Maryland Injury Lawyer Blog

Back in January, I wrote about Allstate’s on going war with the state of Florida (and Missouri) in which it arrogantly racked up more than $4 million in fines for refusing to turn over documents that they had been ordered to produce and which had been requested by the insurance commission in Florida. On Friday, Allstate not only produced 150,000 pages of responsive documents it had protected as proprietary, but it made the documents available on Allstate's website.

In defending some of the documents, a company spokesperson said that many lawyers misinterpreted the documents that refer to how Allstate deals with claims from other parties, not from policyholders. The Allstate spokesperson said many of the documents, which had been picked apart by plaintiff’s personal injury lawyers, refer to claims-handling practices for car accident claims that have been incorrectly assumed to be applied to homeowners’ policies as well.

If this is true, I see Allstate’s point. Accident lawyers whine about Allstate’s bad offers in third party cases. In car accident cases in Maryland, I don’t think GEICO, Progressive, Nationwide, MAIF, or State Farm are making offers that are any different than Allstate’s. But that is not my point. The insurance companies have no obligation in third party cases to make fair offers. Insurance companies can do whatever they want. This is why we have lawsuits.

Moreover, the reason why insurance companies will not pay fair value on my accident claims is because two things have to happen before a bad offer turns into a lawsuit: (1) the accident lawyer has to be willing to file the claim, and (2) the plaintiff has to be willing to file a lawsuit and wait for their recovery. With respect to the former point, accident lawyers who fear filing suit rarely tell their clients they will not file suit. Instead, the lawyer tells the client that it is a great offer and they should accept it. The main reason insurance companies make bad offers is because lawyers let them. The idea that insurance companies – again in third party case – have an obligation to be fair is as absurd as the notion that personal injury lawyers should have the goal of being fair. In the adversary system, if your goal is to be fair, you are doing your client a disservice. This is not to say that you should not recommend fair settlements, but it certainly should not be a plaintiffs’ lawyer’s goal.

First party insurance cases where the insurer has a duty to their insureds to fairly provide compensation for their injuries or losses are a different matter altogether. In these cases, I think there is ample evidence that Allstate has failed to meet their obligations and I would not be surprised if these documents intentionally blur the lines between smart strategies in third party cases where the insurance company has a legitimate objective to pay less than fair value on claims and first party cases where the insurance company has a legal and ethical obligation to pay their insureds fair value for their claims.

Many plaintiffs’ personal injury lawyers are complaining that State Farm’s profit surged to $5.6 billion in 2006 — up 75% from $3.2 billion in 2005. State Farm’s CEO, Ed Rust, Jr., received a $5.26 million dollar pay raise last year and is now earning $11.66 million. Implicit in this complaint is the idea that State Farm’s lowball offers and hardball tactics are the reason why their profits are so high and their CEO is overpaid. I think these complaints are misplaced for a lot of reasons.

First, General Motors took a $39 million loss last quarter. While this statement is misleading as well, it underscores the obvious: big companies can have large profits and large losses. A number like $5.6 billion in a vacuum means nothing, particularly for a huge company like State Farm. If you think the insurance companies make too much in profit, put your savings in a company like Allstate, which is publicly traded. But be careful: Allstate, for example, has underperformed the market in the last ten years. Insurance companies are hardly the Google of the stock market and I really don't think there is any evidence that their profits are historically excessive. (Please, correct me if I'm wrong.)

Second, with respect State Farm’s CEO’s salary, State Farm is a Fortune 100 company. If high CEO salaries are a problem (and I don’t think they are for reasons that are not worth getting into here), it is not specific to the insurance companies. Big company CEOs are making a ton of money in every business.

Finally, and I think most importantly, I think it is misplaced to expend energy complaining about low ball offers. Setting aside first party obligations where the paradigm is a little more complex, insurance companies should be trying to do whatever they ethically can to decrease payouts. It is our job as personal injury lawyers to do the opposite. We are not shooting for fair offers, we are trying to get as much as we possibly can for our clients. They call us greedy personal injury lawyers and we call the insurance companies, like State Farm, cheapskates. But maybe this is not the worst thing in the world. We have an adversarial system that has been in place for a few hundred years and I think it works. To the extent that it does not, it is clearly not a perfect system. It is just the best system.

State Farm and their brethren are going to play tough. That’s okay. If personal injury lawyers hold up their end of the bargain and fight back, the system will work just fine.

