "when viewed in its entirety, that statute [KRS 411.182 - apportionment] limits allocation of fault to those who actively assert claims, offensively or defensively, as parties in the litigation or who have settled by release or agreement."

"[W]e hold that the unknown motorcyclist cannot be deemed a party to the action for purposes of apportionment and that the trial court erred in so instructing the jury. Because there is no dispute concerning the amount of damages, the jury found Ashby at fault and there were no other parties who were subject to liability, the estate is entitled to recover the entire amount of its UIM claim against KFB. Furthermore, since no fault can be apportioned against the unknown motorcyclist, we need not address the trial court's dismissal of the estate's UM claim."

NOT TO BE PUBLISHED

Interesting case involving two-car accident in which Globe American provided insurance for both vehicles.  Mills caused the accident which killed and injured several in Bowman's car.  No fault on Bowman driver.  Mills had 25/50 in liability; Bowmans had stacked UIM coverage totalling $100,000.  Therefore, there was a total of $150,000 available through Globe for the Bowmans.

Globe assigned separate adjusters for the claims - one handling Mills and another handling Bowman.  Adjuster denied Mills claim against Bowman in reliance upon KSP report of accident.  Globe never responded to Bowman's demands for all coverages.  Suit filed claiming liability against Mills, UIM limits against Globe, and bad faith against Globe.  Globe defended denying it owed "the limits of the Mills policy 'since the question of fault in this accident is severely disputed." Globe finally offered the full $150,000 nearly a year and one-half after litigation had been commenced.

At trial, jury found bad faith and awarded plaintiffs nearly $350,000 in damages (including punitives).  Globe's appeal was not on the instructions or evidence but rather on the trial court's failure to grant it summary judgment or directed verdict.

Globe knew early on that there was no defense based on comparative negligence and that the damages would exceed the combined coverages under the policies of liability insurance on Mills and UIM on the Bowmans.  CA also rejected Globe's argument that it could not have paid claim on wrongful death action until after administrator appointed.  CA noted that this did not stop negotiations; and that furthermore, Globe still did not pay the limits until over after the administrator was appointed.

Globe's second argument relying on a technical application of Coots v. Allstate went by the way side.  Specifically, the CA did not require the liability carrier to tender its limits first before the UIM carrier offered its limits.  CA noted this was not the typical Coots scenario since Globe was representing both claims.  

Globe's third argument went the same way the first two went - against Globe.  The fairly debateable defense failed, especially since Globe was the same insurer for both.  They claimed it was 'fairly debatable' regarding the requirement to pay the liability limits first (eg., following upon the second argument which had just failed).

Comment:   This is not an unusual situation.  The key is to watch the insurance companies' handling of the claims.  Here this panel of the CA affirmed the jury's verdict of bad faith etc. but a different panel of the CA (2002-CA-000482.pdf) shot down a million dollar plus verdict over the handling of a wrongful death case where USAA represented the liability and UIM carriers.  Rather than try and distinguish these two, we will just see what happens in the event of an appeal.  I am sure Lee Sitlinger's firm will appeal the loss of a million dollar verdict; whereas Globe may allow this nonpublished decision with its nonbinding analysis to go to the trash heap.  

How can insurers get caught on the fence in other scenarios?  Well, what if UIM is not an issue but the same company has the liability coverage on two cars in an accident.  The settlement of the liability claims and payment of PIP benefits could box the insurer on issues of fault and causation of injuries.  How you say? If liability is determined to be comparative and one claim is settled, but not the other driver's clailm?  What about the handling of the PIP claims?  Potential mingling of the medical expense files? Potential mingling of the investigation files?  Imagine if the PIP adjuster pays medical bills for one injury but the liability adjuster then disputes causation?  Oh, what a web we weave when we practice to deceive....

PUBLISHED

Although USAA did not look very good on the manner in which it handled a wrongful death claim involving two of it's own insured's to include liability on one car and UIM on the other, and the fact that USAA was a little slow in reaching and offering it's reserves, the CA concluded it was NOT bad faith.  Per the CA, "A review of the evidence presented by the Bults reveals a complete absence of the type of conduct required to meet this standard." This conclusion was reached even though the plaintiff had four expert witnesses say it was bad faith - Former Judge and State Farm Agent Michael McDonald, USAA insured, reserve admiral and trial lawyer Larry Franklin, and law school professor Martin Huelsman. 

