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A Guide to General West Virginia Litigation Principles - Bailey & Wyant PLLC


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Important legal topics addressed include: West Virginia Tort Law; Porperty Damage Claims; Damages; Governmental Tort Claims & Insurance Reform Act; Qualified Immunity; Deliberate Intent; Joint & …

Important legal topics addressed include: West Virginia Tort Law; Porperty Damage Claims; Damages; Governmental Tort Claims & Insurance Reform Act; Qualified Immunity; Deliberate Intent; Joint & Several Liability; Collateral Sources; Procedural Strategies; Uninsured/Underinsured Motorist; Unfair Trade Practices; Handling Indemity Issues; Employment law for Public Entities and many many others.

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  • 1. 2010 Edition 2013 Edition Vol. 2
  • 2. 2 A Guide to General West Virginia Litigation Principles I. West Virginia Tort Law …………………………………………………………………………………………………… 7 A. Basic Elements ……………………………………………………………………………………… 7 B. Comparative Negligence ……………………………………………………………………………… 7 C. Agency ………………………………………………………………………………………………………… 8 D. Independent Contractor Defense ……………………………………………………………… 8 II. Property Damage Claims …………………………………………………………………………………………… 9 A. Personal Property………………………………………………………………………………………………… 9 B. Realty…………………………………………………………………………………………………………………… 9 C. Adjusting Property Damage Claims ……………………………………………………………………9 III. Damages …………………………………………………………………………………………………………………… 10 A. Overview of Damages…………………………………………………………………………………………10 B. Non-Economic Damages…………………………………………………………………………………… 11 C. Future Economic Damages……………………………………………………………………………… 12 D. Wrongful Death Damages………………………………………………………………………………… 13 E. Punitive Damages……………………………………………………………………………………………… 13 F. Fee Shifting Statutes………………………………………………………………………………………… 17 IV. Governmental Tort Claims & Insurance Reform Act…………………………………………………… 17 A. Immunities………………………………………………………………………………………………………… 18 B. Special Duty Doctrine…………………………………………………………………………………………20 C. Insurance…………………………………………………………………………………………………………… 21 D. Judgments………………………………………………………………………………………………………… 21 E. Defense of Employees……………………………………………………………………………………… 21 F. Indemnification of Employees……………………………………………………………………………22 G. Procedure……………………………………………………………………………………………………………22 V. Qualified Immunity………………………………………………………………………………………………………… 23 VI. Deliberate Intent…………………………………………………………………………………………………………… 24 VII. Joint & Several Liability……………………………………………………………………………………………………29 VIII. Collateral Sources……………………………………………………………………………………………………………30 TABLE OF CONTENTS
  • 3. 3 *This handbook is not intended to be legal advice. You should consult with an attorney before taking any action that could result in legal liability. IX. Procedural Strategies…………………………………………………………………………………………………… 31 A. Offers of Judgment…………………………………………………………………………………………… 31 B. Third Party Practice………………………………………………………………………………………… 32 X. Uninsured/Underinsured Motorist………………………………………………………………………………… 32 XI. Unfair Trade Practices…………………………………………………………………………………………………… 34 A. Statutory Law…………………………………………………………………………………………………… 34 B. Regulatory Law……………………………………………………………………………………………………37 XII. Insurance Related Case Law………………………………………………………………………………………… 45 XIII. Coverage Principles…………………………………………………………………………………………………………64 XIV. Handling Indemnity Issues…………………………………….………………………………………………… 66 A. Implied Indemnity………………………………………………………………………………………… 66 B. Rules for Interpreting Contractual Indemnity Language ……………………………… 67 C. Fault Based Indemnity……………………………………………………………………………………… 67 D. No-Fault Contractual Indemnity……………………………………………………………………… 68 E. Liability v. Indemnity………………………………………………………………………………………… 69 F. Enforcing the Right of Indemnity……………………………………………………………………… 69 G. What to Do if a Tender Has Been Submitted to You or Your Insured…………… 70 H. Insured Additional Insured and Certificates of Insurance……………………………… 70 XV. Medicare Secondary Payer Act…………………………………………………………………………………………71 XVI. Employment Law for Public Entities…………………………………………………………………………… 72 A. Malice in Employment Termination………………………………………………………………… 72 B. Whistleblower…………………………………………………………………………………………………… 73 C. 42 U.S.C. § 1983……………………………………………………………………………………………… 74 D. Americans with Disabilities Act………………………………………………………………………… 77 XVII. Alternative Dispute Resolution…………………………………………………………………………………… 77 A. Arbitration……………………………………………………………………………………………………………77 B. Mediation…………………………………………………………………………………………………………… 79 XVIII. Privacy and Social Media in the Workplace………………………………………………………………… 80 XIX. The West Virginia Judiciary…………………………………………………………………………………………… 82 A. The Supreme Court of Appeals of West Virginia……………………………………………… 82 B. Circuit Courts…………………………………………………………………………………………………… 82 C. Other Courts…………………………………………………………………………………………………… 83
