Source: https://www.bruerlaw.com/read/archives/08-2017
Timestamp: 2019-04-21 07:01:26+00:00

Document:
1. When a court interprets an insurance policy, it applies the rules applicable to contract construction. See Topps v. City of Country Club Hills, 272 S.W.3d 409, 416 (Mo. App. 2008).
2. The interpretation of an insurance policy is a question of law determined de novo on appeal. See Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 690 (Mo. 2009).
3. Existing and valid statutory provisions enter into and form a part of all contracts of insurance to which they are pertinent and applicable as fully as if such provisions were written into them. Shaffer v. Federated Mut. Ins. Co., 903 S.W.2d 600, 602 (Mo. App 1995).
4. Language contained within the contract must be given its plain and ordinary meaning. Heman, 800 S.W.2d at 4.
5. The burden is on the insured to show that he is within the terms of the policy and prove, by substantial evidence, that the claim sued upon is within the coverage of the insurance contract. Truck Ins. Exchange v. Heman, 800 S.W.2d 2, 3-4 (Mo. App. 1990).
6. The construing of insurance contracts is weighted in favor of the insured. Heman, 800 S.W.2d at 4.
7. The insurer is responsible for stating the terms of any provision so clearly, definitely, and specifically as to make its meaning so plain that no room is left for construction. Jones, 287 S.W.3d at 691 n.1.
8. If a term is defined in an insurance policy, a court will normally only look to that definition to determine the term’s meaning; but in order for the policy’s definition to control, it must be reasonably clear and unambiguous, otherwise, the court is free to give a reasonable construction to the term, by applying general contract principles and resolving doubts in favor the insured. See Chamness v. American Family Mut. Ins. Co., 226 S.W.3d 199, 203 (Mo. App. 2007).
9. If a contract promises something at one point and takes it away at another, there is an ambiguity. Jones, 287 S.W.3d 690.
10. In construing the terms of an insurance contract, the court resolves ambiguities in favor of the insured. Jones, 287 S.W.3d at 690.
11. Extrinsic evidence cannot be used to create an ambiguity. Topps, 272 S.W.3d at 418.
12. Where an insurance company claims non-coverage and relies upon a policy exclusion, it has the burden of proving that such an exclusion is applicable. Heman, 800 S.W.2d at 3-4.
13. Exclusions do not provide coverage; they only limit the obligation undertaken by the policy. See Camden v. State Farm Mut. Auto. Ins. Co., 66 S.W.3d 78, 82 (Mo. App. 2001).
In Missouri and Kansas, UM coverage is mandatory. Mo.Rev.Stat. § 379.203 and K.S.A. 40-284.
In Kansas, the UM minimum limits are $25,000 per person and $50,000 per occurrence, and the limits will match the liability limits, unless the named insured rejects in writing UM coverage that exceeds $25,000 per person and $50,000 per occurrence. K.S.A. 40-284(c).
In Missouri, the UM liability limit is $25,000. Mo.Rev.Stat. § 303.020. In Missouri, there is no requirement that the UM limits match the liability limits.
With respect to “set-offs” or “offsets,” the public policy expressed in § 379.203 is violated by an exclusion which “in effect” deletes UM coverage for persons who also had other insurance or who recovered damages from a workers’ compensation carrier, for it in effect provides no or limited UM coverage for those who have other sources of recovery. See Williams v. Casualty Reciprocal Exchange, 929 S.W.2d 802, 809 (Mo. App. 1996). Such an exclusion conflicts with the statutory requirement of UM coverage, and hence is void up to the minimum amount of coverage required by Chapter 303. Williams, 929 S.W.2d at 809.
Unlike UM coverage, UIM coverage is not mandated by statute and there is no clearly stated public policy in the State of Missouri that insurers provide UIM coverage. Green v. Federated Mut. Ins. Co., 13 S.W.3d 647 (Mo. App. 1999). Accordingly, proceeds from non-UIM as well as from UM motorists may be used to offset UIM coverage when the policy is clear and unambiguous. See Lang v. Nationwide Mut. Fire Ins. Co., 970 S.W.2d 828, 833 (Mo. App. 1998). Where the meaning of a set-off provision is plain and unequivocal, a UIM limit can be reduced such that an insured is not entitled to any payment from the insurer. Lynch v. Shelter Mut. Ins. Co., 325 S.W.3d 531 (Mo. App. 2010).
