Hager v. Allstate Insurance Company, No. 2007-CA-002599-MR (Ky. App. 10/16/2009)

• Decision Date: 16 October 2009
• Docket Number: No. 2007-CA-002599-MR.,2007-CA-002599-MR.
• Parties: Geneva HAGER Appellant, v. ALLSTATE INSURANCE COMPANY APPELLEE.
• Court: Court of Appeals of Kentucky

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Geneva HAGER Appellant, v. ALLSTATE INSURANCE COMPANY APPELLEE.

No. 2007-CA-002599-MR.

Court of Appeals of Kentucky.

October 16, 2009.

Appeal from Fayette Circuit Court, Honorable Thomas L. Clark, Judge, Action No. 98-CI-02482.

J. Dale Golden, Lauren Lea Crosby, Lexington, Kentucky, Brief and Oral Argument for Appellant.

Mindy G. Barfield, Lexington, Kentucky, Floyd P. Bienstock, Jon T. Neumann, Phoenix, Arizona, Brief and Oral Argument for Appellee.

Before: KELLER, MOORE and THOMPSON, Judges.

Not to be Published

OPINION

MOORE, Judge:

Geneva Hager¹ appeals from a jury verdict rendered after a two-week trial in Fayette Circuit Court deciding that Allstate Insurance Company did not violate Kentucky Revised Statute (KRS) 304.12-230, Kentucky's Unfair Claims Settlement Practices Act. Hager brings numerous issues on appeal.

Having heard oral arguments and after a thorough review, we find no error at the trial court level sufficient for the relief sought by Hager.

FACTUAL AND PROCEDURAL BACKGROUND

Hager raises approximately twenty claims of error and numerous subissues as to the trial court proceedings and rulings in this case. Given the size of the record, which contains over 9,300 pages, countless exhibits, numerous depositions, a multitude of hearings, seemingly limitless sidebar hearings, two weeks of trial testimony, and a history spanning nearly ten years, it is fortunate for our review that Hager has not challenged the jury verdict as being against the weight of the evidence. Consequently, despite the fact that both parties have set out in great detail the underlying facts of this matter, the Court need not recite page-upon-page of the convoluted facts of the underlying case for resolution of the appeal.

We appreciate the parties' respective briefs because their efforts were very helpful to the Court to grasp what at first appears to be a complex case. But when fully digested, the matter as litigated on appeal is not nearly as complex as the facts at first make it appear. Accordingly, despite the numerous claims before this Court, only one issue concerns a directed verdict, and that issue can be easily resolved by our analysis. Thus, our review is limited to those rulings and procedural claims of errors brought by Hager, which are preserved on the record, correctly cited thereto and for which proper authority has been given.

For the reasons stated above, Hager's appellate posture only requires that the Court set forth the most basic facts of this matter for its resolution. As additional facts are required for review on the claims, they will be presented later in the analysis.

The action is based on a bad faith claim, upon which Allstate prevailed at trial. Its genesis is an accident that occurred on July 10, 1997. Thomas LaPointe, who was insured by Allstate, rear-ended the Hagers' vehicle. Mr. Hager, Geneva's husband, was driving, and Geneva Hager was a passenger. According to LaPointe's recorded statement of the accident, his brakes failed as he approached the Hagers' truck. In response, he shifted his vehicle from second gear to first gear and turned off the motor. While in second gear, LaPointe estimated that he was going approximately fifteen miles per hour. After gearing down, he thought he was going around five miles per hour when he rear-ended the Hager vehicle. LaPointe described the impact like unexpectedly hitting a speed bump.

At first, Mr. Hager corresponded with Allstate regarding both the Hagers' claims, but later the Hagers retained attorney Paul S. Kaplan to represent them in their claim against LaPointe. In a letter dated December 5, 1997, Kaplan wrote to Allstate that all further communications regarding the accident should be sent to his office.

Within a short time after the accident, Allstate determined that it was reasonably clear its insured was liable. Thus, liability was not at issue. The issue became at what point in the underlying claim procedures Allstate had the necessary documentation and information regarding Geneva Hager's claim to make a timely and reasonable determination of how and under what procedures her claim should be evaluated.

Hager argues in her brief that her case was handled in Allstate's Minor Impact Soft Tissue ("MIST") unit. MIST claims involve accidents with little or no damage to the vehicles, occurring at a low rate of speed, with no discernable physical injury. According to the Allstate documents, "MIST files are, by definition, suspected of consisting of no, or minor injury based on impact." Early recognition of MIST claims include: damages of $1,000 or less; no sheet metal or frame damage; no visible damage indicated by the insured or the police report; soft tissue injuries; no pre-existing conditions to the same bodily area as the complaints arising from the accident; and no objective findings such as confirmed herniation, confirmed bulges, lacerations, scarring, fractures, etc.