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  • 6. 6 About Our Firm Bailey & Wyant, PLLC was formed in 2000. Since its inception, the firm has grown from only a handful of attorneys to its current mark of thirty. We have offices in both Charleston and Wheeling, West Virginia, and provide representation to clients throughout West Vir- ginia, Ohio, Kentucky, and Pennsylvania. Our philosophy is simple. We provide aggressive and effective legal representation, while being ever mindful of each client's individual needs, goals, and economic interests. No matter how complex or novel, our focus in a case is always to reach the right resolution for our client. Bailey & Wyant’s litigation department focuses its efforts in representing indi- viduals, businesses and governmental entities in a variety of claims, including general civil litigation and insurance defense, governmental liability, labor and employment law, product liability and personal injury, medical and other pro- fessional liability, construction and design defect, administrative and regulatory law, environmental law and natural resources, insurance coverage and extra- contractual matters, and corporate litigation. In addition to providing litigation-related services, Bailey & Wyant also serves as general counsel to several state and county agencies and commissions. The lawyers at Bailey & Wyant frequently conduct instructional seminars and conferences to lawyers and non-lawyers on a variety of issues, including em- ployment-related matters, insurance claims handling and extra-contractual is- sues, and public contracts and procurement. Our attorneys are also heavily committed to participating in philanthropic endeavors and community projects. Charleston Office 500 Virginia Street East, Suite 600 Charleston, WV 25301 T: 304.345.4222 F: 304.343.3133 Wheeling Office 1219 Chapline Street Wheeling, WV 26003 T: 304.233.3100 F: 304.233.0201
  • 7. 7 I. WEST VIRGINIA TORT LAW A. The Basic Elements West Virginia employs a traditional English common-law tort system, with most of the well-recognized rules and principles intact. Negligence is the failure to exercise ordinary care, and ordinary care is that kind and degree of care or caution which an ordinary prudent and careful person would exercise under the same or similar circumstances. Negligence is doing something a reasonably prudent person would not do in the same or similar circumstances, or the failing or refusing to do something a reasonably prudent persons would have done in the same, or similar circumstance. A negligence claim requires a claimant to prove by a preponderance of the evidence that a breach of duty occurred which proximately caused injury to him or her. Negligence cannot be presumed; it must be proven. Contributory negligence means negligence of the plaintiff, which together with negligence of the defendant, proximately caused the accident. Where contributory negligence is charged by a party, it must be proven by a preponderance of the evidence by the party asserting it. Assumption of risk means that the plaintiff, knowing full well the hazards involved, failed to take precautions to protect himself from those known or reasonably to be expected hazards. The proximate cause of an event is the negligent act contributing to the accident, without which the accident would not have occurred. The proximate cause of an event is that cause which in actual sequence, unbroken by any independent cause, produces an event, and without which, the event would not have occurred. B. Comparative Negligence West Virginia follows a version of comparative negligence, the modified comparative fault 50% rule system. A plaintiff is barred from recovery if his or her negligence equals or exceeds 50% of the total negligence of all parties to the accident, which total negligence equals 100%. However, if Plaintiff is 49% or less at fault for the accident, then they