Opinion ID: 865317
Heading Depth: 2
Heading Rank: 2

Heading: whether travelers and hri tortiously

Text: IN T E R FE RE D W ITH THE SETTLEM ENT BY CONTINUOUSLY ASSERTING EQUITABLE SUBROGATION. ¶22. Even though Travelers and HRI eventually abandoned their contractual subrogation claim, they continued to pursue an equitable subrogation claim, which Courtney asserted constituted bad faith on the part of Travelers and HRI. ¶23. Travelers and HRI argue that Valley Forge is not dispositive of this issue because this Court did not reach the question of equitable subrogation in that case. Futhermore, Travelers and HRI argue that a more recent case encourages assertion of a claim for equitable subrogation, namely Cooper Tire & Rubber Co. v. Striplin, 652 So. 2d 1102 (Miss. 1995). Chancellor Mask likewise provided a detailed analysis of Cooper Tire in her opinion.7 7 Cooper Tire does not answer the question of whether Mississippi recognizes equitable subrogation in the context of a health insurance policy. Cooper Tire simply suggests that Mississippi might recognize this theory of recovery. 17 In Cooper Tire, a minor child (Striplin) was injured by an uninsured motorist while riding his bicycle. The father’s insurer (Cooper Tire) paid $12,472.80 to medical providers pursuant to his health care plan. In connection with these payments, the parents executed Receipt and Subrogation Agreements which subrogated the insurer to their rights of recovery for the injury against any person or corporation. The father’s automobile insurer (Aetna) thereafter agreed to pay Striplin the sum of $75,000.00 pursuant to the father’s uninsured motorist coverage. Cooper Tire asserted a claim against that sum in the amount equal to what it had paid to medical providers, which Striplin rejected, citing the lack of prior court approval of the subrogation agreement. The Chancellor held that the post-claim subrogation agreement was invalid as to the child because it lacked prior court approval, and Cooper Tire appealed. In affirming the chancellor, the Supreme Court stated that “[i]f Cooper Tire is due consideration, it would be based upon its own equitable claim for reimbursement of necessary medical expenses under the doctrine of quasicontract. Because Cooper Tire raised this claim on appeal, but did not raise it below, the issue is now waived.” Id. at 1104. Based on the Supreme Court’s explanation that the child’s health insurer could have raised an equitable claim for reimbursement in the trial court, it is understandable that Farm Bureau, and HRI, would have viewed the situation at hand as giving rise to that form of claim. However, because the Supreme Court did not take up the issue of equitable subrogation in this context, this holding has limited applicability on that item. Chancellor Mask then held: Based on the foregoing analysis, the Court finds that the holding in Valley Forge should not be strained to forbid the assertion of equitable subrogation in the context of a Mississippi health insurance policy. Further, that case does not support a cause of action where contractual subrogation was erroneously asserted, then withdrawn, during the negotiation process. .... [The issue is] whether [Travelers and HRI] exhibited “bad faith” by [their] asserting equitable subrogation, or otherwise engaged in tortious behavior in their assertion of a subrogation claim. In order to establish a claim of bad faith, [Courtney] must prove: (1) lack of a “legitimate or arguable reason” for asserting a right to subrogation, and (2) commission of a willful or malicious wrong or action with gross and reckless disregard for the insured’s rights. Dixie Ins. Co. v. Mooneyham, 684 So. 2d 574, 583 (Miss. 1996); Life & Cas. Ins. Co. v. Bristow, 529 So. 2d 620, 622 18 (Miss. 1988). The Court previously described the elements of a claim for tortious interference with a settlement. The Court’s findings above regarding the availability of equitable subrogation obviate the need for extensive discussion concerning whether HRI’s assertion of that doctrine was legitimate or arguable.8 Based on the lack of controlling case law, and other factors set forth below, the Court finds that HRI’s actions in asserting this doctrine were neither tortious nor in “bad faith.” Counsel for [Courtney] referred to HRI’s subrogation interest in communications with MetraHealth prior to the alleged tortious assertion of contractual subrogation by HRI. Additionally, as referred to earlier in this opinion, several months prior to the filing of the first petition, Farm Bureau expressed concern to counsel for Courtney that [Travelers and HRI] may have a subrogation claim in some form based on the Cooper Tire case, as discussed above. Thus, the insurer for the tortfeasor, reacting to the recent (though now ten-year old) rulings of our Supreme Court, expressed independent concern over the possibility of a subrogation claim by the health insurance provider for the victim. HRI’s pursuing a potential legal position concerning equitable subrogation, though unsuccessfully, does not in itself expose them to liability. Valley Forge, at 539 (“[F]iling a complaint to resolve a legal issue is not to be considered bad faith merely because the issue is ultimately resolved against the insurer.”) (citing Employers’ Mutual Casualty Company v. Tompkins, 490 So. 2d 897 (Miss. 1986)). The Court finds that [Travelers and HRI] had a legitimate or arguable reason for asserting a right to equitable subrogation, though they did not succeed on their claim. Cf. Dimeo v. Gesik, 197 Or.App. 560, 106 P.3d 697 (Or. Ct. App. 2005).[] It is undisputed that the potential case against Arnold was settled with Farm Bureau for reasons other than the potential claims asserted by HRI or Travelers. The Court finds that neither HRI’s nor Travelers’ actions affected [Courtney’s] decision to elect to settle the case rather than timely pursuing her claim to a trial on the merits against the tortfeasor. Since [Courtney’s] settlement was for full policy limits, HRI’s involvement did not affect the amount of settlement. Thus, the proof was insufficient to show any harm or 8 Chancellor Mask devoted an entire section of her opinion to holding that Travelers and HRI could not rely upon the doctrine of equitable subrogation based on the holdings of other states’ courts. However, that is not an issue on appeal because Travelers and HRI relinquished any and all subrogation claims. 19 injury which was suffered in the ultimate settlement of the case by [Travelers’s and HRI’s] activities during the negotiation process. With regard to the claim that the alleged tortious conduct of [Travelers and HRI] delayed Courtney’s access to the settlement funds, the Court finds that the funds were deposited in the Court’s registry on the joint petition filed on behalf of Courtney and Farm Bureau. Prior to HRI or Travelers being served with process, an order was entered directing the deposit of the funds. Negotiations between the parties continued following the remand from Federal District Court in 1998. See Exhibit 35. In the letter received as Exhibit 35, dated December 7, 1998, counsel for HRI requested that the Petitioner dismiss the complaint against HRI because of HRI’s “decision to forego any claim against the funds being held by the Chancery Court.” Counsel for HRI further stated that “I have also suggested to you on several occasions since the summer of 1997, that, because [HRI] is waiving its subrogation lien, it be dismissed as a defendant.” As described above, the damages which are now cited by [Courtney] as a basis for relief were not suffered until after the filing of the second petition. The Court finds no basis in evidence that the delays in bringing the matter to a final hearing were primarily attributable to either party. ¶24. We agree with the chancellor. In accordance with this Court’s decisions in Mooneyham and Bristow, Travelers and HRI had a “legitimate or arguable reason” to believe that equitable subrogation might have been available to them, based on this Court’s language in Cooper Tire. Additionally, in accordance with Tompkins, we hold that requesting a court to decide whether equitable subrogation is a viable theory of recovery does not in itself equate to the “commission of a willful or malicious wrong or action with gross and reckless disregard for the insured’s rights.” Thus, Travelers and HRI did not act in bad faith to tortiously interfere with Courtney’s settlement; therefore, this issue is without merit. 20