Comment:   There is no real law in this case.  Just an aggressive reading of the facts.  However, this decision seems at odds with another recent CA case (Globe - 2001-CA-001420.pdf) but with a different result albeit unpublished!  The other panel approached the facts from a different angle.   In the USAA case the CA went into a laborious analysis of the facts and proceeded to substitute their own fact finding for that of the jury and concluded the matter should not have even gone to the jury.  The Globe case did not substitute its judgment for that of the jury and reviewed the sufficiency of the evidence to support the verdict - "Without again reviewing the evidence presented at trial, we conclude there was sufficient evidence to support the jury’s verdict on each of the ten interrogatories decided in favor of the Bowmans on their bad faith claims."  Don't forget that in the USAA case, the liability defendant paid money beyond their policy limits and assigned the bad faith claim to the plaintiffs, not to mention that a judge in a damages trial concluded damages in excess of $2.3 million (which oughta been some clue that the policy limits should have been offered immediately and might have avoided the personal exposure of the defendants!)

One panel exemplified judicial activism, the other allowed the jury system to work and limited involvement to curtail abuse (and finding none allowed the jury's verdict to stand).  I hope to see the Supremes look at this one.  I find it hard to believe that no CA was sufficiently offended by the same company on both sides of the case such that clear standards were not implemented to avoid abuses and potential abuses.  If 'chinese walls' are difficult to enforce in conflict situations involving lawyers, imagine the potential abuses when insurers driven by the profit motive and adjusters driven by job security and lack of legal ethical training are thrown into the mix.  In Gailor v. Alsabi, the SC declined to elevate an adjuster to the attorney's ethical standard.  Consequently, I would not expect an adjuster to be able to keep up the wall either.  If I were the SC, I would place the company under the strictest scrutiny on the handling of the claim such that if you are on both sides, then technical violations of the UCSPA are presumptively bad faith.  Outside or third party adjusters might be the solution (but not so in Globe).  Basic fact of organizational hierarchy is the 'pyramid.'  Consequently, there is some level somewhere up the feeding chain where a single adjuster supervises both sides.

"Despite this clear demand by its insured, KMIC refused to pay the negotiated reduced judgment or to engage in good faith negotiations to settle the case prior to entry of final judgment. Final judgment was entered against Dr. Tabler for the amounts awarded by the jury, exposing him to almost a million dollars in excess liability. After final judgment was entered, KMIC paid policy limits for a partial satisfaction of the judgment against Dr. Tabler."   Dr. Tabler assigned his claims against KMIC to Schmidt in return for a release from the excess verdict. Dr. Tabler's claims against KMIC are the subject of this appeal. Schmidt filed the underlying action on behalf of Dr. Tabler against KMIC for the excess verdict. This case deals solely with Dr. Tabler's claims against KMIC.

"KMIC argues that "Dr. Tabler suffered no damages as a result of KMIC's refusal [to pay the reduced sum negotiated by Dr. Tabler]." KMIC states that this is so because "the Schmidts subsequently released Dr. Tabler personally, in exchange for no personal money, merely the assignment of his purported 'bad faith case.' " (Emphasis original.) This citation reveals KMIC's basic misunderstanding of the nature of an assignment of a claim. Schmidt stood in the shoes of Dr. Tabler after the assignment and made the claims applicable to the injury suffered by Dr. Tabler. The entire amount of the excess judgment constitutes Dr. Tabler's injury as a result of KMIC's actions."

Dr. Tabler denied that he had been informed of his personal liability for any excess judgment and claimed that he was not apprised of his personal risk if an excess judgment was entered against him. Dr. Tabler stated that he was informed by defense counsel that the claim was "defensible."

"KMIC was fully aware that Dr. Tabler was facing a judgment in excess of $800,000.00. KMIC had a duty to engage in good faith negotiations to reduce or eliminate that excess by settling the claims against him prior to entry of final judgment. The failure to act in good faith prior to entry of final judgment renders KMIC potentially liable for the damages incurred by Dr. Tabler. We reverse the jury verdict rendered in absence of the evidence regarding KMIC's conduct prior to entry of the final verdict

"Cross Appellant American Physician's Assurance Company, successor in interest to Kentucky Medical Insurance Company (KMIC), filed a cross-appeal complaining of errors in a jury trial in which it was successful in defending against a bad faith claim. KMIC was the insurer of Dr. Tabler. Dr. Tabler had a million dollar verdict and an $800,000.00 excess judgment entered against him in a medical negligence action. Counsel for Dr. Tabler negotiated a substantial reduction of the excess judgment prior to entry of the final judgment and requested that KMIC pay the substantially reduced amount of coverage. KMIC refused to negotiate settlement of the verdict prior to entry of final judgment against Dr. Tabler. Dr. Tabler assigned his bad faith claim against KMIC to Cross-Appellee Schmidt, who brought an action against KMIC for bad faith. After a jury trial, a verdict was entered in favor of KMIC.

