Case Notes

PIP Grace Period Doesn't Automatically Save Late Claim

An insurance coverage claimant's apparent failure to transmit medical records in a timely fashion ' without a showing that it was impractical to do so ' has resulted in the dismissal on summary judgment of his complaint that benefits were improperly withheld under Delaware's personal injury protection statute, a New Castle County Superior Court judge has ruled.

In Davis v. State Farm Insurance, Superior Court Judge Charles E. Butler in an eight-page opinion granted summary judgment in favor of an insurance carrier, holding that a 90-day grace period did not apply to give the claimant extra time to submit medical records and lost-wage information.

According to the opinion, plaintiff Anthony Davis, who had been in an Aug. 11, 2011, car accident, received “no fault” insurance coverage from his carrier, Geico. But on Nov. 21, 2012, Geico said Davis had exhausted his personal injury protection, or PIP, benefits. Davis was also an insured under his mother's insurance policy, issued by State Farm Insurance Co.

On Nov. 4, 2013, Davis sought coverage under the State Farm policy, Butler wrote. Four days later, Davis began his lawsuit demanding coverage. Butler said Davis claimed his Nov. 4 letter included medical bills, records and lost-wage information. But a month later, State Farm rejected Davis' request for coverage, saying more than two years had passed since the accident.

The PIP statute requires insurers to “pay expenses which are incurred within two years of the accident” with a 90-day grace period for some expenses.

The key consideration for Butler was whether the grace period had been triggered. The crucial word that would trigger the provision of extra time was “impracticality.” But Butler said he had been given no grounds to make a finding that it would have been impractical for Davis to have submitted proper documentation within two years of the accident date.

Butler also said that a previous Superior Court decision as well as the language of the statute placed the burden on the plaintiff to make a showing of impracticality.

“Essentially, plaintiff argues that this court should ignore the language in the statute that would require plaintiff to show impracticality in order to be entitled to 90 extra days,” Butler said.

There was apparently no Delaware Supreme Court authority on point.

But a 2008 Superior Court decision, Hayman v. Geico, in which summary judgment was granted in favor of the carrier and against a claimant, had been based on the plaintiff's failure to “make any showing of hardship or impracticality.” As a result, the Hayman court said, the plaintiff was not entitled to the 90-day extension.

“Consistent with the language of the statute and the holding in Hayman, we conclude that a plaintiff must make a showing of impracticality or hardship in order to be entitled to a 90-day extension of the two-year limitations period,” Butler wrote.

But Davis' lawyer, Edward T. Ciconte of Ciconte, Wasserman, Scerba & Kerrick in Wilmington, said, “Until now, no Delaware court has upheld an insurer's denial of payment where expenses were submitted within 27 months of the accident.”

Ciconte said that in Hayman, the complaint was filed 31 months after the accident, so the 90-day extension would not have mattered.

“As I interpret the case law,” Ciconte said, “there actually isn't a split in authority on the issue of whether a plaintiff must demonstrate impracticability to be entitled to the 90-day grace period.” The Davis court, he said, is the first to have rejected a plaintiff's claim “solely on the basis of failure to demonstrate impracticability.”

In a footnote, Butler said Davis argued that a 2011 Superior Court decision, State Farm Mutual Automobile Insurance v. Ciamaricone, stood for the proposition that courts in Delaware had granted 90 days of extra time without requiring the plaintiff to make a showing of impracticality. The Ciamaricone court did say the grace period has been “liberally interpreted to allow a full 90-day extension without requiring claimants to demonstrate” impracticality. But Butler said the Ciamaricone court failed to cite any other case that would show that the liberal interpretation had become a general practice of the state's courts.

Butler said further that when Geico told Davis his benefits under that policy had run out, Davis had ample time to make a request of State Farm, but did not.

“Plaintiff has offered no explanation why it took almost a year to submit the expenses to State Farm and request excess no-fault benefits under his mother's policy,” Butler said.

The Superior Court rejected Davis' argument that State Farm waived any objection to an untimely claim because its written denial did not come until more than 30 days after the Nov. 4 request. Butler said that in a Dec. 4 letter, State Farm made reference to the two-year limitations period and never changed its position.'

