The Supreme Court published Williams v. State Farm, which dealt with an exclusion in an automobile insurance policy providing for underinsured motorist benefits. According to the SC, “The issue on appeal involve[d] whether or not the parents’ underinsured motor vehicle insurance (UIM) policy provided coverage to the passenger, or whether coverage was excluded because the vehicle was “furnished” to and operated by a family member who resided in the house, for his regular use.” In this tragic case, two brothers were killed in a one car collision. The driver (Aaron) owned the truck involved in the accident. The passenger (Paul) recovered under Aaron’s liability policy and sought benefits under the UIM coverage of his parents policy on a different vehicle. All the parties resided in the same household.

State Farm sought to enforce an exclusion in the Dodge Caravan policy which provided that underinsured coverage does not apply to a vehicle where the injury occurred in a vehicle (the pickup), “[f)urnished for the regular use of you, your spouse or any relative.” The issue with State Farm was whether the pickup was “furnished” to Aaron for his regular use. State Farm contended the pickup was excluded because it was owned by a relative (Aaron) that lived in the same house as the policy holders of the Caravan (the parents).

The circuit court agreed and pointed to the exclusion in the Caravan policy of underinsured vehicles furnished for the regular use of a relative, and concluded that a vehicle owned by Aaron was furnished for his use. The court of appeals agreed in a 2-1 decision. The SC agreed with the dissent in that opinion and noted that an owner can not furnish the vehicle to himself for regular use, and that furnish as used in ordinary terms required a third party, which did not exist here. The SC distinguished this from policies, which exclude both vehicles “owned by or furnished or available” for the regular use of the relative, noting that State Farm’s policy excluded only vehicles “furnished for” regular use.

The Supreme Court published Commonwealth Transportation Cabinet v. Sexton , which dealt with the duties imposed on the Department of Highways to inspect for dead or decaying trees on its property.   You may recall my earlier post noting the grant of discretionary review after the Court of Appeals established a new duty on urban landowners to inspect for dead and decaying trees.

Essentially, the Court of Appeals held that urban landowners (whatever that means) could be held liable for failing to inspect and find dead or decaying trees that caused damage to adjoining property owners.  The law as it exists now requires some knowledge of the state of the tree before liability will attach under ordinary negligence principles.  So, the Court of Appeals opinion greatly expanded the duty to all property owners in urban areas, and not just the Commonwealth.

The Supreme Court reversed this case without really discussing that duty.  According to the SC, the actions of the Department of Transportation in locating dead trees and removing them was discretionary.  Since it was discretionary the Commonwealth did not waive sovereign immunity.  Since sovereign immunity applied, no liability existed against the Department of Transportation for failing to locate and remove the dead trees.  The SC did not reach the issue of an expanded duty believing it was unnecessary.  The case was reversed, so that portion of the Court of Appeals decision is vacated.

The Supreme Court has posted its minutes for June 19th, here.  There are some new and interesting cases in the area of tort and insurance law, so please check back for digests discussing those cases.

The Court of Appeals has posted its minutes for June 20th, here.  There weren’t any published cases dealing with tort and insurance law.  The good news is it appears the links to the cases are now working.

MSN Money has a very interesting and informative article styled “basic advice, plus 22 tips to help you protect yourself and get the best value for the money you spend on automobile coverage.” Here’s an excerpt:

Your car insurance rates are based on a few factors you can’t readily change — your sex, age, marital status and where you live — and many that you can — your credit scores, what you drive, how well you drive and how much coverage you buy. Here’s how to get the best deal.

Click here, to read the entire article.

The Kentucky Law Review has posted on an article from the ABA Journal’s website, titled Fla. Can Bar Allstate From New Biz, Unless It Reveals Rate Info., Court Says. According to that article:

A Florida appeals court ruled today that state insurance regulators have the authority to suspend Allstate from writing new policies because the insurance giant has failed to comply with subpoenas about their rates.

The state’s Office of Insurance Regulation is seeking pricing information from the Illinois-based Allstate Corp. Florida wants to know why the company’s property rates haven’t dropped even after a state law was enacted that was designed to reduce premiums, the Associated Press reports.

Click on the article heading to read the full story or click here to link to the court’s opinion. The opinion is a very interesting look at the position of Allstate and its intentional efforts to prohibit administrative review of its rate procedure, including labeling massive amounts of documents, even those posted on the web, as “trade secrets.”