In Kansas, UIM coverage is mandatory. K.S.A. 40-284(b).
“Med Pay” – Missouri. Missouri public policy prohibits the transfer of a personal injury claim, in whole or part. Scroggins v. Red Lobster, 325 S.W.3d 389 (Mo. App. 2010). This rule holds except in the limited circumstance when the transfer is of the proceeds of a potential claim and is granted to an existing creditor. This has been Missouri's policy since at least 1913 and, in all likelihood much longer, as the prohibition against the assignment of personal tort claims dates back to English common law and the Middle Ages. In 1913, the Court of Appeals explained that there is every reason for holding that a cause of action for personal injuries, where the gist of the damages recovered is physical pain and mental anguish, should not be the subject of barter or trade, or a matter of profit to the creditors of the injured party. Scroggins, 325 S.W.3d 389. Insurers paying benefits to insureds as a result of injuries caused by third persons claim an interest in recovering those costs if the insured obtains a settlement or collects upon a judgment against the third party. To that end, insurers have repeatedly attempted to draft policy provisions or establish other requirements for the purposes of seeking reimbursement from the insured in such situations. Such provisions or other requirements have been regularly invalidated by the appellate courts. Scroggins, 325 S.W.3d 389.
“Personal Injury Protection” (PIP) – Kansas. Kansas is different than Missouri.
(a) When the injury for which personal injury protection benefits are payable under this act is caused under circumstances creating a legal liability against a tortfeasor pursuant to K.S.A. 40-3117 or the law of the appropriate jurisdiction, the injured person, such person's dependents or personal representatives shall have the right to pursue such person's remedy by proper action in a court of competent jurisdiction against such tortfeasor.
(b) In the event of recovery from such tortfeasor by the injured person, such person's dependents or personal representatives by judgment, settlement or otherwise, the insurer or self-insurer shall be subrogated to the extent of duplicative personal injury protection benefits provided to date of such recovery and shall have a lien therefor against such recovery and the insurer or self-insurer may intervene in any action to protect and enforce such lien. Whenever any judgment in any such action, settlement or recovery otherwise shall be recovered by the injured person, such person's dependents or personal representatives prior to the completion of personal injury protection benefits, the amount of such judgment, settlement or recovery otherwise actually paid and recovered which is in excess of the amount of personal injury protection benefits paid to the date of recovery of such judgment, settlement or recovery otherwise shall be credited against future payments of such personal injury protection benefits.
(c) In the event an injured person, such person's dependents or personal representative fails to commence an action against such tortfeasor within 18 months after the date of the accident resulting in the injury, such failure shall operate as an assignment to the insurer or self-insurer of any cause of action in tort which the injured person, the dependents of such person or personal representatives of such person may have against such tortfeasor for the purpose and to the extent of recovery of damages which are duplicative of personal injury protection benefits. Such insurer or self-insurer may enforce same in such person's own name or in the name of the injured person, representative or dependents of the injured person for their benefit as their interest may appear by proper action in any court of competent jurisdiction.
(d) In the event of a recovery pursuant to K.S.A. 60-258a, and amendments thereto, the insurer or self-insurer's right of subrogation shall be reduced by the percentage of negligence attributable to the injured person.
(e) Pursuant to this section, the court shall fix attorney fees which shall be paid proportionately by the insurer or self-insurer and the injured person, such person's dependents or personal representatives in the amounts determined by the court.
Where there is a prior criminal conviction involving “intent”, that conviction forecloses the criminal defendant and any party claiming through him from asserting that his conduct was not intentional. James v. Paul, 49 S.W.3d 678 (Mo. App. 2001). In a garnishment proceeding against an insurance company with a homeowner’s policy, the insurer may use equitable and collateral estoppel to assert a coverage exclusion for intentional acts.