Ciconte said a mandate from the Delaware Supreme Court appears necessary to settle the law over the grace period and associated issues under the PIP statute. ' Michael A. Riccardi, Delaware Law Weekly

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In $2M Lawsuit Brought by Insurer, Judge Sides with Firm, Attorney

An insurer was years too late in filing its legal malpractice claim against a Margolis Edelstein attorney who advised the carrier during settlement negotiations in a suit that eventually led to a $2 million bad-faith settlement, a federal judge has ruled. New York Central Mutual Insurance v. Margolis Edelstein.

U.S. District Judge Malachy E. Mannion of the Middle District of Pennsylvania last month dismissed New York Central Mutual Insurance Co.'s suit, which sought $2 million plus in attorney fees, against Margolis Edelstein and attorney Michael T. Savitsky.

Although the carrier had contended that its claim sounded in contract law and therefore should be subject to a four-year statute of limitations, Mannion agreed with the defendant law firm that the gist of the claim was negligence and therefore the action was barred after two years.

“The court agrees with defendants that the allegations in plaintiffs' second amended complaint do not establish a legal malpractice breach of contract claim since plaintiffs fail to adequately allege a breach of a specific instruction or provision of the agreement of the parties,” he said. “Rather, as defendants maintain, plaintiffs' legal malpractice claims are based on failure of defendants to abide by the relevant professional standard of care.”

According to Mannion, the carrier's suit stemmed from a car collision that occurred in 2003. New York Central Mutual insured the tortfeasor for $25,000, and the injured party asked the carrier to tender its policy with the tortfeasor; however, New York Central Mutual offered only $12,500. The injured party then filed suit, and her demand rose to $200,000.

The carrier, according to Mannion, then sought advice from Savitsky, who was a partner at Margolis Edelstein in Scranton, PA. Savitsky agreed to perform legal work for the carrier, including providing his legal opinion on the merits of a potential bad-faith claim.

In a letter dated April 30, 2010, Savitsky advised that the carrier should not make an offer greater than $25,000, according to Mannion.

A jury eventually returned a $960,000 verdict in the underlying case, and the defendant subsequently assigned his rights against the carrier to the plaintiff, who instituted a bad-faith claim against New York Central Mutual. The bad-faith matter eventually settled for $2 million, and on April 29, 2013, the carrier sued Margolis Edelstein. According to Mannion, the carrier sought a breach of contract action, alleging that Savitsky breached the duty that is ordinarily expected of a reasonable attorney by providing misleading advice.

The defendants countered that the carrier was actually asserting a legal malpractice action because the suit was not based on the breach of any specific instruction or provision in the agreement. Because the claim was, at heart, a legal malpractice issue that sounded in negligence, it should be governed by the two-year statute of limitations, the defendants further argued.

Mannion noted the 2014 Middle District decision in Frantz v. Fasullo, which said that, absent allegations that an attorney failed to follow specific client instructions or breached a specific provision of a contract, a claim is not a breach of contract but a negligence claim. Mannion additionally noted the Pennsylvania Supreme Court's decision from December 2014 in Bruno v. Erie Insurance. That case addressed the gist-of-the-action doctrine to determine whether a suit was a tort or a contract claim, and ultimately held that the contract at issue “merely served as the vehicle which established the relationship” between the plaintiff and defendant.

Mannion noted that New York Central Mutual had argued that Savitsky breached the contract by failing to provide a complete analysis of the law governing bad faith and failing to confer with all the counsel in the Scranton office; however, he decided that the carrier's claim did not allege that a specific provision was breached.

“In reading these paragraphs in their entirety, the court agrees with defendants that the allegations amount to claims of negligence and do not sufficiently allege specific instructions or provisions of the attorney-client agreement that defendants supposedly breached,” Mannion said. “The court finds that plaintiffs have attempted to expand upon their contract theory in their opposition brief, as detailed above, however, 'it is axiomatic that the complaint may not be amended by the briefs in opposition to a motion to dismiss.'”

Spector Gadon & Rosen attorney George M. Vinci Jr., who represented Margolis Edelstein, said courts in Pennsylvania have been blurring the distinction between breach of contract and negligence for several years.

