Opinion ID: 1106013
Heading Depth: 2
Heading Rank: 1

Heading: Gross negligence, reckless disregard, or malice: the Bass standard.

Text: ¶ 22. Because they each challenge the legal sufficiency of the evidence presented at trial, the denials of peremptory instructions, motions for directed verdict, and motions for judgment notwithstanding the verdict are reviewed under the same standard. Moore v. State, 859 So.2d 379, 383 (Miss.2003). This Court has held: Under this standard, this Court will consider the evidence in the light most favorable to the appellee, giving that party the benefit of all favorable inference that may be reasonably drawn from the evidence. If the facts so considered point so overwhelmingly in favor of the appellant that reasonable men could not have arrived at a contrary verdict, we are required to reverse and render. On the other hand if there is substantial evidence in support of the verdict, that is, evidence of such quality and weight that reasonable and fair minded jurors in the exercise of impartial judgement might have reached different conclusions, affirmance is required. Id. ¶ 23. Gallagher first contends that the proof was insufficient to establish its liability for its actions in adjusting Jeffcoat's claim this Court's holding in Bass v. California Life Ins. Co., 581 So.2d 1087 (Miss.1991). In Bass, the plaintiff was a member of a group health insurance plan. Id. California Life was the group insurance carrier and used an administrative organization, Variable Protection Administrators, Inc. (VPA), to manage the insurance plan. Id. In March of 1985, the plaintiff sought medical advice on three different occasions for the same medical condition. Id. She subsequently had surgery to correct her problems. Id. After each of these visits, she submitted a claim to VPA. Id. The first claim was allowed, but the others were denied. Id. The plaintiff corresponded with VPA through her attorney and appealed the denial. Id. at 1089. VPA sent the letter to California Life. Id. Upon receipt of the letter, California Life ordered VPA to immediately pay the claims plaintiff submitted. Id. This payment was made in October of 1985. Id. Plaintiff filed suit against California Life and VPA for bad faith denial of her claims. Id. ¶ 24. At trial, the evidence showed that VPA was responsible for drafting the policy of insurance underwritten by California Life. Id. VPA received applications, reviewed claims for coverage, received premiums, and had the authority to pay claims up to $10,000 without prior approval from the carrier. Id. In the master insurance policy, VPA was designated as a third-party who was contracted to act as the benefit coordinator and marketing arm of the group plan. Id. ¶ 25. The trial court granted California Life's motion for directed verdict, holding that VPA had no duty of good faith under Mississippi law. Id. Reversing the judgment of the court below, this Court held that an insurance adjusting company can be liable for gross and reckless negligence. Id. at 1090. That is, an insurance adjuster, agent or other similar entities may not be held liable for simple negligence in connection with adjusting a claim. Id. Rather, an adjuster can only incur independent liability when his conduct constitutes gross negligence, malice, or reckless disregard for the rights of the insured. Id. (quoting Dunn v. State Farm Fire & Cas. Co., 711 F.Supp. 1359, 1361 (N.D.Miss.1987)). ¶ 26. While this Court has not utilized the Bass standard, the federal courts and the Mississippi Court of Appeals have considered and applied it. See, e.g., Howard v. CitiFinancial, Inc., 195 F.Supp.2d 811, 819 (S.D.Miss.2002), aff'd sub nom., Ross v. CitiFinancial, Inc., 344 F.3d 458 (5th Cir.2003); Skinner v. USAble Life, 200 F.Supp.2d 636, 640 (S.D.Miss.2001) (pointing out federal court's expression of uncertainty regarding this Court's creation of separate standard of care for agents such as insurance adjusters); Russell v. New York Life Ins. Co., 1997 WL 170317,  4 (N.D.Miss.1997) (stating that this Court's holding in Bass muddied the waters a bit in this context); Rasberry v. Blue Cross & Blue Shield of Mississippi, 850 So.2d 1194, 1200 (Miss.Ct.App.2002) (affirming summary judgment in favor of third party insurance administrator and holding that no bad faith was shown). ¶ 27. As two federal court opinions make apparent, the absence of cases which discuss and apply the Bass standard has caused some confusion. However, we take this opportunity to revisit our holding in Bass and conclude it plainly states and we now reiterate that an insurance adjuster, agent or other similar entity may not be held independently liable for simple negligence in connection its work on a claim. Such an entity may be held independently liable for