“Stacking” refers to an insured’s ability to obtain multiple insurance coverage benefits for an injury either from more than one policy, as where the insured has two or more separate vehicles under separate policies, or from multiple coverages provided for within a single policy, as when an insured has one policy which covers more than one vehicle. Lynch, 325 S.W.3d 531.
Missouri law permits stacking of UM coverage. Bauer v. Farmers Ins. Co., 270 S.W.3d 491, 494 (Mo. App. 2008). Provisions in policies that purport to prohibit stacking of such coverages violate the public policy reflected in § 379.203. Bauer, 270 S.W.2d at 494.
Missouri law permits stacking of UIM coverages, where an insurance policy treats UM and UIM the same. Bauer, 270 S.W.3d at 492-93. Because there is no statutory requirement in Missouri that drivers purchase UIM coverage, the limits of coverage and any stacking or anti-stacking provisions are determined by the contract entered into by the insured and the insurer. Lynch, 325 S.W.3d 531. Therefore, as long as the policy language disallowing stacking is unambiguous, the anti-stacking provisions will be enforced according to their terms. Lynch, 325 S.W.3d 531.
Coverage under the policy shall be limited to the extent that the total limits available cannot exceed the highest limits of any single applicable policy, regardless of the number of policies involved, persons covered, claims made, vehicles or premiums shown on the policy or premiums paid or vehicles involved in an accident.
Subrogation arises by operation of law (in the casualty insurance context) when the insurance company under its contract obligation pays all or a part of the property damage incurred by its insured. The legal title to the cause of action remains in the insured. The exclusive right to sue for the entire loss remains with the insured, though he will hold the proceeds for the insurer. The only relevant exception to this rule is when the insured assigns his or her property damage claim against the tortfeasor to the insurer. If a claim has been assigned, there is a complete divestment of all rights from the assignor and the vesting of those rights in the assignee. An assignment thus gives the insurer full legal title to the claim and permits the insurer to pursue it against the tortfeasor. By contrast, if there has not been an assignment, and the insurer holds only a subrogation interest, then under Missouri law an equitable right passes to the subrogee and the legal right to the claim remains in the subrogor. In a subrogation situation, since the insured still holds the legal right to the claim, the insurer cannot sue the tortfeasor directly but must wait and assert its subrogation interest against any recovery the insured makes against the tortfeasor. The firmly established rule in Missouri is that when an insurer pays a property loss, then its right to maintain suit against the tortfeasor depends upon whether it receives from the insured an assignment of the whole claim as compared with merely rights of subrogation. If the insurer receives such an assignment, then it has the exclusive right to maintain suit against the tortfeasor for the entire claim including any deductible item. On the other hand, if the insurer's rights are simply those of subrogation, then legal title remains in the insured and he retains the exclusive right to bring suit.
In Missouri, there are three primary sources of law to consider in evaluating issues created by subrogation, liens, and assignments in personal injury situations: (1) Missouri statutes, (2) Missouri common law, and (3) federal law.
Pursuant to Mo.Rev.Stat. § 430.250, a hospital has the right to enforce its lien by providing that any person(s), firm(s), or corporation(s), including an insurance carrier, making payment to the patient, his attorneys, or his heirs or legal representatives as compensation for the injury is liable to the hospital for the amount the hospital is entitled to receive. Bamberger v. Freeman, 299 S.W.3d 684, 688 (Mo. App. 2009). However, hospital liens do not attach to wrongful death settlement proceeds. Bamberger, 299 S.W.3d at 689.
Other Missouri statutory liens in the personal injury context include attorney’s liens and Medicaid liens.
A lien is a charge on property for payment or discharge of a debt or duty. Marvin’s Midtown Chiro. Clinic, LLC v. State Farm Mut. Auto. Ins. Co., 142 S.W.3d 751, 753-54 (Mo. App. 2004). An assignment, on the other hand, transfers to another all or part of one's property, interest, or rights. Marvin’s, 142 S.W.3d at 754. An assignment is a right in the property itself. Marvin’s, 142 S.W.3d at 754. An assignment divests the assignor of all right of control over the subject matter. Marvin’s, 142 S.W.3d at 754. In Missouri, public policy prohibits the assignment of a personal injury claim in whole or in part. Marvin’s, 142 S.W.3d at 754. Such prohibition was adopted by the courts of this state to prevent unscrupulous people from purchasing causes of action and trafficking in lawsuits for pain and suffering. Marvin’s, 142 S.W.3d at 754. Unlike an assignment, a contractual lien granted by an injured party to a health care provider against an insurance company does not violate public policy and is enforceable. See Marvin’s, 142 S.W.3d at 755.
