No fault insurance program, which is in force in Kentucky, gives an insurer little or no ability to handle any fraudulent claim and also penalizes the insurer if it requires co-operation from the insured. Sometimes a court will protect an insurer from excessive penalties.
Grange Property & Casualty Insurance Company v. Tomira Chappel, No. 2017-CA-001418-MR, Commonwealth of Kentucky Court of Appeal February 15, 2019) Grange Property & Casualty Insurance Company appeals an order granting Tomira Chappell's draft summary judgment and orders Grange to pay 18% interest on healthcare costs that the late payment of , as well as Chappell's lawyer fees.  FACTS
Chappell was involved in a car accident where her vehicle was behind. The police report documented that both vehicles experienced "much less" injuries and both drivers reported "no damage". Photographs show that no vehicle received more than scratches in the collision. In the accident, Chappell was insured by a policy issued by Grange, which among other things gave $ 1
Grange recommended Chappell's advice that her bills depended until it completed her investigation into whether her medical treatment was reasonable, medically necessary and related to the car accident. Grange then arranged to take Chappell's registered statement. Chappell failed to show the appointment and her lawyer then withdrew from representation quoting "non-compliance".
Later, Grange responded to Chappell's new lawyer and again requested a recorded statement from Chappell regarding accident facts, injuries, treatment received, and whether your client was working in the context of his accident employment. Grange also recommended that there be a question of the causal link between the damage Chappel claimed and the influence of the other vehicle.
Instead of collaborating, Chappell Grange raised before filing a registered statement claiming that Grange refused to pay the damages benefits was a breach of the insurance contract and a violation of the statutes for which she was entitled to 18% interest and attorney fees. During the discovery, Grange received sufficient information about Chappell's claim to settle outstanding bills with his medical provider.
The Articles of Association provide for repayment of lawyer fees and 18% interest only when the insurance agent's refusal or delayed payment was "without reasonable grounds."
The court of appeal entered into an order that gives summary judgment in favor of Chappell and grants her 18% interest and attorney fee.
The trial must see the record in a light that is most beneficial to the party Opposing the proposal for a summary judgment and any doubt must be resolved in his favor. Summary assessment is only appropriate where the movement shows that the negative party could not prevail under any circumstances.
Grange argued that the summary assessment was inappropriate because there is a substantive question as to whether the late payment was without a reasonable basis required by the Charter.
Kentucky MVRA requires a car insurance company in Kentucky to provide coverage for reasonable and necessary medical expenses incurred due to a covered car accident regardless of fault. These insurance benefits are called basic compensation benefits ("BRB") but are also commonly referred to as personal protection ("PIP") benefits or "no-fault" benefits.
Kentucky MVRA must be interpreted in favor of the casualty. The non-error legislation was intended to offer a cure for accidents that could not be affected in any way. This was the victim's reward for sacrificing traditional damages.
Kentucky MVRA requires an insurer to pay a medical expense within 30 days of receiving reasonable evidence of the fact and amount achieved. It is important that there is a presumption that any medical invoice provided is reasonable. Interest rate recovery of 18% and recovery of lawyer fees depends on two things – benefits must be delayed due to non-payment within 30 days of receipt of reasonable evidence of the fact and number of losses achieved and delay or refusal  State Farm Mutual Automobile Insurance Company v. Adams, 526 SW3d 63 (Ky. 2017), the Supreme Court of Kentucky directed a similar fact scenario. After a car accident, three passengers in a vehicle made claims with State Farm seeking PIP and insurance benefits for unintended motorists. After making initial payments, State Farm experienced inconsistencies between the applicant's versions of what happened on the current day, as well as the inconsistencies between their statements and the police report. Two of the applicants refused to file to question and State Farm declined payment of additional benefits for both. The two accusers then brought an action against State Farm, which filed a counterclaim seeking a declaratory judgment that it did not have to provide cover since the applicants failed to cooperate with their investigation.
The Supreme Court of Kentucky reversed the decision of the Board of Appeal. The Supreme Court noted that an applicant is only entitled to receive BRB for accident-related losses for motor vehicles and that the person liable for compensation has the right to carry out a reasonable investigation to determine whether such a condition exists.
Since MVRA specifically provides for the sharing of documentation on an applicant's medical condition and methods for resolving disputes concerning failure to provide that documentation and for resolving disputes regarding an applicant's mental or physical condition, an offender must avail himself of the provisions of MVRA in order to: solve such problems. The Supreme Court also observed that MVRA does not specifically provide information on underlying motor vehicle accidents.
The Court of Appeal concluded that the trial wrongly stated that Grange was obliged to request a court order to detect any of the information requested by the applicant. The Court of Appeal concluded that Chappell's refusal to cooperate was relevant to whether Grange was unduly delaying the payment.
It also found that an insurance observer has the right to insure a legal defense to a claim and that such a defense, even if it ultimately fails does not trigger the penalty of 18% interest and lawyer fees, since it does not necessarily constitute a unreasonable delay. The claim for a legitimate and bona fide defense of the debtor constitutes a reasonable basis for delays under the charter. This is not changed by the fact that the case is ultimately decided against the debtor. As a result, the court decision was reversed.
No fault insurance was designed to defeat the perceived lack of insurers' good faith by giving them almost no defense against any fraudulent claim. Grange had to pay Chappell's chiropractic bills even though the evidence suggests that the accident was probably unrelated to medical treatment. Only after the discovery did Grange come to the conclusion that it had to pay his bills and then had the insult added to the damage by the court of law to impose sanctions. The damage was settled because the court had been appealed in a similar case by the Supreme Court.
© 2019 – Barry Zalma
This article and all the blog entries on this site, melt and summarize cases published by the courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, condensed to facilitate reading and convey the author's views in each individual case.
Barry Zalma, Esq., CFE, now restricts his practice of service as an insurance consultant specializing in insurance coverage, insurance management, bad faith assurance, and insurance fraud nearly equal for insurers and policyholders. He also serves as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance cover and law firm and more than 50 years in the insurance industry. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual liability magazine / ACE Legend Award.
Over the past 51 years, Barry Zalma has put his life on insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims to become insurance managers.
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