KMIC asserts that it was entitled to summary judgment because Dr. Tabler did not consent to settlement of the action prior to trial. The record shows that issues of fact exist as to whether Dr. Tabler was adequately made aware of his personal liability for an excess judgment prior to trial. Issues of fact also exist as to whether KMIC acted in good faith following the verdict and during negotiations prior to entry of a final judgment. These genuine issues of material fact properly precluded entry of summary judgment in KMIC's favor. CR 56.01.

KMIC argues that the trial court erred in not dismissing the Unfair Claims Settlement Practices Act claim brought by Dr. Tabler. KMIC argues that the entire case was "within litigation" because Schmidt filed the medical negligence action within two months of initiating settlement negotiations. KMIC argues that the UCSPA does not apply to claims in litigation and only applies to claims adjusting. This argument is without basis in fact and is clearly contradicted by the language of the law, and the relevant case law. We affirm the trial court's denial of the motion for directed verdict.

Lastly, KMIC argues that it was entitled to a directed verdict on Dr. Tabler's claim for punitive damages based on the insurer's bad faith actions. Kentucky law permits assignment of bad faith claims. See Grundy v. Manchester Insurance & Indem. Co., Ky., 425 S.W.2d 735 (1968). KMIC argues that claims for punitive damages or damages for emotional distress cannot be assigned, and that Dr. Tabler could only assign his contractual claims against his insurer. While initially bad faith claims were based solely on contractual issues, claims for bad faith now sound in tort. Manchester Ins. & Indem. Co. v. Grundy, Ky. App., 531 S.W.2d 493 (1975). All damages stemming from the bad faith actions are recoverable in an action for bad faith. Motorists Mut. Ins. Co. v. Glass, Ky., 996 S.W.2d 437, 451 (1997), citing Curry v. Fireman's Fund Ins. Co., Ky., 784 S.W.2d 176 (1989), specifically allowing recovery of punitive damages, and FB Ins. Co. v. Jones, Ky. App., 864 S.W.2d 926 (1993)."

The claims were made by the victims against the insurance company, Kentucky Farm Bureau, that provided Michael Carneal's parents, John and Ann Carneal, with homeowner's and umbrella insurance.  The question was whether the shooting incident and its surrounding circumstances were an occurrence under the policy.  The court said no.

"Appellants' first and third-party common law and statutory bad faith claims also fail because they cannot establish the requisite elements: 
(1) the insurer must be obligated to pay the claim under the terms of the policy; (2) the insurer must lack a reasonable basis in law or fact for denying the claim; and (3) it must be shown that the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed.... [A]n insurer is ... entitled to challenge a claim and litigate it if the claim is debatable on the law or the facts.   Wittmer v. Jones, Ky., 864 S.W.2d 885, 890 (1993). See also Motorists Mutual Insurance Company v. Glass, Ky., 996 S.W.2d 437, 453 (1997). Given that we are in agreement with the trial court that there was no "occurrence" under either insurance policy, appellants cannot establish the first prerequisite that the insurer was obligated to pay the claim under the terms of the policy."

Note:  The other owner not on the property and no loss payable provisions in the policy.

Perryman purchased truck from dealer, showed proof of insurance, signed documents, and drove truck off the lot.  38 days after driving truck off the lot, Perryman has accident injuring his passenger and another (which is the subject of a separate appeal and decision rendered this same date - Tingle - scroll down). Title was transferred by the dealer the next (39th day after the purchase).  The trial court found Perryman to be the owner of the vehicle for insurance purposes. CA held the dealer the owner for insurance purposes since too much time had elapsed even though titling statutes permit a dealer to obtain proof of insurance from the purchaser then deliver the titling documents to the clerk. Discretionary review to the SC, and remanded back to CA for further consideration in light of Auto Acceptance Corporation v. T.I.G. Insurance Company, Ky., 89 S.W.3d 398 (2002)(with the 1994 revision to KRS2 186A.220, Auto Acceptance was not the legal owner of the vehicle merely because title had not been transferred; if the dealer verifies that the buyer is insured, the dealer may agree to title the vehicle after relinquishing control to the purchaser.).

