Georgia Insurance Coverage Decisions
During June 2008
Toomer v. Allstate Ins. Co.
, Case No. A08A0529 (Ga. App. June 16, 2008).
In Toomer, the Court of Appeals reversed the trial court’s grant of summary
judgment to the insurer on the insured’s claims for uninsured motorist bene-
fits. The insured, injured in an automobile accident, settled with the tortfea-
sor’s liability carrier for the policy limits. The amount received by the in-
sured was subject to a medicare lien under federal law. The insured then
sought coverage under her uninsured motorist coverage which had denied
coverage because its limits were no greater than the tortfeasor’s liability lim-
its which had been paid. The insurer based its argument on the general rule
that the proper way to determine underinsured motorist exposure is to subtract
the total liability coverage available to the injured party from the limit of the
uninsured motorist coverage. However, the Court rejected the insurer’s ar-
gument noting that Medicare had filed a lien on the insured’s settlement re-
covery for the medical expenses it paid. The insured’s recovery of the tort-
feasor’s liability limits was not protected from the lien by Georgia’s complete
compensation rule because the right of Medicare to recover from the settle-
ment proceeds is governed by federal law. So to determine whether unin-
sured motorist coverage was exposed, the Court
first deducted
the Medicare
lien from the tortfeasor’s liability limits that had been paid to determine
“available tortfeasor liability limits.”
Lee, Black, Hart & Rouse PC v. The Travelers Indemnity Co.
, Case No.
A08A0353 (Ga. App. June 5, 2008). The Georgia Court of Appeals upheld
the grant of summary judgment to the insurer based on the insurer’s assertion
that the policy at issue did not provide coverage for money that was stolen
from the plaintiff, but then, as part of the fraudulent scheme,
placed back into
the plaintiff’s accounts. The plaintiff’s employee, through a complex scheme
of shifting money and check writing, stole approximately $350,000 from
1998 through 2004. During 2004, the employee forged several checks that
were fraudulently endorsed and the funds were deposited in the plaintiff’s
escrow account. The plaintiff was insured for “employee dishonesty.” The
plaintiff submitted a claim to its insurer in the amount of $325,885.64. After
LEGAL E-NEWSLETTER
JUNE/JULY 2008
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COURT DECISIONS
Special Note:
New York
Radically Changes Late
Notice Law
New York passes law that insurers will
now have to show prejudice for late
notice defense and also sets forth pro-
cedure allowing direct action suits
against insurers denying coverage on
late notice.
Georgia Decisions
Stretching
Uninsured Motorist Cover-
age
When federal law mandates that a
Medicare lien can recover from a tort
victim s liability recovery, which was
paid by the tortfeasor s liability insurer,
the court held that the lien amount will
reduce what is considered part of the
tortfeasor s available liability limits
when determining whether uninsured
motorist coverage limits are triggered.
Fidelity Loss
In a single check writing scheme,
fraudulently taken money is covered
while money fraudulently
deposited
in
an insured s account is not covered.
Recent Cases Of Interest
Around the Country
A Federal Court Awards Massive Sanc-
tions For Failure To Comply With Dis-
covery Of Electronic Data
$8.5 million sanction levied, that will
catch your attention.
Texas, Looks At Whether Public Policy
Prevents Insurability Of Punitive Dam-
ages
The Texas Supreme Court surveys
state law and adopts the majority posi-
tion that insuring punitive damages
awarded for gross negligence, and not
intentional harm, is not violative of pub-
lic policy.
Complex Insurance Coverage
Litigation and Liability Def
ense