may be eligible to recover damages. A plaintiff’s recovery is offset by the percentage of negligence attributable to him or her. For example, if a jury determines that a plaintiff’s total damages are $100,000, and further finds that the plaintiff was 20% at fault, then the plaintiff would be entitled to recover only 80%, or $80,000. In Bradley v. Appalachian Power Co, 163 W.Va. 332, 341-42, 256 S.E.2d 879, 885 (1979), the Supreme Court of Appeals in discussing contributory and comparative negligence noted: We do not accept the major premise of pure comparative negligence that a party should recover his damages regardless of his fault, so long as his fault is not 100 percent. Without embarking on an extended philosophical discussion of the nature and purpose of our legal system, we do state that in the field of tort law we are not willing to abandon the concept that where a party substantially contributes to his own damages, he should be permitted to recover
  • 8. 8 for any part of them. We do recognize that the present rule that prohibits recovery to the plaintiff if he is at fault in the slightest degree is manifestly unfair, and in effect rewards the substantially negligent defendant by permitting him to escape any responsibility for his negligence. Our present judicial rule of contributory negligence is therefore modified to provide that a party is not barred from recovering in a tort action so long as his negligence or fault does not equal or exceed the combined negligence or fault of the other parties involved in the accident. Under Bradley, it is not initially necessary for the jury to make a comparison of each individual defendant’s negligence. The first determination is whether the plaintiff’s percentage of contributory negligence bars recovery. On this issue, the jury is instructed to determine if the defendants are liable to the plaintiff. Then the percentage, or degree of the plaintiff’s contributory negligence is compared to that of all of the other parties involved in the accident. King v. Kayak Mfg. Co., 182 W.Va. 276, 280, 279, 387 S.E.2d 511, 515 (1989). In Adkins v. Whitten, 171 W.Va. 106, 297 S.E.2d 881 (1982), the Supreme Court of Appeals held that “a trial court has a duty to instruct the jury as to the effect of the doctrine of comparative negligence when requested.” (Quoting Sitzes v. Anchor Motor Freight, Inc., 169 W.Va. 698, 713, 289 S.E.2d 679, 688 (1882)). C. Agency An agent is one who acts on behalf of another and subject to his or her control. With respect to an employee/employer relationship, an employer is liable for all damages proximately caused by the negligence of his agent employee who is acting within the scope of his employment. An employee is acting within the course of his employment when he is engaged in doing, for his employer, either the act directed by the employer or any act which can fairly and reasonably be deemed to be a natural, direct and logical result of the act directed by the employer. If in doing such an act the employee acts negligently, that is negligence within the course of the employment. In order to recover against a tortfeasor’s employer, the plaintiff has the burden of proving by preponderance of the evidence that the tortfeasor was the employee of the employer, that the employee tortfeasor was negligent while acting within the scope of his employment, and that this negligence proximately caused damage to the plaintiff. Under West Virginia law, a corporation acts by and through its officers, agent, and employees. If an officer, agent or employee of a defendant corporation is found negligent in the performance of his or her duties, then any such negligence is attributable to the corporation and considered negligence on the part of the corporation, including the failure to comply with automobile and road safety laws. D. Independent Contractor Defense If a tortfeasor was acting as an independent contractor, then an employer has no responsibility for the tortfeasor's acts. Whether or not a tortfeasor is an independent contractor or agent depends on whether the employer controlled, or had the right to control, the work of the tortfeasor. Control in this sense means the right to determine where and in what manner the work would be done. It does not matter that the employer never actually exercised control over the tortfeasor, as long as the employer reserved to itself the right to do so.