its work on a claim if and only if its acts amount to any one of the following familiar types of conduct: gross negligence, malice, or reckless disregard for the rights of the insured. We will now analyze the voluminous record here in light of this standard to determine whether Gallagher was grossly negligent, malicious, or exhibited reckless disregard for Jeffcoat's rights. ¶ 28. It is clear to us that Gallagher's acts in the adjustment of this claim were, at the most, negligent. Gallagher never denied or recommended denial of this claim, but it did not pay any benefits on the policy until ten months after Jeffcoat made the claim. The payments of medical and uninsured motorist benefits were both made after Jeffcoat filed suit. ¶ 29. Moreover, Gallagher did not provide training or resources to support its adjusters' work on uninsured motorist claims. Gallagher failed to give its adjusters any resources or training regarding stacking in Mississippi. Although she was generally familiar with stacking, Love did not know that stacking was available in Mississippi or how it works until Jeffcoat's lawyer informed her that it is and explained how it works. Love knew that she needed a legal opinion on this issue, but she failed to request one. It escapes us why Love would wait until the fleet schedule was discovered to request an opinion. Clearly, Love could have obtained a legal opinion on whether and how stacking applies in Mississippi without knowing the number of vehicles in the NHL fleet. [2] ¶ 30. Love admitted at trial that local defense counsel was available to her if she was unfamiliar with the laws of a particular jurisdiction, but she did not consult an attorney. Friedhoff likewise failed to request a legal opinion. When Jeffcoat's attorney notified Love that stacking might be available on this claim, she was unfamiliar with anti-stacking provisions. After receipt of the policy in question, Love reviewed it to determine if the policy contained such a provision, even though such clauses are against the public policy of this State. [3] Thus, it is clear to this Court that Love was not trained in any aspect of handling uninsured motorist claims in the State of Mississippi. Further, neither Gallagher nor Love was licensed to adjust insurance claims in Mississippi at the time of this claim. ¶ 31. Notwithstanding this evidence, Gallagher argues that it did not violate this Court's standard for insurance adjuster liability as set out in Bass, 581 So.2d at 1088. We agree. Considering the evidence in the light most favorable to Jeffcoat and giving him the benefit of all favorable inferences that may be reasonably drawn from it, we hold that there is not substantial evidence supporting the verdicts. At the very most, Gallagher and Love were negligent in their handling of Jeffcoat's claim. As demonstrated, supra, there is substantial evidence supporting such a conclusion. However, their acts do not rise to the standard for insurance adjuster liability as set out by this Court in Bass. ¶ 32. A careful review of the Court's analysis in Bass shows that insurance agents, adjusters, and similar entities cannot be held liable for simple negligence. This well-reasoned opinion adopts the rule that a higher standard should be applied in cases such as the one sub judice. ¶ 33. Gallagher's adjustment of this claim evinces a complete breakdown of communication and cooperation between two contractually obligated parties, supervisors and subordinates within Gallagher, as well as between two principals and their agent. Important documents related to this policy were not shared with Gallagher either by accident or willfully. The carrier's representatives were uncooperative with Gallagher, bringing the resolution of Jeffcoat's claim to a standstill, or as Love described it, an impasse. ¶ 34. Gallagher argues that it was in a position of irreconcilable conflict, but such conflict is inherent to the business in which Gallagher operates. It is obvious to anyone who has ever written or purchased an insurance policy that an insured and an insurance carrier have independent interests in connection with a claim. The insurer seeks to minimize loss while the insured seeks to maximize benefits under the policy. When a third-party administrator becomes involved, as is the case here, that adds yet another set of interests and differing duties to this complicated risk-allocation and prevention calculus. ¶ 35. Although Gallagher and Love were negligent at the most, we find no evidence of gross negligence, malice, or reckless disregard for Jeffcoat's rights under NHL's uninsured motorist policy. Therefore, we find that Gallagher did not violate the Bass standard, and the trial court erred in denying Gallagher's motion for judgment notwithstanding the verdict.