A former Allstate claims adjuster supervisor tells all in a first party bad faith trial in Kentucky. My response: I am shocked - shocked - that there is gambling going on in this establishment.

To read more about the former Allstate employee's testimony, click here.

Yesterday, Washington Governor Christine Gregoire's signed into law a bill to strengthening Washington's first party bad faith law. Maryland recently passed its own first party bad faith law but Washington's is much stronger. Although the Washington law regrettably excludes health insurers, it eases the stringent requirements for first party bad faith lawsuits, allowing policyholders who are treated unreasonably by their own insurance company to recover three times the actual damages. Now that is a first party bad faith bill was some real teeth. The Washington law also allows for an award of attorneys' fees and costs to the claimant.

I'm hoping that the success of the new Maryland first party bad faith bill will bring about a more stringent law in the future in Maryland. Virginia, which has a similar statute to Maryland's (Virginia Annotated Code §38.2-209), could also use a stronger law that will do more to discourage insurance companies from making the motto of "taking premiums and denying claims" a common business practice in Maryland and Virginia.

The Maryland Daily Record published an article today on Erie Insurance Exchange v. Heffernan, a new Maryland Court of Appeals opinion in an underinsured motorist case. The reporter, Caryn Tamber, does a real nice job of addressing a complicated issue. Any Maryland lawyers handling auto accident or truck accident cases should read the entire opinion. You can find the article, which includes a few quotes from me, here.

CNN reports on an 18 month investigation into minor-impact soft-tissue injury crashes around the country. The report confirms what auto accident lawyers in Baltimore and around the country have known for quite some time: the insurance companies defend these cases not based on the value of the cases, but in an attempt to discourage auto accident lawyers and victims from bring a claim.

You can read more here about Colossus, the computer system discussed in the article that directs the process of making offers in auto accident cases. Since the mid-1990s most of the major insurance companies - led by the two largest, Allstate and State Farm - have adopted a tough take-it-or-leave-it strategy when dealing with most auto accident cases. The result of this strategy has been billions of dollars in profits for insurance companies and little, if anything, for the public, according to Jeff Stempel, a University of Nevada insurance law professor. Stempel further stated that “We can see that policyholders individually are getting hurt by being dragged through the court on fender-bender claims, and yet we don’t see any collateral benefit in the form of reduced premiums even for the other policyholders." He goes on to say that he thinks that "this kind of program is in my view institutionalized bad faith.”

My last blog entry was a rambling diatribe about how desperately we need first party bad faith in Maryland. But I do not agree with Professor Stempel that insurance companies' decisions to aggressively fight claims is tantamount to bad faith in every case. The insurance companies have a right to take a tough posture, particularly in the third party context. Our personal injury lawyers' job is to fight back when they do. I do not think we deserve a free ride in third party cases.

In Maryland, in cases where the policy limit may be exceeded, most insurance companies will notify their insured that there is a risk that the verdict will exceed their policy limit and promise to pay any excess verdict. (Plaintiffs' lawyers nickname the letters based on the insurance company slogans: you would get a "good neighbor" letter from State Farm; a "good hands" letter from Allstate.) So my feeling is that in the third party context, if the insurance company is willing to pay any excess judgment, they should be able to do whatever they want.

Where injustice does come into play in Maryland in auto accident cases is uninsured motorist cases. Today, insurance companies are not obligated and do not act fairly to their own insureds in Maryland. This is where I believe that insurance companies should be obligated to take off the gloves and deal with their customers in an even-handed manner. They are required to do this in most states. Hopefully, they will soon be required to do so in Maryland. If you agree with me, write your state senator and local delegates as this battle will be waged in the Maryland legislature in Annapolis in the upcoming months.

The Maryland Court of Appeals affirmed today Munday v. Erie, an uninsured motorist case involving a twenty year-old Prince George's County man who had been living with his grandmother in Waldorf, Maryland (Charles County) for almost a year. The Maryland Court of Special Appeals found that he was not a resident relative of his parents who lived in Lusby, Maryland. The Plaintiff's Maryland personal injury lawyer had sought a finding that his parents' uninsured motorist coverage with Erie Insurance could be applied to his auto accident case.