  • 9. 9 II. PROPERTY DAMAGE CLAIMS A. Personal Property Generally, the proper measure of damages for loss or destruction of personal property, other than that which has a peculiar value to its owner, such as an heirloom or a particular portrait, is the fair market value of the property at time of its loss or destruction. The proper measure of damages for injury to personal property is the difference between its fair market value immediately before the damage and its fair market value immediately after the damage, plus necessary reasonable expenses incurred by the owner in connection with the damage. However, when damaged personal property can be restored to is previous condition, the measure of damages should be the amount required to restore such property to its previous condition. Thus, when personal property is injured, the owner may recover costs of repairing it, plus his expenses stemming from the injury, including loss of use during repair. If the injury cannot be repaired or the cost of repair would exceed property's market value, then the owner may recover its lost value, plus his expenses stemming from the injury, including loss of use during time he has been deprived of his property. Testimony regarding the value of articles of personal property to a plaintiff and of the price the plaintiff paid for such personal property is inadmissible to show market value of such personal property. If the owner of a vehicle which is damaged and subsequently repaired can show diminution in value based upon structural damage after repair, then recovery is permitted for that diminution in addition to the cost of repair, but total shall not exceed market value of vehicle before it was damaged. In order to recover for diminution in value, in addition to costs of repairing a damaged vehicle, there must be actual proof that value is diminished following repair, diminution in value must be due to structural damage, and vehicle must have had significant value prior to accident. B. Realty When realty is injured the owner may recover the cost of repairing it, plus his expenses stemming from the injury, including loss of use during the repair period. If the injury cannot be repaired or the cost of repair would exceed the property's market value, then the owner may recover its lost value, plus his expenses stemming from the injury including loss of use during the time he has been deprived of his property. Annoyance and inconvenience can be considered as elements of proof in measuring damages for loss of use of real property. C. Adjusting Property Damage Claims In West Virginia, it is imperative that denials of first-party claims, particularly those involving property damage, are effectuated with caution. When an insurer wrongfully withholds or unreasonably delays payment of an insured's claim, the insurer is liable for all foreseeable, consequential damages naturally flowing from the delay. When a policyholder “substantially prevails” in a property damage suit against an insurer, the policyholder is entitled to damages for net economic loss caused by the delay, as well as an award for aggravation and inconvenience.
  • 10. 10 The question of whether an insured has “substantially prevailed” against his or her insurance company on a property damage claim is determined by the status of negotiations between the insured and the insurer prior to the institution of the law suit. Where the insurance company has offered an amount materially below the damage estimates submitted by the insured, and the jury awards the insured an amount approximating the insured's damages, the insured has substantially prevailed. In addition, an insured “substantially prevails” in a property damage action against his or her insurer when the action is settled for an amount equal to or approximating the amount claimed by the insured immediately prior to the commencement of the action, as well as when the action is concluded by a jury verdict for such an amount. In either of these situations the insured is entitled to recover reasonable attorney's fees from his or her insurer, as long as the attorney's services were necessary to obtain payment of the insurance proceeds. When a policyholder substantially prevails on a first-party insurance claim against an insurer and becomes entitled to a reasonable attorney's fee, the amount of the attorney's fee is determined by the circuit judge and not by a jury. A reasonable contingent attorney's fee is presumed to be one-third of the recovery, unless the face value of the policy is extremely small or enormously large—under $20,000.00 or over $1,000,000.00. It is up to the circuit court to make an inquiry into what a reasonable fee might be. Whatever the award, that amount is unliquidated and unsettled until the circuit court issues its ruling. Only after the circuit court approves the policyholder's attorney's fee does the amount become liquidated and established. As such, prejudgment interest is not available. A circuit court may shift a policyholder's attorney's reasonable litigation expenses to the insurance carrier as well. However, in most cases, those litigation costs are not out-of- pocket expenditures because under a contingent fee agreement, the policyholder does not become responsible for these costs until after the insurance carrier pays the verdict or settlement. Accordingly, as with attorney’s fees, a policyholder usually may not recover prejudgment interest on litigation expenses incurred by his attorney. III. DAMAGES A. Overview of Damages It is the purpose of the law to compensate a person who has sustained injuries through the fault of another, as fully and as completely as it is possible in dollars and cents to make compensation for such injuries. However, damages which are purely speculative cannot be recovered. It is the uncertainty as to the fact of damages, and not as to the amount of damages, that is to be considered. Where it is certain that the damages resulted, uncertainty as to the amount does not justify the jury in refusing recovery. If a jury believes from a preponderance of the evidence that a plaintiff is entitled to recover a verdict, then it has a duty to take into consideration any or all of the following items: 1. Any and all bodily injuries sustained by the plaintiff and the extent and duration of such bodily injuries; 2. Any and all physical pain the plaintiff has suffered in the past;
