Justia Insurance Law Opinion Summaries

Before the South Carolina Supreme Court in this appeal was the trial court's dismissal of respondent Jeanne Beverly's claims pursuant to Rule 12(b)(6) of the South Carolina Rules of Civil Procedure. Beverly brought claims against Grand Strand Regional Medical Center, LLC. Blue Cross Blue Shield of South Carolina (BCBS) was a mutual insurance company that provided health insurance coverage through Member Benefits Contracts to its Members. Beverly was a BCBS Member. In 2005, Grand Strand and BCBS entered into a contract labeled "Institutional Agreement." The Institutional Agreement contained a clause entitled, "No Third Party Beneficiaries," that provided in part, "This Agreement is not intended to, and shall not be construed to, make any person or entity a third party beneficiary." Grand Strand and BCBS were the only parties to the Institutional Agreement. Grand Strand made two promises to BCBS in the Institutional Agreement that Beverly contended created rights she and other BCBS Members could enforce. Beverly was injured in an automobile accident on September 6, 2012. The same day, she received health care services at a Grand Strand emergency room for injuries she sustained in the accident. Beverly alleges she provided Grand Strand proof of her status as a BCBS Member. Some time later, Beverly received a bill directly from Grand Strand for $8,000. Beverly alleges the $8,000 bill does not reflect the discount Grand Strand promised in the Institutional Agreement. Beverly filed this action on behalf of herself and a class of similarly situated BCBS Members who were denied the right to have their bills processed and discounted according to Grand Strand's promises in the Institutional Agreement. The primary question before the Supreme Court was whether the "no beneficiary" clause in the Institutional Agreement overrode an otherwise manifestly clear purpose of the contracting parties to provide a direct benefit to non-contracting parties. "Mindful that we are reviewing a Rule 12(b)(6) dismissal order—not an order on the merits—we hold it does not." The Supreme Court affirmed the court of appeals' opinion reversing the 12(b)(6) dismissal. The case was remanded to circuit court for discovery and trial. View "Beverly v. Grand Strand Regional Medical Center, LLC" on Justia Law

After sustaining injuries in a vehicle driven by her son, Kevin Simms, Petitioner Belinda Pickens sought UM coverage through her policy with Respondent United Services Automobile Association (USAA). At the time of the accident, Pickens's policy covered five vehicles, including the 1997 Chevrolet involved in the accident. The policy included liability, personal injury protection (PIP), UM, and underinsured motorist (UIM) coverage. Pickens also executed a named driver exclusion. Pickens's declarations page also contained a provision that stated, "***COVERAGES EXCLUDED WHEN ANY VEHICLE OPERATED BY KEVIN SIMMS***." USAA denied Pickens's claim and initiated a declaratory judgment action asserting she was not entitled to UM coverage because Simms, the excluded driver, was operating the vehicle at the time of the accident. Pickens sued USAA and lost. The issue this case presented for the South Carolina Supreme Court's review centered on whether Section 38-77-340 of the South Carolina Code (2015) permitted a named driver exclusion that precluded uninsured motorist (UM) coverage to a passenger injured in an accident involving an unknown driver. The Court held that it did. "As the circuit court noted, no liability coverage would have been afforded to a third party had Simms been at fault, and thus, it would violate public policy to allow Pickens to recover UM when she was the person who executed the exclusion yet knowingly allowed Simms to drive her vehicle." View "United Services Automobile Association v. Pickens" on Justia Law

A Town of Cottageville police officer shot and killed the former town Mayor Bert Reeves. A federal jury awarded Reeves' estate $97,500,000 in damages. The South Carolina Municipal Insurance and Risk Financing Fund, which insured the town, paid $10,000,000 to settle the federal lawsuit and two other lawsuits. The Settlement Agreement provided for two questions to be submitted to the state courts: (1) whether the amount of indemnity coverage available under the policy was more than $1,000,000; and (2) whether the South Carolina Tort Claims Act applied to a bad faith action against the Fund. The South Carolina Supreme Court answered the first question "yes"; it declined to answer the second. View "Reeves v. South Carolina Municipal Insurance" on Justia Law

Kristina Knight agreed to an endorsement to her Nationwide automobile insurance policy providing the coverage in the policy would not apply to her husband. During the policy period, Danny Knight was tragically killed in a motorcycle accident. Knight, as personal representative of Danny's estate, recovered $25,000 in UIM coverage under Danny's motorcycle insurance policy with Progressive Casualty Insurance Company and $25,000 in UIM coverage under a policy with ACCC Insurance Company insuring a different vehicle Danny owned. Knight made a claim with Nationwide to recover an additional $25,000 in UIM coverage under her insurance policy. Nationwide denied the claim and filed this lawsuit asking the trial court to declare Nationwide did not have to pay the $25,000 because Danny was excluded from all coverages under the policy. On appeal, Knight claimed the endorsement excluding coverage for her husband violated public policy and Nationwide could not enforce it. The South Carolina Supreme Court found the exclusion was clear and unambiguous and was not in violation of any statute. Therefore, the Court held the exclusion was enforceable. View "Nationwide Insurance Company of America v. Knight" on Justia Law

