INSURANCE-RELATED COURT CASES
Digested from case reports published online
A tangled tale
On October 14, 2018, Megan Johnson and Terri Reed were involved in a collision while in Johnson’s vehicle. That vehicle was insured by Erie Insurance Exchange. The day after the crash, on October 15, 2018, Johnson and Reed sought medical attention at ARH Hospital in Floyd County, Kentucky, incurring costs from the hospital, a radiologist, and an osteologist. The day after this treatment, on October 16, 2018, Johnson and Reed submitted no-fault benefits applications to Erie for payment of medical bills under their Basic Reparation Benefits (BRB) coverage. Bills from ARH Hospital, the radiologist, and the osteologist were promptly and correctly submitted to Erie. Thereafter, Johnson and Reed sought treatment from a chiropractor for their injuries. The only element of loss requiring payment of BRB resulting from the accident was medical expenses from the three hospital-related parties and the chiropractor.
On October 23, 2018, counsel for Johnson and Reed sent a letter to Erie instructing it to withhold all no-fault benefits until further direction pursuant to a state statute. Erie complied. On January 16, 2019, counsel for Johnson and Reed sent another letter to Erie. This letter instructed Erie to pay Johnson’s and Reed’s chiropractic bills before paying any other medical expenses. Erie refused, asserting that it was required to pay medical bills in the order they are received regardless of other directives from insureds. Erie had already received the filed bills from ARH Hospital, the radiologist, and the osteologist for Johnson and Reed, and it intended to pay those bills before paying for the later chiropractic care.
In response to this dispute, Erie filed a declaratory judgment action on January 25, 2019, to determine whether it was required to pay bills within an element of loss in the order directed by the insured persons. In response, Johnson and Reed filed a counterclaim on February 15, 2019, seeking the award of an attorney’s fee under a state statute and excess interest for the unreasonable delay of the payment of their bills caused by Erie.
On April 11, 2019, Erie moved for summary judgment. Erie set out arguments in favor of its interpretation of the Motor Vehicle Act and against an award of an attorney’s fee and excess interest. Johnson and Reed filed a countermotion for summary judgment on May 7, 2019, but that motion did not include an argument regarding Kentucky’s Motor Vehicle Reparations Act (MVRA). (Instead, it argued about unreasonable delay warranting an attorney’s fee award and excess interest.)
On May 9, 2019, only two days after filing a summary judgment motion and before the court ruled on either summary judgment motion, Johnson and Reed moved the court for a reasonable attorney’s fee.
On May 30, 2019, the trial court denied Erie’s motion for summary judgment. In its denial, the trial court made findings favorable to Johnson and Reed’s position. The order denying summary judgment also included a finding that the suit was “beyond reason.” The court, however, never granted Johnson and Reed’s motion for summary judgment.
On June 14, 2019, after its summary judgment motion was denied, Erie moved for summary judgment on count II of Johnson and Reed’s counterclaim and moved to alter or amend the trial court’s May 30 denial of summary judgment. Erie wanted the trial court to change the language of its prior order regarding the schedule and mechanism for bill payment and also wanted the court to add language indicating that it granted Johnson and Reed’s summary judgment motion.
Then, Johnson and Reed renewed their motion for summary judgment on July 10, 2019; Erie filed a response to that motion on July 29, 2019.
After these filings, the trial court issued three orders: On August 9, 2019, it granted Johnson and Reed’s motion for an attorney’s fee; then on the same day it denied Erie’s second summary judgment motion but agreed to amend the first order denying Erie’s summary judgment motion to rephrase its language regarding the timing of payment of medical bills. Finally, on September 20, 2019, the court ordered an attorney’s fee totaling $14,383. The first order for the attorney’s fee contained finality language but no amount; the second order contained the amount but no finality language. The trial court appeared never to have ruled on Johnson and Reed’s summary judgment motions, nor at all regarding excess interest to be applied to medical bill payment. The court ultimately did not amend its order to indicate that it granted Johnson and Reed’s summary judgment motion as requested by Erie, nor did it ever make an explicit finding regarding excess interest to be paid on medical bills.
Erie appealed to the court of appeals, arguing that the trial court erred by awarding summary judgment and awarding an attorney’s fee plus excess interest on medical bills.
The court of appeals affirmed the judgment of the trial court and granted Erie’s subsequent motion for discretionary review.
The discretionary review of the order for denial of summary judgment was conducted by the supreme court of Kentucky. The court found that it could not review the denial of summary judgment, stating that Erie lacked an entry of a final judgment on appeal to which it could attach its appeal of the summary judgment denial. Because Erie sought review of a denial of summary judgment outside of an exception, it was outside the court’s jurisdiction for review.
With respect to the issue of excess interest to be paid on overdue medical bills, the court stated that it could find no order that compelled Erie to pay a higher interest rate. Because the trial court did not order excess interest, the supreme court had no jurisdiction over the issue.
Because no final and appealable orders were before it, the supreme court said it had no jurisdiction over the appeal and must dismiss it. The court of appeals similarly lacked subject matter jurisdiction to review these claims; the supreme court thus vacated the appellate court’s opinion affirming the trial court’s judgment. Accordingly, the supreme court ordered that the court of appeals’ opinion be vacated and the appeal to the supreme court be dismissed.
Erie Insurance Exchange v. Johnson and Reed—Supreme Court of Kentucky—June 16, 2022—No. 2019-CA-1449.