Court Opinion

ID: 9534639
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:41:35.678152+00
Date Added: 2024-06-11T13:30:20.913845
License: Public Domain

Larson, J.,
concurring and dissenting:
I concur with the result reached, in this case, but I dissent from the wording and import of Syllabus ¶ 4. .
The literal reading of Syllabus ¶ 4 is that in every case, once the trial court finds that personal injury protection (PIP) payments were overdue because the insurer had no reasonable grounds to refuse or, delay payment, it has also found that the. delay or refusal requires the allowance of attorney fees to the claimant.
My reading of K.S.A. 40-3110(b) and K.S.A. 40-3111(b) is materially different. I would hold that before attorney fees would be allowed, a two-step approach' is required. The. trial court must first make a determination whether, payments for . benefits are overdue, with the insurer being entitled to the provision “[t]hat no such payment shall be deemed overdue .where the insurer or self-insurer has reasonable proof to establish it is not responsible for the payment.” K.S.A: 40-3110(b). This section goes on to *101require the payment of 18% simple interest on all overdue payments.
The statutory provision for the allowance of attorney fees is found in K.S.A. 40-3111(b), which in applicable part reads as follows:
“An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal injury protection benefits which áre overdue. The attorney’s fee shall be a charge against the insurer or self-insurer in addition to the benefits recovered, if the court finds that the insurer or self-insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.”
This separate provision requires the application of the second step to the mandated statutory approach, which is for the trial court to determine, before attorney fees are allowed, if the insurer or self-insurer “unreasonably refused to pay the claim or unreasonably delayed in making proper payment.”
The trial court here was unimpressed with Intracorp’s evaluation and the lack of an examination of Scott by Dr. William Slentz; it was impressed by the fact that the treatments by the nurses and therapists were successful and resulted in Scott’s recovery from her pain and discomfort. These facts justify the trial court’s finding that the PIP payments were overdue and State Farm was unreasonable in refusing to pay the claim.
The trial court made a sufficient finding to justify both the imposition of interest under K.S.A. 40-3110(b) and attorney fees under K.S.A. 40-3111(b) albeit not with the precision and clarity required by the separate statutory provisions.
The literal reading and application of Syllabus ¶ 4 of this case is inconsistent with our previous decision of Hand v. State Farm Mut. Auto. Ins. Co., 2 Kan. App. 2d 253, 577 P.2d 1202, rev. denied 225 Kan. 844 (1978). Although the issue in Hand was the extent of the survivor’s benefits to be allowed under K.S.A. 1977 Supp. 40-3101 et seq., Hand was the first case construing K.S.A. 40-3111(b). The law relative to the recovery of attorney fees under K.S.A. 40-256 was held to be relevant authority. Judge Rees of our court opined:
“Construing K.S.A. 40-256, the Kansas Supreme Court has said that attorney fees will be awarded in cases of ’frivolous and unfounded denial of liability.’ Koch, Administratrix v. Prudential Ins. Co., 205 Kan. 561, 565, *102470 P.2d 756 (1970). The issue of whether an insurer refused to pay without just cause or excuse is primarily one of fact to be determined in the first instance by the trial court. Farm Bureau Mutual Ins. Co. v. Carr, 215 Kan. 591, 598, 528 P.2d 134 (1974); Sloan v. Employers Casualty Ins. Co., 214 Kan. 443, 521 P.2d 249 (1974). The presence of a good faith legal controversy, particularly if it involves a matter of first impression in this jurisdiction, may constitute just cause or excuse for an insurer’s refusal to pay. Farm Bureau Mutual Ins. Co. v. Carr, [15 Kan. at 599]; Forrester v. State Farm Mutual Automobile Ins. Co., 213 Kan. 442, 517 P.2d 173 (1973).
“In this case, defendant was not guilty of a frivolous and unfounded denial of liability; the legal issue involved is one of first impression and defendant’s position was not without merit. We do not find the trial court erred.
“The denial of recovery of attorney fees is affirmed.” 2 Kan. App. 2d at 261.
I do not question that the justification for the allowance or denial of attorney fees is in the trial court’s discretion, which was held in DiBassie v. American Standard Ins. Co. of Wisconsin, 8 Kan. App. 2d 515, 661 P.2d 812 (1983), to be based on whether there was just cause to refuse payment.
I would hold the two-step approach should be consistently applied throughout the Kansas Automobile Injury Reparations Act. First, “Was the PIP payment overdue?” Then, “Did the insurer unreasonably refuse to pay the claim?” I disagree with and dissent from Syllabus ¶ 4, which would make the determination a one-step process.