The United States District Court for the District of South Carolina certified a question to the South Carolina Supreme Court on whether a homeowner's insurance policy that did not define the term "actual cash value," an insurer could depreciate the cost of labor in determining the "actual cash value" of a covered loss when the estimated cost to repair or replace the damaged property includes both materials and embedded labor components. This issue arose in two cases in which the homes of Miriam Butler and Joseph Stewart were damaged in separate fires. Butler and Stewart each purchased a homeowner's insurance policy from one of the defendants, both of whom were subsidiaries of The Travelers Companies, Inc. Butler and Stewart elected not to immediately repair or replace their damaged property. Each thus elected not to receive replacement cost but instead to receive a cash payment for the ACV of the damaged property. The certified question addressed whether Travelers properly calculated the ACV payments Travelers offered to Butler and Stewart to settle their property damage claims. The Supreme Court responded affirmatively: “the fact the labor cost is embedded makes it impractical, if not impossible, to include depreciation for materials and not for labor to determine ACV of the damaged property. Rather, the value of the damaged property is reasonably calculated as a unit. Therefore, we answer the certified question "yes," because it makes no sense for an insurer to include depreciation for materials and not for embedded labor.” View "Butler v. The Travelers Home" on Justia Law

Nationwide Mutual Insurance Company ("Nationwide") relied on flight-from-law enforcement and felony step-down provisions in an automobile liability insurance policy to limit its coverage to the statutory mandatory minimum. Following a bench trial and after issuance of the South Carolina Supreme Court's opinion in Williams v. Government Employees Insurance Co. (GEICO), 409 S.C. 586 (2014), the circuit court held the step-down provisions were void pursuant to Section 38-77-142(C) of the South Carolina Code (2015). The court of appeals reversed. Three individuals, Sharmin Walls, Randi Harper, and Christopher Timms, were passengers in a vehicle driven by Korey Mayfield that crashed in 2008 following a high-speed chase by law enforcement. Mayfield refused to pull over, and during the chase, the trooper's vehicle reached speeds of 109 miles per hour. All the passengers begged Mayfield to stop the car, but Mayfield refused. Eventually, the trooper received instructions to terminate the pursuit, which he did. Nevertheless, Mayfield continued speeding and lost control of the vehicle. Timms died in the single-car accident, and Walls, Harper, and Mayfield sustained serious injuries. After being charged with reckless homicide, Mayfield entered an Alford plea. At the time of the accident, Walls' automobile was insured through her Nationwide policy, which included bodily injury and property damage liability coverage with limits of $100,000 per person and $300,000 per occurrence. Walls also maintained uninsured motorist (UM) coverage for the same limits, but she did not have underinsured motorist (UIM) coverage. In reliance on the aforementioned provisions, Nationwide paid only $50,000 in total to the injured passengers (the statutory minimum as provided by law) rather than the liability limits stated in the policy. Safe Auto, Mayfield's insurance company, also paid a total of $50,000 to the passengers. Nationwide brought this declaratory judgment action requesting the court declare that the passengers were not entitled to combined coverage of more than $50,000 for any claims arising from the accident. Walls answered, denying there was any evidence that the flight-from-law enforcement and felony provisions applied. The South Carolina Supreme Court reversed the court of appeals, holding that section 38-77-142(C) rendered Nationwide's attempt to limit the contracted-for liability insurance to the mandatory minimum void. View "Nationwide Mutual Ins. Co. v. Walls" on Justia Law

Several insurance companies (the Insurers) appealed the denial of their motions to intervene in a construction defect action between a property owners' association (the Association) and a number of construction contractors and subcontractors (the Insureds). The underlying construction defect action proceeded to trial, resulting in a verdict for the Association. After review, the South Carolina Supreme Court determined the Insurers were not entitled to intervene as a matter of right, and the trial court did not abuse its discretion in denying them permissive intervention. However, the Court held the Insurers had a right to a determination of which portions of the Association's damages are covered under the commercial general liability (CGL) policies between the Insurers and the Insureds. The Court also recognized that the Insurers had the right and ability to contest coverage of the jury verdict in a subsequent declaratory judgment action. "In that action, the Insurers and the Insureds will be bound by the existence and extent of any jury verdict in favor of the Association in the construction defect action. However, they will not be bound as to any factual matters for which a conflict of interest existed, such as determining what portion of the total damages are covered by any applicable CGL policies." View "Builders Mutual Insurance Company" on Justia Law

