Opinion ID: 2079158
Heading Depth: 1
Heading Rank: 1

Heading: The appeal: interest and attorney fees.

Text: Under 24-A M.R.S.A. § 2436 an insurer may be required to pay penalty interest and attorney fees if it fails to pay an undisputed claim within a prescribed time. [2] The Superior Court, in ruling that the statute was inapplicable, relied on Burne v. John Hancock Mutual Life Insurance Co., Me., 403 A.2d 775 (1979), in which this court held that section 2436 did not apply to life insurance policies. Burne construed an earlier version of section 2436 that by its terms governed [c]laims made by a named or other person insured thereunder for payment of benefits under a policy of insurance against loss. [3] We held that the quoted language excluded life insurance from the coverage of the statute because a life insurance policy is collected upon only when the insured is dead and cannot himself make any claim. Plaintiff argues that because the language found critical in Burne has been amended to read [a] claim for payment of benefits under a policy of insurance against loss, without limiting the identity of the person by whom the claim is made, the statute must now be construed to cover all kinds of insurance, including life insurance. We disagree. Initially we point out that, whatever the motivation behind the change in the statutory language, it was not a reaction to our decision in Burne. Section 2436 was enacted in its present form in 1977, while Burne, which interpreted the original version of section 2436, was not decided until 1979. The Burne decision depended in part upon a Statement of Fact attached to the 1973 bill that became 24-A M.R.S.A. § 2436 in its original form. That Statement of Fact, supplied by the Committee on Business Regulation, stated that [t]he purpose of the new draft is to limit the bill to claims for first-party coverage. See 403 A.2d at 778. The Statement of Fact attached to the 1977 bill that became the present section 2436, L.D. 1247, 108th Me.Legis., 1st Reg.Sess. (1977), gives no indication that the legislature intended to change that basic limitation, which excludes life insurance. The 1977 Statement of Fact reads in its entirety: This bill clarifies the requirements regarding timely payment of insurance claims. There are also internal indications that no extension of section 2436 to cover life insurance was intended. Even though the 1977 amendment eliminated the language, [c]laims made by a named or other person insured, that we found critical in the Burne case, that amendment introduced other limiting language in the same first sentence that has a comparable consequence in construing the statute: the 30-day payment period starts to run only after ascertainment of the loss is made either by written agreement between the insurer and the insured or by filing with the insured of an award by arbitrators. . . . (Emphasis added) The reasoning of Burne continues to apply. [4] Furthermore, the legislature has established a time period for payment of life insurance proceeds that is different from the payment period applicable to other types of insurance. The latter period, established by section 2436, is 30 days from proof and ascertainment of loss. On the other hand, the payment period for life insurance is established by 24-A M.R.S.A. § 2513 (1974) to be two months from receipt by the insurer of due proof of death. The original time period of section 2436 was 60 days, see n. 3 above, practically identical to the two-month period of section 2513. Subsequent amendments shortened the time period of section 2436 to 30 days, while leaving the two-month period of section 2513 for life insurance intact. We discern no legislative intent to treat life insurance and other kinds of insurance alike. As we remarked in Burne, 403 A.2d at 778, the wisdom of the legislature's distinctions is not for us to judge. Even if section 2436 applied to life insurance, it would hardly help this plaintiff, for the section imposes penalties only for failure to pay an undisputed claim. The Caverlys received oral notice that their claim was disputed when Foster and Ennis visited the Caverly farm shortly after Brainard's death. By then, and at all times thereafter, everyone knew the ground of FFLIC's dispute of the claim; namely, that the insurance policy had expired and had not been reinstated. In response, plaintiff argues that in order to be effective the notice of dispute must be in writing. However, section 2436 contains no such requirement: its second paragraph provides only that an insurer may dispute a claim by furnishing a written statement to the insured or his representative. That present language should be contrasted with the original form of section 2436, which did require written notice. See n. 3 above. The present permissive language gives an insurance company an option of either using a written statement in form and substance that the statute declares to be adequate or taking its chances with an oral notice of dispute that may or may not be found adequate in the course of later litigation. The presiding justice ruled correctly that Depositors Trust was not entitled to the statutory interest and attorney fees provided by 24-A M.R.S.A. § 2436.