In addition, a lien granted by an injured party to a creditor against an insurance company is also enforceable. Ford Motor Credit Co. v. Allstate Ins. Co., 2 S.W.3d 810 (Mo. App. 1999).
It is well settled that in Missouri, a claim for personal injury cannot be assigned, in whole or in part. Hays v. Mo. Highways & Transp. Comm’n, 62 S.W.3d 538 (Mo. App. 2001). Insurers paying benefits to insureds as a result of injuries caused by third persons claim an interest in recovering those costs if the insured obtains a settlement or collects upon a judgment against the third party. Hays, 62 S.W.3d 538. To that end, insurers have repeatedly attempted to draft policy provisions or establish other requirements for the purposes of seeking reimbursement from the insured in such situations. Hays, 62 S.W.3d 538. Such provisions or other requirements have been regularly invalidated by the appellate courts. For example, an attempt by an insurer providing medical pay coverage in an automobile insurance policy to obtain a subrogation interest in the insured's personal injury claim against a third party tortfeasor was held void as against public policy. Travelers Indem. Co. v. Chumbley, 394 S.W.2d 418, 424 (Mo. App. 1965). An insurer providing health and medical insurance could not require the insured to grant the insurer an equitable interest in the insured's personal injury claim. Jones v. Aetna Cas. & Sur. Co., 497 S.W.2d 809, 813 (Mo. App. 1973). An assignment of the potential proceeds of a personal injury claim has likewise been held invalid. Schweiss v. Sisters of Mercy, St. Louis, Inc., 950 S.W.2d 537, 538 (Mo. App. 1997). Further, the Court of Appeals has held that an insurer cannot require an insured to sign an agreement under which the insured agrees to reimburse the insurer if the insured obtains a settlement or judgment against a third party tortfeasor. See Waye v. Bankers Multiple Line Ins. Co., 796 S.W.2d 660, 661 (Mo. App. 1990). Each of these holdings was premised upon the longstanding policy prohibiting the assignment, forced or otherwise, of a personal injury claim whether denominated an assignment, subrogation interest, or agreement to reimburse.
It has been held that the Employees Retirement Security Act of 1974 (ERISA), 29 U.S.C. section 1001, et seq., permits employers with self-insurance plans that fall within the Act to obtain subrogation rights in a personal injury claim by an insured against a third party, provided the plan documents explicitly grant such a right. Hays, 62 S.W.3d 538. This exception is based upon specific language within the ERISA code that expressly preempts state law in this area. Hays, 62 S.W.3d at 538.
Another federal lien in the personal injury context is the Medicare lien.
In Missouri, § 379.203.4 gives the UM insurer a right to reimbursement out of any recovery by the insured against the uninsured tortfeasor. While the language of the statute does not appear to give the UM insurer a right to pursue a subrogation claim directly against the uninsured motorist, a UM carrier does have such a right in certain circumstances. Roberts v. Progressive Northwestern Ins. Co., 151 S.W.3d 891 (Mo. App. 2004). The right is limited to recovery from the uninsured motorist, and the UM carrier is not entitled to recovery from other tortfeasors. Schaeffer v. American Motorists Ins. Co., 973 S.W.2d 180 (Mo. App. 1998). An insurer cannot require a UM claimant to execute a release that grants the insurer greater subrogation rights than the law provides. Waldrop v. Shelter Mut. Ins. Co., 221 S.W.3d 401 (Mo. App. 2006).