As I wrote last year in analyzing the Maryland Court of Special Appeals opinion, while our auto accident lawyers would certainly prefer a different result, this decision by the Maryland appellate courts is in line with the language of the insurance policy at issue and Maryland law on who is a resident relative.

The Maryland Court of Appeals last month issued another opinion interpreting Maryland Insurance Code Annotated Section 19-509 in State Farm Mut. Auto. Ins. Co. v. DeHaan. In this case, the Plaintiff's night got off to a great start: the Baltimore Ravens won their first Super Bowl over the New York Giants, a night everyone in Baltimore remembers. On his way home from a party, Plaintiff stopped at a Shell Station in Baltimore County (near the old Westview drive-in movie theater) in his 1989 Chevrolet Blazer, which was insured under a State Farm automobile insurance policy that had $10,000.00 coverage in Personal Injury Protection benefits (PIP) and $100,000.00 coverage in uninsured motorist benefits.

After arriving at the gas station just after 1:00 a.m., Plaintiff put his keys on the driver's side floorboard and entered the convenience store portion of the Shell station to make a purchase. Upon returning to his vehicle, Plaintiff found someone sitting in his car. The intruder shot him and drove away.

Plaintiff was taken to Maryland Shock Trauma Center and suffered substantial injuries and incurred approximately $70,000.00 in medical expenses. The bad guy, who shockingly did not have any insurance, was caught and convicted of attempted murder. Plaintiff 's personal injury attorney brought an uninsured motorist coverage claim to recover for his client's injuries in Howard County Circuit Court.

The trial court granted Plaintiff's lawyer's motion for summary judgment that Plaintiff should receive both his PIP benefits and the uninsured motorist provisions of the car insurance policy. After the ruling was granted, State Farm paid Plaintiff the amount covered under the PIP provision, but appealed the trial court's decision regarding the uninsured motorist claim, arguing that the trial court erred in concluding that the insured's injuries arose out of the "use" of an automobile. The Maryland Court of Special Appeals agreed, affirming the Howard County trial court's ruling.

The Maryland Court of Appeals reversed, ruling that the fact that the assailant was in the vehicle and was in control of the vehicle at the time of the incident did not constitute "use" under Maryland Code Ann., Ins. § 19-509 (2006) because the instrumentality of the injuries Plaintiff suffered was the handgun and not the use of the automobile.

The Maryland Personal Injury Lawyer Blog is written for plaintiffs and their lawyers. But, honestly, while I think the law should include this kind of injury under a insured's uninsured motorist coverage, I do not think this accident, however unfortunate, comes within the scope of Maryland Code Ann., Ins. § 19-509 (2006). Accordingly, I agree with the Maryland Court of Appeals' opinion.

A Virginia lawyer wrote me last night asking about a client that was injured in a car accident in Maryland. Apparently, the car accident was a by-product of road rage that reached a point where the Defendant arguably intentionally rear ended the Plaintiff’s car. The Defendant apparently admits positioning his car to retaliate against the Plaintiff but claims the contact was unintentional. The insurance company is refusing to defend or indemnify the case because it claims the Defendant’s recorded statement to them admits that the conduct was intentional.

The lawyer’s question is whether uninsured motorist coverage is available to this Plaintiff in Maryland. Assuming that the Plaintiff did not intentionally cause the car accident, the answer is yes. Section 19-501(c) of the Maryland Annotated Code of Insurance requires only that the Plaintiff did not intentionally cause the car accident.

Continue reading "Is Uninsured Motorist Coverage Available in Maryland for an Intentional Car Accident?" »

The Maryland Court of Special Appeals had occasion this month to consider the scope of what constitutes a resident relative for the purposes of uninsured motorist coverage in Mundey v. Erie Insurance Group.  In this case, a Prince George's County man who had been living with his grandmother in Waldorf, Maryland (Charles County) for almost a year was found by the Maryland intermediate appellate court not to be resident relative of his parents who lived in Lusby, Marylandand therefore his parents' uninsured motorist coverage with Erie Insurance could not be applied to his auto accident.