The Court of Appeals published Commonwealth of Kentucky v. Chauvin, 2008-CA-000027, which dealt with a Motion for a Writ of Prohibition vacating Judge McKay Chauvin’s Order to release a Plaintiff’s KASPER report. (Report kept by the Commonwealth showing narcotic prescription use). The Commonwealth argued that KRS 218A.202(6), as newly amended, prohibited disclosure of KASPER reports for the purpose of discovery or evidence in a civil action. The Circuit Court determined that the evidence was discoverable and that an apparent conflict existed between the statute governing the Cabinet’s disclosure and the rule pertaining to discovery, CR 26.01.

The Commonwealth argued that the Judge was acting outside his jurisdiction and that the argument was not one of discovery but of the ability of the legislature to create a KASPER statute while determining the scope of the disclosure of the information gathered. The Defendant in the action below argued that the statute, as amended, encroached on the separation of powers and the Judicial Branches prerogative on determining the scope of discovery in a civil action. The Attorney General’s Office intervened in the matter, arguing that the KASPER statute is governed by state and federal law privacy protections, which creates privileged material not subject to discovery. The AO’s Office made no distinction between confidential material and privileged material.

The Court of Appeals held that this was one of those very few cases that would substantiate the appropriate relief of a writ. It noted; “The trial court determined that Baumler’s KASPER records are relevant to the subject matter involved in the action and are reasonably calculated to lead to the discovery of admissible evidence. In so ruling, the trial court exercised its discretion and authority as the gatekeeper of the timing and scope of discovery in actions over which it presides.” As to the claims of privilege, these are not supported by the legislature’s use of the word “confidential” or its goals in maintaining confidentiality. The Court did not believe that the Commonwealth had shown the existence of a privilege, excluding this material from discovery under CR 26.01. Therefore, the statute as amended encroached on a responsibility and judicial function to control the scope and extent of discovery in civil actions.

The Court declined to vacate Judge Chauvin’s order. It did however, take exception with the order’s requirements that the KASPER report be turned over to defense counsel without an in camera review by the Judge to determine what if any of the material was discoverable. It ordered such a review upon remand.

Comment: Any attorney that has had this issue come up, knows it is a vital part of any defense. In the underlying case, the defense attorney argued that the material was relevant to show that it was more likely than not that the plaintiff’s prescription drug use was related more to his history of drug use, than any injury sustained in the accident. The best evidence of this history is the KASPER report which tracks narcotic prescription drug use. It was this relevancy that formed the basis of Judge Chauvin’s decision.

However, does this opinion provide a blueprint for the addition of language by the legislature, making merely confidential information, privileged? While the Court discusses the claims of privilege, which it dismisses, it never really talks about the viability of one if claimed. It would appear to this author that the legislature’s labeling of this material as privileged, is no less an encroachment on the Judical Branch’s function than claiming one in the first place. While privileges do exist, their existence and application is not one for the legislature to determine, but the Judicial Branch. That is, the Judicial Branch determines what is discoverable, then determines what is privileged and therefore exempt from discovery, not the legislature.

AIG Chief Resigns

June 16, 2008

MSN Money is reporting on the resignation of AIG Chief Martin Sullivan in the wake of the mortgage meltdown. Here’s an excerpt:

Another Wall Street executive bites the dust because of the subprime-mortgage market mess. Martin Sullivan is stepping down as chief executive officer at American International Group (AIG, news, msgs) amid intense shareholder pressure. Big shareholders — including billionaire investor Eli Broad and Legg Mason (LM, news, msgs) fund manager Bill Miller — had written letters to AIG’s board of directors, pushing the company to make changes to its leadership. Shares of AIG, a Dow stock, fell 43 cents, or 1.3%, to $33.75 in midday trading.

Click here to read the entire article.

Insurance Rates Moderate

June 16, 2008

According to an article in the Courier Journal, Kentucky and Indiana residents are likely to face lower insurance premiums this year.  Auto insurance rates in Kentucky and Indiana are expected to fall for a second year, and homeowners rates are due to rise only slightly, if at all, after years of steeper climbs.

To read the entire article, click here.

The Court of Appeals has posted its minutes for June 13th, here.  Unfortunately, the links to the reported cases still will not work.  As soon as I can get some information on those cases dealing with tort and insurance law, I’ll post it.