There is no statutory right to reimbursement or subrogation in Missouri for UIM claims. In Missouri, in general, a personal injury cause of action is not assignable where the insured has, prior to entry of a judgment on the underlying tort action, entered into a settlement with the tortfeasor. Marshall v. Northern Assur. Co. of America, 854 S.W.2d 608, 610 (Mo. App. 1993). Such causes of action may not be assigned prior to judgment for reasons of public policy. Marshall, 854 S.W.3d at 610. Public policy reasons for prohibiting the assignment of a personal injury cause of action do not apply where the action has been reduced to judgment. Marshall, 854 S.W.2d at 610. There is every reason for holding that a cause of action for personal injuries, where the gist of the damages recovered is physical pain and mental anguish, should not be the subject of barter or trade, or a matter of profit to the creditors of the injured party. Marshall, 854 S.W.2d at 610. The objection to such assignment is that unscrupulous people would purchase causes of action and thereby traffic in law suits for pain and suffering. Marshall, 854 S.W.2d at 610.
Missouri courts have stated that it would be patently unjust to permit a third party tortfeasor, with knowledge of an insurer's subrogation interest, to settle with the insured for less than the wrongdoer's full liability, and become thereby insulated against the insurer's right of action against the tortfeasor. Marshall, 854 S.W.2d at 610. Underinsured motorist coverage is contractual. Absent contrary public policy, the parties to a contract are free to condition their undertaking as they choose. Marshall, 854 S.W.2d at 611. Accordingly, when a UIM carrier pays its insured pursuant to the underinsured provision of the insurance policy, the carrier then will be entitled to attempt to recover from the uninsured motorist any monies its has paid to its insured because of the automobile accident that was the subject of the tort action, notwithstanding any covenant not to execute under Mo.Rev.Stat. § 537.065. Marshall, 854 S.W.2d at 612.
In any action, suit or other proceeding instituted against any insurance company, association or other insurer upon any contract of insurance issued or delivered in this state to a resident of this state, or to a corporation incorporated in or authorized to do business in this state, if the insurer has failed or refused for a period of thirty days after due demand therefor prior to the institution of the action, suit or proceeding, to make payment under and in accordance with the terms and provisions of the contract of insurance, and it shall appear from the evidence that the refusal was vexatious and without reasonable cause, the court or jury may, in addition to the amount due under the provisions of the contract of insurance and interest thereon, allow the plaintiff damages for vexatious refusal to pay and attorney’s fees as provided in section 375.420. Failure of an insurer to appear and defend any action, suit or other proceeding shall be deemed prima facie evidence that its failure to make payment was vexatious without reasonable cause.
In any action against any insurance company to recover the amount of any loss under a policy of automobile, fire, cyclone, lightning, life, health, accident, employers’ liability, burglary, theft, embezzlement, fidelity, indemnity, marine or other insurance except automobile liability insurance, if it appears from the evidence that such company has refused to pay such loss without reasonable cause or excuse, the court or jury may, in addition to the amount thereof and interest, allow the plaintiff damages not to exceed twenty percent of the first fifteen hundred dollars of the loss, and ten percent of the amount of the loss in excess of fifteen hundred dollars and a reasonable attorney’s fee; and the court shall enter judgment for the aggregate sum found in the verdict.
A person providing professional services is under a duty to exercise such care, skill, and diligence as persons in that profession ordinarily exercise under like circumstances. Richey v. Phillip, 259 S.W.3d 1, 17 (Mo. App. 2008). A professional person, therefore, owes a client a duty of care commensurate with the degree of care, skill and proficiency commonly exercised by ordinarily skillful, careful and prudent professionals. Id. Insurance agents are held to a professional standard of care. Insurance professionals are not ordinary people in regard to insurance matters. Id. at 18. They have a duty to exercise such care, skill, and diligence as persons in that profession ordinarily exercise under like circumstances. Id. An agent, in handling inquiries about insurance coverage, should exercise a degree of care, skill and learning that an ordinarily careful and prudent person in an insurance business would use under the same or similar circumstances. See id.
Missouri recognizes negligent misrepresentation as an actionable tort and has recognized the right of a third party to sue an insurance company for negligent misrepresentation. Id. at 8-9. The submissibility of a misrepresentation claim depends not upon the contract but upon the establishment of all the elements of the misrepresentation. Id. at 9.