Apparently, the Plaintiff, who the Court noted was not a full-time student, lived with his grandparents for the 11 months preceding the auto accident. During that time, the Plaintiff visited his parents' home approximately four to six times, spending the night on Thanksgiving and Christmas. On these holidays, Plaintiff slept on an extra bed in his younger brother's room because his bedroom had been converted for other uses after he left. Erie Insurance's accident lawyers argued that under these facts, the Plaintiff should not be deemed a resident relative and could not recover from Erie Insurance for his personal injuries from his auto accident under his parents' uninsured motorist policy. Plaintiff's personal injury lawyer, Waldorf attorney Michael J. Schreyer, contended that "resident," as defined in Erie Insurance's policy, limits the statutorily required uninsured/underinsured motorist coverage and constitutes an impermissible exclusion from coverage, thus violating the public policy goals of Md. Code Ann., Ins. § 19-509

The Maryland Court of Special Appeals disagreed with Plaintiff's attorney, ruling that Plaintiff was not a "resident" of his parents' Lusby home as defined by their insurance contract with Erie Insurance. The court reasoned that according to the policy language,Plaintiff would be a resident only if he physically lived in his parents' household, is under the age of 24, and attends school full-time. Writing for the court, Judge J. Frederick Sharer found that the"undisputed evidence before the Prince George's County Circuit Court clearly established that appellant failed to meet either definition of 'resident' because he did not physically live in his parents' home and did not attend college."

While our Maryland auto accident lawyers would certainly prefer a different result, this decision by the Maryland Court of Special Appeals would appear to be in line with the language of the Erie Insurance policy and Maryland law on who is a resident relative Our personal injury lawyers have a resident relative case pending in Baltimore County Circuit Court where we expect a very different result because, unlike this case, the injured party was a listed insured on the insurance policy. But in this case, it was more difficult to argue insurance coverage as a resident when the injured victim was clearly not a resident of the home in question.

The New Jersey Superior Court, Appellate Division, ruled last month in Dolores Kleiber v. State Farm Ins. Co. that the trial court properly entered summary judgment in favor of State Farm in a lawsuit filed by a State Farm insured seeking a declaratory judgment that Plaintiff was entitled to additional optional uninsured motorist (UM) coverage because her insurer failed to offer her optional coverage when she moved from Florida to New Jersey shortly before an auto accident she had in the fall of 1999 with an uninsured driver.

The New Jersey Superior Court, Appellate Division, ruled the trial court did not err in entering summary judgment in favor of an insurer in an insured's action seeking a declaratory judgment that she was entitled to additional optional uninsured motorist (UM) coverage because her insurer failed to offer her optional coverage when she moved from Florida to New Jersey.

Plaintiff's attorney's argument was a stretch, contending that because the policy was issued in Florida, State Farm was obligated to offer her additional coverage because State Farm knew she would be driving her car in New Jersey. Accordingly, she claimed that if she had been informed that she was required to obtain insurance in New Jersey, she would have obtained $100,000 in optional UM coverage.

The Appellate Division disagreed, holding that because New Jersey only requires 15/30 coverage under N.J.S.A. 17:28-1.1(a), there was no evidence that Plaintiff would have purchased additional UM coverage.

In 2004, the Maryland legislature passed a bill that requires an insurer to offer to the first named insured under a motor vehicle liability policy "liability coverage for claims made by a family member in the same amount as the liability coverage for claims made by a nonfamily member under the policy or binder." 2004 Maryland Laws, Chap. 127, Section 1.

But this Maryland law does not require insurance companies to "offer" the insurance in the same sense the Plaintiff claims above. This definition of offer means "making available" as opposed to the affirmative burden Plaintiff's auto accident lawyer sought to place on State Farm in this case. I think it is dangerous to place the burden on insurance companies to take affirmative action in offering coverage, particuarly based on conversations the insured had with the insurance company. Moreover, I think Plaintiff's claim that she would have bought coverage if it had been offered is speculative at best. Accordingly, I think the court made the right ruling in this New Jersey case, and I suspect a Maryland court would similarly hold.

Maryland House Bill 1162, sponsored by Delegate Darryl Kelley, was passed by the Maryland General Assembly over Governor Ehrich's veto yesterday. As set forth in more detail in our January 24, 2006 blog, this new bill will greatly assist personal injury lawyers in Maryland dealing with uninsured motorist claims.

The burden is on the personal injury plaintiff's attorney in Maryland in an uninsured or underinsured motorist claim to prove that the negligent car, truck or motorcycle was uninsured or underinsured. The attorney's inability to establish lack of insurance is fatal to an uninsured motorist claim. Some jurisdictions, such as Texas, realizing how difficult it is to prove that an automobile is not insured, shifts the burden of proof to the insurance company. See Tex. Ins. Code. Ann. art. 5.06--1(7).