“This court, based upon a recent decision, basically said, 'No. We don't believe that's the law in Pennsylvania,'” Vinci said. ' Max Mitchell, The Legal Intelligencer

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PIP Grace Period Doesn't Automatically Save Late Claim

An insurance coverage claimant's apparent failure to transmit medical records in a timely fashion ' without a showing that it was impractical to do so ' has resulted in the dismissal on summary judgment of his complaint that benefits were improperly withheld under Delaware's personal injury protection statute, a New Castle County Superior Court judge has ruled.

In Davis v. State Farm Insurance, Superior Court Judge Charles E. Butler in an eight-page opinion granted summary judgment in favor of an insurance carrier, holding that a 90-day grace period did not apply to give the claimant extra time to submit medical records and lost-wage information.

According to the opinion, plaintiff Anthony Davis, who had been in an Aug. 11, 2011, car accident, received “no fault” insurance coverage from his carrier, Geico. But on Nov. 21, 2012, Geico said Davis had exhausted his personal injury protection, or PIP, benefits. Davis was also an insured under his mother's insurance policy, issued by State Farm Insurance Co.

On Nov. 4, 2013, Davis sought coverage under the State Farm policy, Butler wrote. Four days later, Davis began his lawsuit demanding coverage. Butler said Davis claimed his Nov. 4 letter included medical bills, records and lost-wage information. But a month later, State Farm rejected Davis' request for coverage, saying more than two years had passed since the accident.

The PIP statute requires insurers to “pay expenses which are incurred within two years of the accident” with a 90-day grace period for some expenses.

The key consideration for Butler was whether the grace period had been triggered. The crucial word that would trigger the provision of extra time was “impracticality.” But Butler said he had been given no grounds to make a finding that it would have been impractical for Davis to have submitted proper documentation within two years of the accident date.

Butler also said that a previous Superior Court decision as well as the language of the statute placed the burden on the plaintiff to make a showing of impracticality.

“Essentially, plaintiff argues that this court should ignore the language in the statute that would require plaintiff to show impracticality in order to be entitled to 90 extra days,” Butler said.

There was apparently no Delaware Supreme Court authority on point.

But a 2008 Superior Court decision, Hayman v. Geico, in which summary judgment was granted in favor of the carrier and against a claimant, had been based on the plaintiff's failure to “make any showing of hardship or impracticality.” As a result, the Hayman court said, the plaintiff was not entitled to the 90-day extension.

“Consistent with the language of the statute and the holding in Hayman, we conclude that a plaintiff must make a showing of impracticality or hardship in order to be entitled to a 90-day extension of the two-year limitations period,” Butler wrote.

But Davis' lawyer, Edward T. Ciconte of Ciconte, Wasserman, Scerba & Kerrick in Wilmington, said, “Until now, no Delaware court has upheld an insurer's denial of payment where expenses were submitted within 27 months of the accident.”

Ciconte said that in Hayman, the complaint was filed 31 months after the accident, so the 90-day extension would not have mattered.

“As I interpret the case law,” Ciconte said, “there actually isn't a split in authority on the issue of whether a plaintiff must demonstrate impracticability to be entitled to the 90-day grace period.” The Davis court, he said, is the first to have rejected a plaintiff's claim “solely on the basis of failure to demonstrate impracticability.”

In a footnote, Butler said Davis argued that a 2011 Superior Court decision, State Farm Mutual Automobile Insurance v. Ciamaricone, stood for the proposition that courts in Delaware had granted 90 days of extra time without requiring the plaintiff to make a showing of impracticality. The Ciamaricone court did say the grace period has been “liberally interpreted to allow a full 90-day extension without requiring claimants to demonstrate” impracticality. But Butler said the Ciamaricone court failed to cite any other case that would show that the liberal interpretation had become a general practice of the state's courts.

Butler said further that when Geico told Davis his benefits under that policy had run out, Davis had ample time to make a request of State Farm, but did not.

“Plaintiff has offered no explanation why it took almost a year to submit the expenses to State Farm and request excess no-fault benefits under his mother's policy,” Butler said.

The Superior Court rejected Davis' argument that State Farm waived any objection to an untimely claim because its written denial did not come until more than 30 days after the Nov. 4 request. Butler said that in a Dec. 4 letter, State Farm made reference to the two-year limitations period and never changed its position.'