CA stated its earlier opinion was consistent with the underlying rationale of Auto Acceptance by holding the dealer to be the owner, not because of its possession of the title documents, but because it did not promptly and with due diligence deliver the necessary documents to the county clerk. 

Plaintiff and others were injured when Cox was driving friend's uninsured vehicle.  No question of injuries, but Allstate investigated whether the vehicle was in fact uninsured, and after determining it was uninsured, then investigated to see if the four plaintiffs/passengers resided in the policyholder's household to be entitled to coverage.   Upon completion of investigation and depositions, Allstate determined all were residents and a check was issued to their attorney to cover the medicals under PIP.

CA concluded that "once the reparation obligor receives reasonable notice of the loss and the amount of the loss, which Deerbrook [Allstate] undisputedly did in this case, the time for payment of PIP benefits begins to run."  If the investigation results in no liability, no interest; but if PIP is paid later, then interest is owed;  12% interest even if insurer had reasonable grounds for not paying PIP initially.  Trial court was correct in concluding, however, that the insurer had reasonable grounds for delaying payment of PIP and properly denied 18% interest and attorneys fees.

Comment:  Interesting case on the relationship of alternative and inconsistent defenses, defendants, and insurers.  Here, plaintiff sued other driver and other driver's employer (alleging driver was acting within scope of employment). ANPAC insured the defendant driver and defended him on liability and  claimed insured driver was within the scope of his employment.  Hartford requested a defense of its insured (employer) and defended the employer on liability and denied he was acting within the scope of employment.  Jury apportioned fault on liability, and TC ruled as matter of law that defendant driver was acting within the scope of his employment.  ANPAC has satisfied the money judgment in full.  Hartford wants it's $19,000+ in defense attorneys fees.

The duties to defend and indemnity.  
"Every policy of insurance imposes two basic duties: (1) the duty to provide a defense to the insured; and (2) the duty to indemnify the claims made against the insured pursuant to the terms and conditions of the policy. Thompson v. West American Insurance Co., Ky. App., 839 S.W.2d 579 (1992); Brown Foundation, Inc. v. St. Paul Fire & Marine Ins. Co., Ky., 814 S.W.2d 273 (1991). These duties are separate and distinct from each other. When two or more insureds under the same policy have conflicting interests in the litigation, the insurer must provide separate counsel to each of the insureds. See 14 Couch on Insurance §§ 202:24, 204:25 (3d ed. 1999)."

Potential conflicts of interest.
This case raises a classic conflict for the insurance defense counsel in a vicarious liability situation.  While representing the driver, it's in his best interest for a driver financially to be within scope of employment for the simply reason of a deeper pocket for coverage (assets and more insurance).  The employer, on the other hand, does not benefit from a scope of employment (workers comp and vicarious liability) and if the facts warrant may wish to place a Maginot line defense to keep the plaintiff at bay by denying scope of employment.  In this case the plaintiff did it correctly,  sued the plaintiff driver AND then later amended the complaint to include the employer.  This amendment (and not the ultimate resolution of agency liability) is what kicks in the insured driver's insurer's obligation to provide a defense for the employer (if the policy provisions so provide).  

Therefore, plaintiff's lawyers - if you think there is employer vicarious liability - name them as a party and let the other side figure it out.  Defense lawyers be careful of the potential conflict since there is a potential employer/employee conflict.  Even if the plaintiff does not name the employer as a defendant, and the defense counsel knows of the potential liability, then remember the duty to notify the insurer of the case for purposes of coverage on behalf of the defendant driver and place the onus on them to address the coverage issue separately.  The defense attorney may even need to third-party the employer in if the employer's insurer denies scope of employment and resultant coverage (and who wishes to forego potential reimbursement of insurance defense costs and the large liability policies available to most  employers if the case involves catastrophic injuries?).

