Motorcyclist’s injury claims queried

INSURANCE-RELATED COURT CASES

Digested from case reports published online

Patrick Sandidge and Sara Tharp were involved in a motor vehicle accident on September 1, 2017. Sandidge was traveling along Highway 287 with a group of motorcyclists while himself riding a motorcycle. Tharp was attempting to exit a store’s driveway and slowly merge onto Highway 287 around a visual obstruction. While the parties disagreed as to what occurred, Sandidge alleged he was forced to ditch his motorcycle to avoid hitting Tharp’s vehicle. A collision did not occur, but Sandidge’s motorcycle came to rest against Tharp’s vehicle.

Sandidge made a Ridley claim to Depositors Insurance Company, Tharp’s insurer, for advance payment of damages caused by the accident. Depositors advanced payment for medical bills and lost wages in the amount of $89,983.95.

After Sandidge’s past medical records were obtained, Depositors retained Dr. Lowell Anderson to conduct a review of Sandidge’s injuries. Dr. Anderson concluded that the injuries Sandidge sustained in the accident should have been fully treated within six weeks and that any additional treatment was the result of the natural progression of his pre-existing conditions. Thereafter, Depositors ceased making advance payments.

Sandidge retained counsel and demanded that Depositors continue to make advance payments. Depositors and Tharp filed a declaratory judgment action to obtain a determination regarding Depositors’ obligation to make additional payments.

Sandidge sought to dismiss Tharp’s and Depositors’ action, and the district court granted his motion as to Tharp. Because Sandidge attached “multiple exhibits to his motion to dismiss,” however, the court converted the motion to dismiss Depositors into a motion for summary judgment. Depositors filed its own motion for summary judgment. The court concluded that Depositors had raised genuine issues of material fact as to whether the liability was reasonably clear and whether Sandidge’s injuries were causally related to the accident.

Accordingly, the district court denied Sandidge’s motion and granted summary judgment to Depositors. Sandidge appealed the court’s denial of his motion for summary judgment, and Tharp cross-appealed her dismissal.

On appeal, Sandidge contended that the district court failed to hold a hearing on the parties’ cross-motions for summary judgment because “it erroneously believed neither party requested a hearing.” He contended that the court’s failure to hold a hearing cost him the opportunity to present witness testimony and lay the foundation for otherwise inadmissible hearsay evidence he offered in support of his motion. The court concluded that Sandidge waived his right to a hearing pursuant to state statute.

Sandidge argued that Depositors lacked standing to seek a declaratory judgment because it was at no risk of injury and any decision a court reached would be advisory in nature. Sandidge acknowledged that it is proper under Montana precedent for a third-party claimant to seek a declaratory judgment under Ridley to establish that liability is reasonably clear and the insurer is required to advance-pay the third party’s expenses.

Sandidge contended, however, that, when an insurer halts medical payments and files a declaratory action to determine whether liability is reasonably clear, it has no standing because a court’s resolution of the matter “would not stop the advance payment of medical expenses because that [has already] occurred,” and thus “would not conclude the controversy over the tort claim or whether a violation of the [Unfair Trade Practices Act, or UTPA] occurred.” The court concluded that Sandidge’s argument lacked merit.

Similarly, the court held that Sandidge’s argument that the district court’s ruling will enable an insurer to use a declaratory action as “a shield to immunize the insurer from its past adjustment decisions” was unavailing.

Sandidge’s argument that permitting only third-party claimants to initiate declaratory actions concerning Ridley protects them from unfair burdens of the litigation was not convincing. Even when a third-party claimant initiates the action, a decision that the insurer need not advance payments reaches the same result, with the same burdens, as here.

The court concluded that Depositors’ declaratory judgment action presented a legitimate, justiciable controversy to the district court, which Depositors had standing to initiate.

A two-part test establishes an insurer’s obligation to make advance payments under Ridley: “(1) whether liability is reasonably clear and (2) whether it is reasonably clear that a medical expense is causally related to the accident … . “[E]ven though liability for the accident may be reasonably clear, an insurer may still dispute a medical expense if it is not reasonably clear that the expense is causally related to the accident in question.”

Here, the district court concluded that there were disputed issues of material fact relative to both liability and causation, precluding summary judgment in Sandidge’s favor. It therefore granted Depositors’ motion for summary judgment. Sandidge argued that the district court failed to view the evidence in the light most favorable to him regarding both liability and the causal relationship between his injuries and the accident.

Further, regarding the first part of the test, whether liability is reasonably clear, Sandidge argued that Depositors’ initial willingness to pay $89,983.95 in advance medical expenses and lost wages conclusively established that Tharp’s liability was reasonably clear and that a vehicle crash report confirmed Tharp’s liability.

The district court’s determination that Depositors never unambiguously accepted liability for the accident was correct. Depositors’ complaint clearly stated its belief that Sandidge was comparatively negligent in the accident, and it submitted Tharp’s affidavit that provided sufficient information to raise genuine issues of material fact regarding how the accident occurred and her resulting liability, if any.

Sandidge presented no authority for the position that when an insurance company makes any advance payments, it is unalterably conceding that its insured’s liability is reasonably clear. The district court was likewise correct in determining that the vehicle crash report offered by Sandidge as evidence of Tharp’s liability was inadmissible hearsay.

On the second part of the test, the district court likewise concluded it was not reasonably clear that Sandidge’s medical expenses were causally related to the accident. Depositors provided Dr. Anderson’s expert report and his affidavit as authentication.

Dr. Anderson opined that Sandidge’s injuries should have resolved within six weeks of the accident. Sandidge provided medical records from his treating physicians to support his claim that his continuing injuries were causally related to the accident, but he did not present any affidavits authenticating or otherwise explaining the medical records or providing his physicians’ opinions on causation. Without authentication, these records were inadmissible hearsay, and the district court correctly disregarded them in its analysis.

The district court’s summary judgment order was affirmed. The supreme court further concluded that Tharp’s cross-appeal was moot.

Depositors Insurance Company v. Sandidge—Supreme Court of the State of Montana—February 15, 2022—No. DA-21-0230.