Ciconte said a mandate from the Delaware Supreme Court appears necessary to settle the law over the grace period and associated issues under the PIP statute. ' Michael A. Riccardi, Delaware Law Weekly

'

In $2M Lawsuit Brought by Insurer, Judge Sides with Firm, Attorney

An insurer was years too late in filing its legal malpractice claim against a Margolis Edelstein attorney who advised the carrier during settlement negotiations in a suit that eventually led to a $2 million bad-faith settlement, a federal judge has ruled. New York Central Mutual Insurance v. Margolis Edelstein.

U.S. District Judge Malachy E. Mannion of the Middle District of Pennsylvania last month dismissed New York Central Mutual Insurance Co.'s suit, which sought $2 million plus in attorney fees, against Margolis Edelstein and attorney Michael T. Savitsky.

Although the carrier had contended that its claim sounded in contract law and therefore should be subject to a four-year statute of limitations, Mannion agreed with the defendant law firm that the gist of the claim was negligence and therefore the action was barred after two years.

“The court agrees with defendants that the allegations in plaintiffs' second amended complaint do not establish a legal malpractice breach of contract claim since plaintiffs fail to adequately allege a breach of a specific instruction or provision of the agreement of the parties,” he said. “Rather, as defendants maintain, plaintiffs' legal malpractice claims are based on failure of defendants to abide by the relevant professional standard of care.”

According to Mannion, the carrier's suit stemmed from a car collision that occurred in 2003. New York Central Mutual insured the tortfeasor for $25,000, and the injured party asked the carrier to tender its policy with the tortfeasor; however, New York Central Mutual offered only $12,500. The injured party then filed suit, and her demand rose to $200,000.

The carrier, according to Mannion, then sought advice from Savitsky, who was a partner at Margolis Edelstein in Scranton, PA. Savitsky agreed to perform legal work for the carrier, including providing his legal opinion on the merits of a potential bad-faith claim.

In a letter dated April 30, 2010, Savitsky advised that the carrier should not make an offer greater than $25,000, according to Mannion.

A jury eventually returned a $960,000 verdict in the underlying case, and the defendant subsequently assigned his rights against the carrier to the plaintiff, who instituted a bad-faith claim against New York Central Mutual. The bad-faith matter eventually settled for $2 million, and on April 29, 2013, the carrier sued Margolis Edelstein. According to Mannion, the carrier sought a breach of contract action, alleging that Savitsky breached the duty that is ordinarily expected of a reasonable attorney by providing misleading advice.

The defendants countered that the carrier was actually asserting a legal malpractice action because the suit was not based on the breach of any specific instruction or provision in the agreement. Because the claim was, at heart, a legal malpractice issue that sounded in negligence, it should be governed by the two-year statute of limitations, the defendants further argued.

Mannion noted the 2014 Middle District decision in Frantz v. Fasullo, which said that, absent allegations that an attorney failed to follow specific client instructions or breached a specific provision of a contract, a claim is not a breach of contract but a negligence claim. Mannion additionally noted the Pennsylvania Supreme Court's decision from December 2014 in Bruno v. Erie Insurance. That case addressed the gist-of-the-action doctrine to determine whether a suit was a tort or a contract claim, and ultimately held that the contract at issue “merely served as the vehicle which established the relationship” between the plaintiff and defendant.

Mannion noted that New York Central Mutual had argued that Savitsky breached the contract by failing to provide a complete analysis of the law governing bad faith and failing to confer with all the counsel in the Scranton office; however, he decided that the carrier's claim did not allege that a specific provision was breached.

“In reading these paragraphs in their entirety, the court agrees with defendants that the allegations amount to claims of negligence and do not sufficiently allege specific instructions or provisions of the attorney-client agreement that defendants supposedly breached,” Mannion said. “The court finds that plaintiffs have attempted to expand upon their contract theory in their opposition brief, as detailed above, however, 'it is axiomatic that the complaint may not be amended by the briefs in opposition to a motion to dismiss.'”

Spector Gadon & Rosen attorney George M. Vinci Jr., who represented Margolis Edelstein, said courts in Pennsylvania have been blurring the distinction between breach of contract and negligence for several years.

“This court, based upon a recent decision, basically said, 'No. We don't believe that's the law in Pennsylvania,'” Vinci said. ' Max Mitchell, The Legal Intelligencer

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