Underinsured motorist benefits can really muddy the water.
Of course, this area can get even more complicated in the event of an underinsured motorist claim and potential employer liability/coverage for the injuries.  Remember UIM kicks in when liability limits are exhausted OR you settle for less than policy (or policies) limits.  Imagine this scenario - you have a $500,000 case, the defendant driver has minimum limits of $25,000, and you have $500,000 in stacked UIM coverage (yeah, I know this sounds like a law school exam).  Early on and before suit may even be filed, the liability carrier throws in the towel of policy limits of $25,000.  Now you proceed against the UIM carrier (after giving them the required notice under Coots v. Allstate and KRS 304.39-320 and the release of the defendant;  a release of the agent releases the principal too!).  Here is where it can get dicey.  What happens if it is now discovered that there is an employer with a $1 million CGL etc policy available.  How can this happen?  Well, the risk exists whenver no depositions were taken and there were no clues on the accident report that there may be an employer out there (eg., vehicle ownership).  Of course, I won't even throw in the other danger of a defendant driver having an umbrella policy with a carrier different from his liability carrier.  Double ouch.  You know what is going to happen - UIM carrier will insert the excess and/or umbrella liability coverages between them and the plaintiff.  In this scenario, the UIM carrier would take the position of no liability until the plaintiff's damages exceed $1,025,000 (combined CGL and liability policies).

Minimizing the risk.
How do plaintiffs protect themselves.  No 'text book' answer for this one.  In the absence of filing suit in every case (and still the risk remains), you may wish to wrap up these loose ends with the other side through correspondence and/or the release in which the putative defendant-driver asserts/covenants/acknowledges there is no other person, entity, etc. potentially liable, denies any principal liability for the damages (eg., no scope of employment), admits there are no other policies of liability insurance (excess, umbrella or otherwise) which may provide coverage for any or all of the damages claimed, and you get the insurer who is paying the liability limits to do the same.  A simple letter to the insurer asking about these issues may provide you some relief in the event your rainmaker case goes awry.

Oftentimes, defense counsel/liability insurers prepare subrogation and subordination agreements to protect themselves and require certain disclosures and duties from the plaintiff upon the advanced payment of UIM benefits.  No reason the plaintiff's attorney cannot protect him/herself in these situations and avoid becoming the next named defendant in the lawsuit.

This was a duty to defend a trademark infringement claim involving the use of the name "Weikel" as part of a real estate school.  Earl Weikel  claimed he could use his own surname, but ETS which ran A-Pass Weikel Institute thought differently after Weikel Academy of Realty, Inc. opened its doors.  Earl had sent a letter stating "I believe you know that a competing school . . .  real estate school yet to be established, would profit greatly with WEIKEL as part of it's name." The circuit court concluded that Weikel Academy acted with intent to confuse its service mark, with intent to harm, and that therefore an exclusion in the Monroe policy operated to relieve Monroe of its duty to defend and its obligation to provide coverage.  ETS appeals, arguing that Earl Weikel acted under the mistaken impression that he had an unfettered right to use his own surname, and that therefore he did not act with intent to violate the law.

NOT TO BE PUBLISHED

The insurance contract provided for arbitration, and the umpire's award of damages (which was less than the insurer actually paid) was held by the CA to have gone outside the terms of the contract regarding a loss so that this portion of the judgment was reversed.

The summary judgment dismissing Tri-Valley's claim under the Consumer Protection Act was proper. KRS 367.220(1) sets forth the class of individuals who may bring actions for recovery of money or property under the Consumer Protection Act. In order "[t]o maintain an action alleging a violation of the Act, however, an individual must fit within the protected class of persons defined in KRS 367.220." Skilcraft Sheetmetal, Inc. v. Kentucky Mach., Inc., Ky.App., 836 S.W.2d 907, 909 (1992). Tri-Valley does not fit within the protected class of persons who may file claims under the act. See Gooch v. E.I. DuPont de Nemours & Co., 40 F.Supp.2d 857, 862 (W.D.Ky.1998), citing Aud v. Illinois Cent. R.R. Co., 955 F.Supp. 757, 759 (W.D.Ky.1997). Thus, we affirm that portion of the summary judgment.

APPELLATE NIT-PICKING AGAIN:  (CR) 76.12(4)(c)(v)

"Hamilton also argues that the issue of debris removal should not be considered by this court because Tri-Valley did not comply with Kentucky Rules of Civil Procedure (CR) 76.12(4)(c)(v) which requires that the portion of a brief containing arguments must begin with a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner. Although Tri-Valley's brief may have been lacking in this respect, we nonetheless exercised our discretion and reviewed the issue on the merits. See Kentucky Farm Bureau Mut. Ins. Co. v. Burton, Ky.App., 922 S.W.2d 385, 387 (1996). See also Cornette v. Holiday Inn Express, Ky.App., 32 S.W.3d 106, 109 (2000)."

