When Being Innocent Isn't Enough!: A Cautionary Tale for Drivers

Cross-posted from Tort Deform: The Civil Justice Defense Blog

By Marc Dittenhoeffer

What's your take on this? Ms. & Miss Innocent were riding along the road minding their own business in their 1998 Dodge, insured by Picayune Insurance Company. Their insurance policy contained the standard "uninsured motorist endorsement" to provide them with recourse to their own coverage in the event that they are damaged in an accident with an uninsured vehicle. They have broken no laws, taken no unreasonable actions with respect to the use or operation of their vehicle, and harmed no one. They are in compliance with all state insurance mandates, vehicle inspection requirements and rules of the road. At the intersection of Strange Street and Loophole Avenue, while stopped waiting for a red light to change, a 1989 Honda belonging to Oswald Owner slammed into their Dodge from behind.

It had a policy of insurance issued by Some Freakin' Insurance Company which contained standard No-Fault coverage for medical care, lost earnings and household help, and was driven at the time by either Mr. Owner (if you believe his version of things) or by a Mr. Otherguy (if you believe the Police Report). Insofar as the Innocents are concerned, please assume that the injuries they suffered were serious under New York law.

Without hedging bets, it seems from this account to be a worthwhile exercise in civil justice for the Innocents to recover for the injuries, damages, pain and suffering visited upon them through no fault of their own. Indeed, it seems at first blush to be just the type of case we all would agree belongs in our civil courts. Doubtless that is how plaintiffs both felt when this case was originally started and moved through the court system on behalf of a deserving pair of law-abiding citizens. But, alas, the plot thickened.

As it turned out, this was the second instance of Mr. Owner's car rear-ending an unsuspecting motorist in a two-week period. Within a month after the Innocents' collision, Owner's policy of auto insurance was officially cancelled for non-payment of any premiums beyond the initial binder that initiated coverage (which payment pre-dated the accident in question). Owner failed to cooperate with his insurer by refusing to make a Statement and not appearing at an Examination Under Oath, though two passengers in his car on the day in question did show up. Their combined testimony convinced Some Freakin' Ins. Co. that this was no accident at all, but rather an intentional act designed to fraudulently obtain No-Fault benefits for occupants of the Owner car. Some Freakin' then cordially refused insurance coverage to Owner, his occupants and both Innocents for any claims arising out of this felonious occurrence.

Further, Picayune's counsel moved in Court to stop the proceeding to collect under the "uninsured motorist endorsement" (which is supposed to protect against uninsured drivers) alleging that such coverage is only to compensate for injuries "caused by an accident", which this staged collision was not. All parties were joined in this action, which went to trial in Nassau County Supreme Court.

Lest anyone think this a fabricated scenario, this is a real case actually named PROGRESSIVE v. McNEIL. And, lest anyone believe that "all's well that ends well", this accident case ended as badly for the Innocents as it began. In a well-written decision that was obviously a displeasure to author, the Judge was constrained to rule: 1) that the insurer of the offending vehicle was correct in denying coverage to plaintiffs for "an intentional staged event", definitionally not an accident; 2) that the language of the "uninsured motorist" endorsement of the policy on the plaintiffs' own vehicle has been interpreted by the Courts to likewise "exclude recovery for intentional conduct"; and, by extension 3) the state agency of last-resort would likewise be unavailable to plaintiffs for similar reasons.

In short: 1 accident + 2 injured + 2 insurers + 3 co-conspirators in an offending vehicle = 0 recoveries to the Innocents! Not for medical care, pain and suffering, permanent injury, household help, lost earnings - nothing. And all the while the Innocents thought they had bought and paid for all the insurance they needed to keep themselves and their family well provided for in case of an accident.

The Judge has been quoted as saying "I couldn't believe the law on it...You have an innocent party that was rear-ended. (Legislators) have to create a statute that deems this to be an accident or to exempt a party from not being covered when fraud is determined".

Many people agree. Thankfully some are in the Legislature. Assembly Bill A8198 would have the effect of extending these standard types of insurance coverage to include innocent victims of intentional auto accidents. Insurers would no longer be able to refuse to pay innocent law-abiders if they somehow became ensnared in a felon's dangerous net. This Bill was passed in the Assembly in April of '06, but languished in the Senate Insurance Committee until it was too late to pass last spring. Perhaps it will have a better fate this coming session.

In the meantime, be very careful who you let hit you with their car!

Tags: auto insurance, tort deform, tort reform (all tags)



Doesnt make sense

So if some guy with a mental disorder or a suicidal tendency wants to ram some random car, wouldn't that be classified as an intentional act too denying any coverage to the innocent victims, using the same logic?

Are you telling me the judge couldnt have reinterpreted the phrase "intentional staged act" as something that may well be intentional staged act on part of the scammers, but still, the fact that the innocents happened to be in that specific intersection was accidentally random as it could have been any person victimized and it was just bad luck that they happened to be there at that moment. It could have been a staged act to the scammers, but it was an accident(al turn of events) for the innocents.

On a related note, not that it would have done any good if the scammers were bankrupt, but this would not preclude the innocents from suing the scammers directly, right?

by Pravin 2006-10-23 11:06PM | 0 recs
Re: Doesnt make sense

There are good points of logic in Pravin's Comment, but unfortunately they don't always lead where you expect them to when the issue is one of regulatory construction and Legislative intent! In this instance the case revolved around specific interpretation (based upon years of precedent) of deliberate policy language as specifically regulated by the state's insurance Department. The Judge just doesn't have the power to re-interpret language in a manner that flouts previous decisional law.

In your examples, a mental disorder might survive a challenge in that the actor might not be criminally liable due to an inability to form the requisite mental state of mind necessary for "intent". An attempted suicide, as well, might conceivably fail the intent test: the intent was primarily to perish, not to injure others.

But where, as here, there was a concerted scheme to defraud an insurance company by deliberate acts designed to get benefits for the felons, the policy's own language allows the insurance company to escape payment to the Innocents a well as the guilty. THAT is what doesn't make sense and needs to be changed; and no one can just reason their way out of that - not even a Judge.

Marc M. Ditt

by TortDeform com 2006-10-26 12:32PM | 0 recs


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