  • 11. 11 3. Any and all physical pain the plaintiff, with reasonable certainty, shall suffer in the future, and the probable duration or permanency of such pain; 4. Any and all suffering or mental anguish the plaintiff has suffered in the past; 5. Any and all suffering or mental anguish the plaintiff, with reasonable certainty, shall suffer in the future because of any such injuries, and the probable duration or permanency of such suffering or mental anguish; 6. Any and all effects the bodily injuries, pain, inconvenience or suffering have had in the past upon plaintiffs health and plaintiffs ability to enjoy life, the extent of such losses of his health and ability to enjoy life, and any and all losses of health and ability to enjoy life, which with reasonable certainty plaintiff will suffer in the future because of the effects of said injuries; 7. The just, reasonable, and necessary doctor, hospital, and medical expenses incurred by plaintiff as a result of his injuries; 8. The reasonable and necessary doctor, hospital, and medical expenses plaintiff shall with reasonable certainty incur in the future as a result of his injuries; 9. Any and all past losses of earnings or caning capacity which plaintiff has lost in the past by reason of being unable to work as a result of said injuries; 10. Any and all loss of earnings or earning capacity and fringe benefits which plaintiff shall with reasonable certainty lose in the future by reason of being unable to work as a result of said injuries, and the probable extent and duration of any such future loss of earnings or earning capacity; 11. The reasonable value of household services, if any, provided to or for plaintiff by reason of plaintiffs injuries, and the reasonable value of household services that with reasonable certainty shall be necessary for plaintiff in the future and the probable extent and duration of any such future household services or expenses; and 12. In considering the duration or permanency of any such injuries, pain, suffering, or losses, a jury may take into consideration the plaintiffs’ probable life expectancy. B. Non-economic Damages Compensation for pain, suffering, loss of enjoyment of life, and loss of consortium are general items of damages. There is no rule or measure upon which these damages can be based. The amount of compensation to be awarded for such injuries is left by law to the sound discretion of the jury as to what is fair and just.
  • 12. 12 Loss of the enjoyment of life, or of the ability to enjoy life, refers to how the injury has affected the plaintiff’s ability to perform and enjoy the ordinary functions of life. The degree of such an injury is measured by ascertaining how the injury has deprived the plaintiff of his or her customary activities as a whole person. Accordingly, in assessing damages for loss of the ability to enjoy life, a jury considers the customary activities of the plaintiff prior to the incident giving rise to the claim, and how, if at all, the injuries he or she suffered affects his or her ability to perform and enjoy these activities. Consortium is defined generally as the society, companionship, comfort, guidance, kindly offices and advice existing between a husband and a wife or between a parent and a child. If a jury determines from the evidence that there has been an interference with the consortium rights of a plaintiff’s husband, wife or child, damages may be assessed against the defendant. In determining the damage suffered by a plaintiff, a jury may consider as an element of damages any aggravation of any preexisting condition which proximately results from the incident. Even if the jury believes that the plaintiff was afflicted with some condition at the time of the injury from which he or she might have a predisposition, but was otherwise in good health, and the injuries received in the collision developed or aggravated this condition and predisposition, then the defendant is liable for the plaintiff’s condition or his or her aggravation. The extent or seriousness of a permanent injury is measured by ascertaining how the injury has deprived a plaintiff of his customary activities and has reduced the capacity of the plaintiff to function as a whole person. C. Future Economic Damages In determining the loss of earning capacity, it is unnecessary that the jury find that the plaintiff would actually have worked at a particular job or have earned a certain sum of money. All the plaintiff is required to prove is that he could have performed a particular job or work but is unable to do so now, and will with reasonable certainty be unable to do such work in the future. The jury is to reduce the claim of plaintiff for future loss of earnings and future fringe benefits, if any, to present dollar value. However, since there is no definite measure to use to determine indefinite damages, such as pain, suffering, loss of enjoyment of life, and loss of consortium, a jury is not to make a similar reduction for those general damages. In deliberating the present value of the future income and benefits of the plaintiff, the jury should use that rate of interest which, in the jury's considered judgment, is reasonable, just, and right under the circumstances, taking into consideration the evidence presented, the jury's knowledge of the prevailing interest rates, and what rate of interest could fairly be expected from safe investments that a person of ordinary prudence, but without particular financial experience or skill, could earn in the area. The fact that the actual cost of future medical care for plaintiff could not be stated to an absolute certainty does not defeat his right to recover for such fixture medical expenses. It is sufficient that the projected expenses were not speculative or conjectural, are reasonably probable, and were indicated within an approximate range.