KENTUCKY SCHOOL BOARDS INSURANCE TRUST V. BOARD OF EDUCATION OF WOODFORD COUNTY, KENTUCKY
INSURANCE, COVERAGE, EXCLUSIONS
CA held "the negligence and civil rights claims brought by [school student] did not arise out of an assault and battery or bodily injury. Because the alleged  liability of the Board is predicated upon its conceptually independent negligent supervision,  application of the subject exclusions would effectively eviscerate the errors and omissions policy altogether contrary to Kentucky law. Accordingly, the judgment declaring that [the board's insurance company] has a duty to defend the Board in the underlying action under the terms of the governing policy is affirmed."

Note:  Lengthy and detailed opinion which scrutinizes the school board's insurance policy to provide coverage.

At trial, the judge denied directed verdicts, and the jury ruled in favor of the plaintiff awarding her policy limits of $25,000 plus pre-judgment interest.  Court of Appeals affirmed.

The first argument of being intoxicated did not cut it.  The statutory presumption is rebuttable, and evidence to the contrary was offered in the form, inter alia, of the decedent's companion saying they only had two beers.

The second argument denying the appeal took a little more finesse by the appellate court regarding the decedent's actions causing a substantial risk of serious physical injury or death.  The unfair claims settlement practices act was resurrected as shield to this defense by the insurer insofar as the insurer is required by law to give reasons for denying a claim, and the sole reason for denying this claim was the intoxication.  Nothing else was said.  Failure to timely raise this defense cost them the defense and no entitlement to a directed verdict or jury instructions.

Notes.  Again, not much law and lots of facts highlighting a situation in which the defenses and exclusions were strictly construed.  The Unfair Claims Settlement Practices Act defense to a denial of coverage was an odd twist in which the insurer was stuck with the reasons given for its denial of the claim.  Additionally, no mention of the substantial risk/felony was raised in the answer to the complaint.  Although we do not have access to the Answer to the Complaint, it does raise some interesting analysis to the typical defenses to insurance coverage (eg., plaintiff's claim is subject to the statutory, policy, and regulatory defenses, exclusions, and coverages) which are generic and not fact-specific.  When an exclusionary defense is raised, then it behooves defense counsel to amend the answer and not rely on instructions and the generic defense.

The trial court, through a heroic stretch of the rules of construction, granted summary judgment in favor of the insured, invoking the principle of expressio unius est exclusio alterius (expressed exclusion of one thing implies inclusion of others).  The TC held that since the insurer did not expressly exclude tractors in its definition of the term “motor vehicle,” that it impliedly included it in its definition. 

The Supreme Court upheld the Circuit Courts reversal of summary judgment in favor of the insured.  The SC held a) the tractor was excluded under the plain language of the policy, since it is “an off the road vehicle no meeting highway use specifications” and b) the trial court’s interpretation of the exclusion clause was contrary to the rule of Kemper v. Heaven Hill Distilleries 82 S.W.3d 869 (2002): “exclusion clauses do not grant coverage; rather, they subtract from it.”

FYI:  "Under the policy, 'motor vehicle' is defined as [A] four or more wheeled vehicle which is self-propelled and designed to run on the public highway. This definition does not include motorcycles, motor scooters, motorized bicycles, three-wheeled all-terrain vehicles (ATVs), snowmobiles, dune buggies or other off the road vehicles not meeting highway use specifications, vehicles while being used for racing or demolition derbies, law enforcement vehicles, or fire department vehicles."

The Indiana Ins. Co. policy excluded coverage for any employee to whom the employer may be liable for workers' compensation benefits, for injuries to an employee arising out of the scope of employment, and for injuries caused to an employee by a fellow employee.  The employer failed to obtain workers' compensation coverage and was not immune from civil liability under the Workers Compensation Act.  However, this failure to obtain workers' compensation coverage for its employees, and its potential liability to them in a civil action, does not enlarge the scope of coverage under the policy.  

The decision then turned on the definition of employee, and the CA's decision was that the three workers were employees under the terms and definitions of the policy.

Comment:  The interpretation of the insurance contract consumed the bulk of this decision, but the dagger to the heart was the ruling that a business automobile liability policy could exclude coverage for employees within the scope of employment.  The exclusion was considered valid and even obviated minimum limits coverage available to the employees. Note that there was no coverage available to the employee driver which negated any source of recovery for any third-parties injured PLUS the injured fellow workers who were passengers in the accident.