Regardless of how convoluted the parties may try to make the issue, at the time of receiving Kaplan's letter, the record supports that Allstate knew only that Hager had been taken to the emergency room by ambulance and, based on LaPointe's earlier referenced statement, that it was a minor accident. At that time, because the accident appeared to be minor, the claim initially fell into the MIST category. It was given to Allstate claim handler, Sarah Howard, who handled attorney-represented claims in the MIST unit.

A series of correspondence was exchanged between Hager's attorney and Allstate's claim adjusters. The record is replete with requests from Allstate for information from Kaplan regarding Hager's medical records, history, treatment, prior conditions, etc. While Kaplan supplied some documentation to Allstate, he responded that it was his policy not to have his clients sign medical releases in cases such as this.

The record is undisputed that Allstate made a number of attempts to get documentation regarding Hager's damages. For example, in Howard's claims diary, dated January 5, 1998, she wrote that she and Kaplan had discussed the Hagers' loss. Kaplan would talk to his clients but said "our [Allstate's] reputation proceed[ed] us, so [they] may wait until we are in suit." (Capitalization changed.). Howard continued to request documentation from Kaplan to evaluate Geneva Hager's claims. While Kaplan supplied some of the documents, Howard wrote, in a letter dated May 13, 1998, that she had reviewed the documentation provided thus far. However, to properly review the claim, Howard still needed the emergency room records, where Hager was treated after the accident; the family physician's records (both before and after the accident); a number of medical billing records; the complete PIP file; and all wage and disability verification. Thereafter, Howard took an extended medical leave. In the interim, however, it is undisputed that Kaplan did not provide the documentation Howard requested.

While Howard was on leave, another adjuster, Debbie Niemer, reviewed the file. In an entry in the claims diary, dated June 20, 1998, she noted that she received a telephone call from Kaplan requesting policy limits because (1) Geneva Hager had an objective injury; (2) she had an assessed 11 percent impairment; and (3) the PIP carrier's IME agreed with the diagnosis. Kaplan relayed to Niemer that he would "not go into detail and indicated that if we were unable to evaluate this claim at policy limits before the statute [of limitations ran,] he would file suit[.] I advised that we would continue to investigate this matter[;] we would require prior medical history and perhaps our own IME on the case[.] He indicated that he would still file suit[.] I advised we would handle accordingly." (Capitalization changed).

In an entry dated July 6, 1998, Niemer wrote that Kaplan had contacted her again regarding evaluation of the claim. Niemer also wrote that the claim was not ready for an evaluation because medical records and loss information were still missing. At that time, given additional information and photographs of the automobiles that Allstate received, Niemer did agree with Kaplan that it was not a minor impact case, as damage was shown to the rear cab panels, the tailgate, and the front of the Hagers' vehicle. The type of damage shown on the Hager vehicle took the claim outside of the qualifiers for the MIST unit. Thus, the claim was transferred out of the MIST unit.

In July of 1998, Ben Urso, a senior adjuster who had been with Allstate for thirty years, was assigned to Hager's claim. Urso was not an adjuster in the MIST unit. According to Urso's testimony, due to the lack of the requested documentation while Howard and Niemer had the claim and prior to it being transferred to him, Hager's claim was never evaluated in the MIST unit.

Kaplan filed suit on behalf of the Hagers against LaPointe in July of 1998. Allstate provided counsel for LaPointe, its insured. Thereafter, discovery commenced in the case. Both Hager and LaPointe sought through discovery requests information they had not received during the claims process.

Ultimately, according to Allstate, once it received the documentation it requested relevant to Hager's claim for proper evaluation, it offered policy limits prior to the trial in this matter. Shortly thereafter, Kaplan amended the complaint to add a bad faith claim against Allstate. The Hagers and LaPointe settled their suit, but the circuit court ordered that Allstate shall remain as a defendant in the action. Later Hager filed a motion for leave to file a second amended complaint, which included a reference to a class action against Allstate. The court granted this motion on June 16, 2000. Thereafter, Hager filed two additional amended complaints regarding more specific allegations against Allstate to form a foundation for the class action suit. The last amended complaint was the fourth one, which was granted on November 30, 2004.

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