Wadette Cothran incurred approximately $40,000 in medical expenses from injuries she received in an automobile accident. Her employer's workers' compensation carrier paid all of her medical expenses. She was also covered by her automobile insurance policy issued to her and her husband Chris by State Farm Mutual Automobile Insurance Company. The State Farm policy provided PIP coverage with a limit of $5,000. However, State Farm refused to pay her any PIP benefits for medical expenses based on a "Workers' Compensation Coordination" provision in the policy. This appeal requires presented for the South Carolina Supreme Court's consideration whether Section 38-77-144 of the South Carolina Code (2015) prohibited an automobile insurance carrier from reducing its obligation to pay PIP benefits to its insured by the amount of workers' compensation benefits the insured received for medical expenses. The Court held that it did: "[w]hen an insurer seeks to reduce its obligation to pay benefits based on a third party's previous payment for the same claim, it is a setoff. Because that is the precise effect of State Farm's "Coordination" provision, section 38-77-144 prohibits the provision from reducing State Farm's obligation to pay PIP benefits to the Cothrans." the Court reversed the court of appeals and reinstated the summary judgment in the Cothrans' favor. View "Cothran v. State Farm" on Justia Law

The federal district court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. The Supreme Court was asked to construe section 38-77-350(C) of the South Carolina Code (2015) and determine whether, under the facts presented, an insurance company was required to make a new offer of underinsured motorist (UIM) coverage when an additional named insured is added to an existing policy. In 2012, Wayne Reeves acquired an insurance policy from Progressive Direct Insurance Company (Progressive) covering his motorcycle. When the policy was issued, Wayne declined optional UIM coverage. In 2015, Wayne's wife (Jennifer) and son (Bryan) were added to the policy as "drivers and household residents," because they also drove motorcycles. In 2017, Bryan sold his motorcycle and purchased another motorcycle, a 2016 Harley Davidson, which was added to the policy. At the time, Wayne had Bryan added as named insured to the policy. Progressive did not offer Bryan any optional coverages. Later in 2017, Bryan was involved in an accident while driving his 2016 Harley Davidson. Bryan ultimately made a claim against Progressive to reform the policy to include UIM coverage based on Progressive's failure to offer him the optional coverage. Progressive contended that adding Bryan as a named insured was a change to an existing policy, and as a result, Progressive was not required to offer Bryan UIM coverage. Based on the undisputed facts, the parties filed cross motions for summary judgment. The Supreme Court concluded under South Carolina law, Progressive was not required to make an additional offer of UIM coverage to Bryan. View "Progressive Direct v. Reeves" on Justia Law

In 2013, a bus driven by Defendant Asia Partman struck Respondent Andrew Neumayer while he was a pedestrian in Cayce, South Carolina. EMS transported Neumayer to Lexington Medical Center where he was diagnosed with a ruptured spleen, broken left ribs, left humerus fracture, left pneumothorax, and a punctured lung. After eight days in the hospital and medical costs of approximately $122,000, Neumayer was released. Partman worked for Defendant Primary Colors Child Care Center, and in November of 2013, Neumayer filed a lawsuit against both defendants, alleging negligence against Partman and Primary Colors. The defendants did not answer or respond in any fashion, and after a default judgment was entered, the court held a damages hearing, where it awarded Neumayer $622,500. Over eighteen months after the entry of default, Philadelphia Indemnity Insurance Co. (Philadelphia), Primary Colors' insurance carrier, received notice that its insured was involved in a lawsuit that culminated in a default judgment. While the record was unclear as to why it took eighteen months to notify Philadelphia, it ultimately received notice when Neumayer's counsel faxed documents seeking to collect $622,500. Philadelphia declined to pay that amount, instead asserting its indemnification obligation was limited to $25,000 because South Carolina jurisprudence required an insurer to pay only the minimum limits when it was substantially prejudiced by its insured's failure to provide notice of a lawsuit. Further, Philadelphia contended the failure to receive notice of the underlying lawsuit prevented an opportunity to investigate and defend. Neumayer filed this declaratory judgment action asking the court to require Philadelphia to pay the judgment in full. At issue before the South Carolina Supreme Court was whether notice clauses in automobile insurance policies were rendered meaningless by Section 38-77-142(C) of the South Carolina Code (2015) . The trial court found the clause in this policy void and accordingly required the insurance company to pay the full default judgment entered against its insured. The insurer appealed. The Supreme Court determined the circuit court erred in ruling that section 38-77-142(C) invalidated the standard notice clause contained in this insurance policy. “An insurer may continue to invoke notice clauses to deny coverage above the statutory limits, providing the insurer can prove that it was substantially prejudiced by its insured's failure to comply with the provision.” View "Neumayer v. Philadelphia Indemnity" on Justia Law