As I mentioned last week, I’m pretty excited about our law firm’s win in Buckley v. Brethren Mutual. I think this is an important case for two reasons. First, it shows that the Maryland Court of Special Appeals respects the actual intent of Maryland’s statutory scheme for uninsured motorist claims.
But this case also tells us something about Brethern Insurance Company. You don’t see them a ton in Maryland accident cases. And I’ve actually always liked the company. They have been easy to deal with in the past. But what we learned from this case is that Brethern will not stand by their own insureds. Because Brethern played an awful trick on its own insured in this case, a trick that GEICO, Allstate, State Farm, etc. never would have pulled. You understand the gravity of this, right? They are worse than those guys. If you have to take a brief walk around the block to let marinate the magnitude of this, feel free.
Welcome back. Okay, let’s get into the facts. Our client is seriously injured in a car accident. The details are not important here, but it is a bad accident – the claim is worth more than $300,000. Defendant was insured by GEICO and had policy limits of $100,000. GEICO put up the policy in exchange for the client executing “a full and final Release of any and all claims and liens.” The offer was put in writing from GEICO’s adjuster to the lawyer that our client hired.
Dear [Referring Lawyer]:
This letter serves to follow up to your conversation with Holly Mitchener (who is a really good adjuster, by the way, who now works for State Farm) wherein she conveyed an offer of the policy limits of $100,000 in exchange for a full and final Release of any and all claims and liens.
Please contact me at the number below should you have any questions or require anything further.
The client had her own automobile insurance policy through Brethren that provided her with uninsured motorist benefits in the amount of $300,000. So her lawyer sought Brethren’s consent to accept the policy limits settlement offer, under Maryland uninsured motorist law:
Dear Ms. Kidwell:
We represent the above who was injured in an automobile collision. Our office currently has an open file with Brethren Mutual for P.I.P.benefits.
Enclosed please find a copy of correspondence which I have received from Geico Insurance Company, the liability carrier for the tortfeasor, They have offered their policy limits of $100,000.00 in settlement for this claim and are willing to settle the case accordingly if the tortfeasor is released from liability and subroutines. This letter is a request that you permit this to occur pursuant to Insurance Article, §19-511.
Thank you in advance for your prompt attention to this matter. If you have any questions or concerns please do not hesitate to contact me.
Very truly yours, [Referring Lawyer]
This was done by the book. This letter was accompanied by a copy of GEICO’s tender explaining that the tortfeasor’s policy limits settlement offer was contingent upon the client executing “a full and final Release of all claims and liens.” Brethren later admitted in discovery that it knew full well that it understood this communication to mean that the client was making a claim for underinsured motorist’s benefits because the defendant’s policy limits did not pay her damages. Brethren sent out a letter waving its subrogation interests.
What the lawyer didn’t do was make a note on the all-encompassing GEICO release – that releases GEICO, the defendant, and the entire world from past, present, and future murder and mayhem – excluding the UM claim. What Brethren tried to do to its own insured was set them up to sign the release and then pull a “ha-ha, we tricked you.” Again, it bears repeating here. I have never heard of another insurance company doing this.
Why would the lawyer let her client sign the release? Well, besides thinking Brethern would not try to screw over their insured, the statute makes clear that the entire purpose of the settlement statutory scheme is to allow the accident victim to execute a release and pursue the uninsured motorist claim.
Okay, admittedly, on our clients’ releases, we make a point of putting in language that the release does not include the underinsured motorist claim. But I always do this in a “ridiculous abundance of caution, why am I so paranoid I do this?” kinda way.
So you know what happens next. Brethren pulls its clever trick. The client’s lawyer calls us. (I recommend doing this right away in complex cases with serious personal injuries.) We assist her in filing a bad faith claim with the Maryland Insurance Commissioner. FACT: No one wins in front of the Maryland Insurance Commission on a bad faith claim unless the insurance company is found guilty beyond a reasonable doubt of trying to murder or maim the insured. She wins anyway. We also filed a lawsuit and filed a motion for summary judgment. Brethren did too. Brethren wins. We appeal.
In an opinion by Christopher B. Kehoe, the Maryland Court of Special Appeals reversed, finding that the circuit court erred in ruling that plaintiff’s claim for UM benefits was barred by the release that she executed with GEICO. The court also said that “Brethren would shoot its own parents in the side of the head to rip off their insured.” (Okay, I made that one up. That paragraph just read better that way.”)
Specifically, the court found that if the plaintiff’s claim for UM benefits was barred by the release that she executed with GEICO; it frustrates the purpose of the statute, which is to allow an insured to provide the liability carrier with a full release, to avoid lengthy delays in settling with the tortfeasor, and to make a financial recovery quickly while retaining the ability to make an uninsured motorist claim.
Not for nothing, the court quotes extensively from the Maryland Insurance Administration opinion that found that Brethern Insurance acted in bad faith in this case.
I’ve been teaching insurance law at the University of Baltimore Law School for 14 years now. One of the underlying premises I teach about Insurance Law is that it is not a regular contract between two citizens or companies at arm’s length. Everyone agrees – Democrats, Republicans, everyone who is not Ron Paul crazy – that insurance contracts need to be treated differently. Maryland insurance law rewrites car insurance contracts to conform to our public policy goals. The court is saying that it will reject “attempts by insurers, and insureds and the insurance commissioner, to circumvent the required coverage provisions of the statutes dealing with automobile insurance.” In other words, Maryland rewrites these contracts to accomplish the bigger picture. This is an important principle that has to be respected in insurance law, and I’m glad the court deferred to the purpose of the statute instead of focusing solely on the language of the release.
Judge Deborah S. Eyler dissented, adopting Brethren’s argument that a release is a release.
Probably because I’m involved in it, I think this is the harshest language I’ve used to describe an insurance company on this blog. I don’t know if this decision was made by a single adjuster who may have deferred to outside counsel. You know, I don’t fault their lawyers for coming up with this argument.
Lawyers are supposed to figure out stupid hypertechnical ways to get over on the other side. I’m cool with that, although I expect the courts to be at least reluctant to allow gamesmanship to trump the law and the facts. But I also expect insurance companies to understand the big picture. Brethern has lots of moments where some higher up could have looked at this and pulled back, to the appellate mediation we had. Instead, they laughed off the iceberg warning and floored it.
Assuming this decision stands, Brethern is out $200,000 which is how much a company like that tips the gardener. But this appellate opinion and the MIA opinion will remain out there. This information leaves tracks out there of how prospective clients should expect to be treated by Brethern.
You can find the opinion here.