  Let us go back to square one - the No Fault Act's purpose at KRS 304.30-010(1) which is  "To require owners, registrants and operators of motor vehicles in the Commonwealth to procure insurance covering basic reparation benefits and legal liability arising out of ownership, operation or use of such motor vehicles . . . ."   Consistent with that purpose, exclusions were shot down to provide coverage, or at least the minimum limits coverage under the No Fault Act, in several situations over the years consistent with that purpose.  

• Intentional Injuries.  Insurer could not exclude intentional injuries from minimum tort liability limits of automobile policy required by Motor Vehicle Reparations Act (MVRA). Mosley v. West American Ins. Co., 743 S.W.2d 854 (Ky. Ct. App., 1987).  Or to put it another way, an accident is an accident even if intentional.
• Family Exclusion and Minimum Coverage.  The Supreme Court declared the family member exclusion invalid even though it had been recognized prior to the MVRA.  "[When the legislature stated the policy behind the MVRA and set forth its requirements it specified no exclusions from minimum coverage.... Neither the drafters of the Uniform Act nor the writers of Kentucky's MVRA included sections permitting exclusions to the minimum required tort liability coverage. The effect of these omissions is similarly clear. Neither intended that the minimum tort liability coverage be diluted or eliminated by exclusions. An exclusionary clause in an insurance contract which reduces below minimum or eliminates either of these coverages effectively renders a driver uninsured to the extent of reduction or elimination. Because the stated purpose of the MVRA is to assure that a driver be insured to a minimum level, such an exclusion provision contravenes the purpose  and policy of the compulsory insurance act. (Emphasis added.) Bishop v. Allstate Insurance Co., Ky., 623 S.W.2d 865 (1981).
• Family Exclusion Void In Entirety.  "Family exclusion" or "household exclusion" clauses in automobile liability or other liability insurance policies, which clauses limit coverage available for person's injuries solely on basis of injured person's status as member of policyholder's family, are invalid and unenforceable as violative of public policy.  Lewis v. West American Ins. Co.,  927 S.W.2d 829 (Ky. 1996).
• PIP.  A passenger in a car driven by a "converter" a/k/a "thief" is entitled to reparation benefits is he/she has a good faith belief that the driver is entitled to use the car.  Stuart v. Capital Enterprise Ins. Co., 743 S.W.2d 856 (Ky. Ct. App. 1987).

  The opinion in Ind. Ins. Co. v. Brown was authored by Judge Knopf.  The appellants argued that the exclusion should not apply since there was no workers compensation coverage.  Judge Knopf then noted (and quoted an earlier decision of his own authorship) that the exclusive remedy provisions of the Workers Compensation Act do not immunize the employer from tort liability since he had no workers compensation insurance.  The very next sentence addressed the central issue -  "However, Willowbank's [the employer's] failure to obtain workers' compensation coverage for its employees, and its potential liability to them in a civil action, does not enlarge the scope of coverage under the policy.".  This legal conclusion was reached without a single statutory reference, citation or reason given to how it was reached!

  Admittedly, I (nor most lawyers)  have ready-access to the briefs or arguments in these decisions, and all I know is what they tell me in the opinions.  With that said, this purported attempt to examine this exclusion within the context of both the No Fault AND the Workers Compensation Acts was given short shrift by Judge Knopf in this decision.   It is not like it is beyond the Court of Appeals ability or authority to address the issue since exclusions involving intentional acts, family members, and thieves were all addressed by other panels of the Court of Appeals in times past. 

  In addition, Judge Knopf has not shied away from issues of first impression before:  

• Tyler v. Taylor, 2002-CA-001771.pdf, Date: 11/26/2003
  PUBLISHED (statute of limitations and prisoner's declaratory judgment action).
• Ryan v. Kentucky Farm Bureau Mut. Ins. Co.,2002-CA-000637.pdf (in a matter of first impression, held that trial court improperly allowed jury to apportion fault to unknown defendant who was merely a nominal party).
• For what it is worth, a total of 9 decisions were located in the WestLaw (tm) database involving Judge Knopf and issues of first impression.  All of which were published.  More importantly, none have been reversed yet either. 

 Some practical insights are also relevant.  This case involved a business automobile insurance policy which excluded employees from coverage.  In order for the insurer to reap the benefit of an employee exclusion in a business policy, should there not be proof presented to them that a workers compensation policy existed so that public policy was not skirted?