While not as accident victim friendly as Texas, there is a bill pending in the Maryland General Assembly that would make the Maryland personal injury attorney's difficult job of proving a negative a great deal easier. House Bill 1162 would enable Maryland attorneys representing personal injury victims bringing uninsured motorist claims to prove that the negligent driver was uninsured by one of two methods:

1. Submission of a certified copy of the Maryland Motor Vehicle Administration (MVA) record (or similar record from another state) indicating the absence of insurance coverage on the date of the auto accident, or
   
2. Offering:
   1. a document submitted by "the insurer that has been identified as the insurer of the motor vehicle" by the MVA or similar agency of another state;
   2. a writing signed by the owner or driver of the car; and
   3. a police report from the accident investigator.

If the attorney could make such a showing under this bill, the burden of proof would shift to the insurance company to prove by a preponderance of the evidence that either the car or the driver had insurance coverage.

The bill passed unanimously passed the Maryland House of Delegates (134-0) and also passed the Maryland State Senate but the bill was vetoed by Governor Robert Ehrlich. Supporters are trying to get the votes necessary to override the veto, a task they were unable to accomplish last year. Why Governor Ehrlich opposes the bill is anyone guess. The Maryland Automobile Insurance Fund (MAIF) opposes the bill, almost certainly at the Governor's express or implied request, but the rest of the insurance industry apparently understands the logic of the bill and has not opposed it. But Governor Ehrlich appears willing to stand on a virtual island on this issue.

The Court of Special Appeals of Maryland ruled last week in Shafer v. Interstate Automobile Ins. Co. that a motorcycle passenger - who was injured when the motorcycle on which she was riding blew out a tire - is not entitled to uninsured motorist coverage because she failed to meet her burden of proof that the damage to the tire was caused by negligence of a third party. Accordingly, the court affirmed a Washington County, Maryland trial court judge who granted summary judgment on behalf of defendants Interstate Insurance and Nationwide Insurance.

The Plaintiff's Maryland personal injury attorney presented uncontroverted evidence through an accident reconstructionist expert, R. Scott Wills, that the motorcycle accident was caused by a tire blowout from a piece of sheet metal from an unidentified vehicle that was lodged into the motorcycle's tires. There was no evidence of contributory negligence by Plaintiff or the operator of the motorcycle. But the unanimous court found that Plaintiff's case failed because her attorney did not and could not prove "any evidence of the negligent act or course of negligent conduct which resulted in the dislodgment of a metal piece in the roadway."

In other words, under Maryland Insurance Code Annotated Section 19-509(c)(1), you must be entitled to recover damages from the negligent party. Accordingly, the uninsured motorist insurance carrier in Maryland steps into the shoes of the party whose negligence caused the accident, even if the negligent party is a phantom car that sped away after causing the accident. In this case, there were no shoes to step into because Plaintiff could not point to any negligent party because there was no evidence that the nail was lost due to the negligence of a third party. In fact, logic and reason leads to the opposite conclusion: that the nail dropped from the engine of another car through no fault of the driver. The court wrote: "Although the owner or operator has an obligation to inspect and maintain his/her motor vehicle, the ability to discern that a metal piece of a vehicle has rusted through to an extent that it will become dislodged is an event which cannot be as easily anticipated as the potential for injury to an invitee and, indeed, is an event which may never occur." This is, of course, particularly true if the loose nail is not likely to be detected during normal use or maintenance or the car.

The court stated because Plaintiff's attorneys specifically stated they were not arguing the doctrine of res ipsa loquitur, they would not consider authority from two other personal injury cases in other jurisdictions where the doctrine was applied in a similar context: Woosley v. State Farm Insurance, 18 P.3d 317 (Nev. 2001) and Hale v. American Family Mutual Insurance Company, 927 S.W.2d 522 (1996). But even if the plaintiff's attorneys had argued res ipsa loquitur, it is difficult to argue that a nail is not usually placed in the roadway in absence of negligence.

Regrettably, the Maryland Court of Special Appeals really had no choice in this case but to find for the insurance companies. The Maryland uninsured motorist statute does not allow for absolute liability; instead, it allows for recovery when a negligent third party has no insurance coverage or limited insurance coverage.