To make a submissible case of negligent misrepresentation for a pecuniary loss, Missouri law requires a plaintiff to establish: (1) the speaker supplied information in the course of his or her business because of some pecuniary interest, (2) that was false, (3) without exercising reasonable care or competence in obtaining or communicating this information, (4) for the guidance of a limited group of persons in a particular business transaction, (5) and the listener justifiably relied on the information, (6) and, as a result, suffered a pecuniary loss. Id. at 15. A person who negligently gives false information to another may also be liable for physical harm. Id. Under the Restatement (Second) of Torts § 311: (1) one who negligently gives false information to another is subject to liability for physical harm caused by action taken by the other in reasonable reliance upon such information, where such harm results (a) to the other, or (b) to such third persons as the actor should expect to be put in peril by the action taken. Id.
Missouri courts have long held that a broker or agent who undertakes to procure insurance for another for compensation owes a duty of reasonable skill, care, and diligence in obtaining the requested insurance. Parshall v. Buetzer, 121 S.W.3d 548, 554 (Mo. App. 2003). An agent or broker who unjustifiably and through his fault or neglect fails to obtain the requested insurance will be held liable for any damages resulting from such failure. Zeff Distr. Co., Inc. v. Aetna Cas. & Surety Co., Inc., 389 S.W.2d 789, 795 (Mo. 1965).
Moreover, “[a]n agent or broker who undertakes to procure insurance in accordance with instructions impliedly undertakes to give notice to the [client] in the event of his failure to procure such insurance.” Id. Failure to provide this notice will render the agent or broker liable to the client for damages, and the client may sue in tort for negligent breach of the agent’s or broker’s duty to timely notify the client that the requested insurance was not obtained. Wilmering v. Lexington Ins. Co., 678 S.W.2d 865, 872 (Mo. App. 1984).
To prevail on a claim of negligent failure to procure insurance, the plaintiff must plead and prove that (1) the agent agreed to procure, for compensation, insurance from the insurance company, (2) the agent failed to procure the agreed upon insurance and, in so doing, failed to exercise reasonable care and diligence, and (3) as a result, the plaintiff suffered damages. Haynes v. Edgerson, 240 S.W.3d 189, 195 (Mo. App. 2007).
An insurer that assumes control of the right to settle claims against its insured may become liable in excess of the policy limits if it fails to exercise good faith in considering an offer to compromise the claim for an amount within the policy limits. Johnson v. Allstate Ins. Co., 262 S.W.3d 655, 662 (Mo. App. 2008).
When an insurer breaches its duty to consider settlement offers in good faith, the insured is free to then reach a reasonable settlement on his own, which he can then enforce against the insurer. Johnson, 262 S.W.3d at 662. An insurer has a duty to consider the insured's interest, and if this interest conflicts with its own, good faith obligates the insurer to sacrifice its interest in favor of the insured’s. Id. Bad faith on the part of the insurer would be the intentional disregard of the financial interest of the insured in the hope of escaping the responsibility imposed upon it by its policy. Id. An insurer must act honestly to effectually indemnify and save the insured harmless as it has contracted to do; to the extent, if necessary, that it must make whatever payment and settlement an honest judgment and discretion dictate, within the limits of the policy. Id.
An insurer’s bad faith in refusing to settle is a state of mind, which is indicated by the insurer’s acts and circumstances and can be proven by circumstantial and direct evidence. Id. Circumstances that indicate an insurer's bad faith in refusing to settle include the insurer's not fully investigating and evaluating a third-party claimant’s injuries, not recognizing the severity of a third-party claimant's injuries and the probability that a verdict would exceed policy limits, and refusing to consider a settlement offer. Id. Other circumstances indicating an insurer’s bad faith include not advising an insured of the potential of an excess judgment or of the existence of settlement offers. Id.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 379
 § 303
 § 379
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 379
 § 430
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 379
 v. 
 v. 
 v. 
 v. 
 § 537
 v. 
 § 311
 v. 
 v. 
 v. 
 v. 
 v.