  • 13. 13 D. Wrongful Death Damages In awarding damages for wrongful death, it is the jury’s duty to award, pursuant to West Virginia Code § 55- 7-6(c)(1), monetary damages for the following: 1. The sorrow and mental anguish suffered by the decedent's family members and his or her other beneficiaries; 2. The loss of solace, which may include society, companionship, comfort guidance, kindly offices and advice, which has been suffered by the decedent's family members and other beneficiaries as a result of his death; 3. Compensation for the reasonably expected loss of (i) income of the decedent, and (ii) services, protection, care and assistance provided by the decedent; 4. Expenses for the care, treatment and hospitalization of decedent incident to the injury which resulted in his or her death; and 5. Reasonable funeral expenses. The “reasonably expected loss of income” is the total amount, properly discounted to present value that a decedent would reasonably have been expected to earn had he or she lived out a normal life span. It is not merely the amount of his or her future earnings which his family and other beneficiaries might reasonably have expected to receive from had he lived out a normal life span. E. Punitive Damages A jury may award punitive damages against a defendant as punishment for willfulness, wantonness, malice, gross negligence or other like aggravation of the wrong done to the plaintiff. Punitive damages are something in addition to full compensation, given with a view to the gravity of the offense, to punish the defendant and to make them an example, so that others will be deterred from engaging in similar conduct. The law awards compensatory damages when the unlawful act is done without intent to do wrong or where there is no malice or where the offense is not oppressively or recklessly committed, while punitive damages are awarded where the wrongful act is done with a bad motive, or in a manner so wanton or reckless as to manifest a willful disregard of the rights of others. In awarding punitive damages, a jury may consider the following factors: 1. The harm that is likely to occur from the defendant's conduct as well as to the harm that actually has occurred. If defendant's actions caused or would likely cause in a similar situation only slight harm, the damages should be relatively small. If the harm is grievous, the damages should be greater. 2. Whether defendant’s conduct was reprehensible, and in doing so should take into account how long defendant continued in his actions, whether defendant was aware that its actions were causing or were likely to cause harm, whether defendant attempted to conceal or cover up his actions or the harm caused by such actions, whether/how often defendant engaged in similar conduct in the past.
  • 14. 14 3. Whether defendant profited from' his wrongful conduct, and if you find defendant did profit from his conduct you may remove the profit and your award should be in excess of the profit, so that the award discourages future bad acts by defendant. 4. As a matter of fundamental fairness, punitive damages should bear a reasonable relationship to compensatory damages. 5. In determining the amount of punitive damages, the financial position of defendant is relevant. It is worth noting that it is well settled in West Virginia that it is not against public policy for an insurance contract to cover punitive damages. Hensley v. Erie Ins. Co., 283 S.E.2d 227 (1981). Barring a conspicuous exclusion, courts in West Virginia will find coverage for such awards. In addition, in practice, it is not uncommon for trial courts in West Virginia to “backdoor” punitive damage awards. Basically, judges will hold in abeyance any ruling on punitive damages issues until after evidence is presented at trial. In doing so, they let in every piece of incriminating evidence. After the evidence is presented, they will dismiss the punitive damages claim. The result is an inflated compensatory damages award by the jury. By allowing “backdoor” punitive damages, the judge avoids being overruled by the Supreme Court of Appeals, and the jury gets an opportunity to punish the defendant. A plaintiff is prohibited from seeking punitive damages from a government agency in any action. W. Va. Code § 55-17-4(c). “Government agency” includes a constitutional officer or public official named as a defendant or respondent in his or her official capacity, or a department, division, bureau, board, commission or other agency or instrumentality within the executive branch of state government that has the capacity to sue or be sued. W. Va. Code § 55-17-2(2). However, we have seen compelling arguments to the contrary under a state “constitutional tort” theory of liability. In any civil action involving a political subdivision or any of its employees as a party defendant, an award of punitive or exemplary damages against such political subdivision is prohibited. W. Va. Code §29-12A-7(a). The seminal punitive damages cases in West Virginia are as follows: Garnes v. Fleming Landfill, Inc., 413 S.E.2d 897 (1991) In this matter, the Supreme Court of Appeals exhaustively set forth the law in West Virginia as it pertains to awards of punitive damages:  Allowing a jury to return punitive damages without finding compensatory damages is overruled. Punitive damages must bear a reasonable relationship to the potential of harm caused by the defendant's actions.  Under our system for an award and review of punitive damages awards, there must be: (1) a reasonable constraint on jury discretion; (2) a meaningful and adequate review by the trial court using well-established principles; and (3) a meaningful and adequate appellate review, which may occur when an application is made for an appeal.  When the trial court instructs the jury on punitive damages, the court should, at a minimum, carefully explain the factors to be considered in awarding punitive damages. These factors are as follows:
  • 15. 15 (1) Punitive damages should bear a reasonable relationship to the harm that is likely to occur from the defendant's conduct as well as to the harm that actually has occurred. If the defendant's actions caused or would likely cause in a similar situation only slight harm, the damages should be relatively small. If the harm is grievous, the damages should be greater. (2) The jury may consider (although the court need not specifically instruct on each element if doing so would be unfairly prejudicial to the defendant), the reprehensibility of the defendant's conduct. The jury should take into account how long the defendant continued in his actions, whether he was aware his actions were causing or were likely to cause harm, whether he attempted to conceal or cover up his actions or the harm caused by them, whether/how often the defendant engaged in similar conduct in the past, and whether the defendant made reasonable efforts to make amends by offering a fair and prompt settlement for the actual harm caused once his liability became clear to him. (3) If the defendant profited from his wrongful conduct, the punitive damages should remove the profit and should be in excess of the profit, so that the award discourages future bad acts by the defendant. (4) As a matter of fundamental fairness, punitive damages should bear a reasonable relationship to compensatory damages. (5) The financial position of the defendant is relevant.  When the trial court reviews an award of punitive damages, the court should, at a minimum, consider the factors given to the jury as well as the following additional factors:  The costs of the litigation;  Any criminal sanctions imposed on the defendant for his conduct;  Any other civil actions against the same defendant, based on the same conduct; and  The appropriateness of punitive damages to encourage fair and reasonable settlements when a clear wrong has been committed. A factor that may justify punitive damages is the cost of litigation to the plaintiff. Because not all relevant information is available to the jury, it is likely that in some cases the jury will make an award that is reasonable on the facts as the jury know them, but that will require downward adjustment by the trial court through remittitur because of factors that would be prejudicial to the defendant if admitted at trial... “Upon petition, this Court will review all punitive damages awards. In our review of the petition, we will consider the same factors that we require the jury and trial judge to consider, and all petitions must address each and every factor set forth in Syllabus Points 3 and 4 of this case with particularity, summarizing the evidence presented to the jury on the subject or to the trial court at the post-judgment review stage. Assignments of error related to a factor not specifically addressed in the petition will be deemed waived as a matter of state law.”
  • 16. 16 TXO Production Corp. v. Alliance Resources Corp., 419 S.E.2d 870 (W.Va. 1992) In this case, the Supreme Court of Appeals offered advice as to a reasonable punitive damages award: “The outer limit of the ratio of punitive damages to compensatory damages in cases in which the defendant has acted with extreme negligence or wanton disregard but with no actual intention to cause harm and in which compensatory damages are neither negligible nor very large is roughly 5 to 1. However, when the defendant has acted with actual evil intention, much higher ratios are not per se unconstitutional.” Ironically, notwithstanding its suggested ratio, the Court upheld and found reasonable the verdict against TXO for $19,000 in compensatory damages and $10,000,000 in punitive damages for TXO’s acts of slander and libel. The Court noted: “[T]he jury may reasonably have determined that TXO set out on a malicious and fraudulent course to win back, either in whole or in part, the lucrative stream of royalties that it had ceded to Alliance. The punitive award is certainly large, but in light of the millions of dollars potentially at stake, TXO's bad faith, the fact that TXO's scheme was part of a larger pattern of fraud, trickery, and deceit, and TXO's wealth, the award cannot be said to be beyond the power of the State to allow. “ State Farm v. Campbell, 538 U.S. 408 (2003) In this seminal case, the Supreme Court of the United States set forth the following holding regarding ratio of punitive damages awards: “We have been reluctant to identify concrete constitutional limits on the ratio between harm, or potential harm, to the plaintiff and the punitive damages award. We decline again to impose a bright-line ratio which a punitive damages award cannot exceed. Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. In [Pacific Mut. Life Ins. Co. v.] Haslip, [499 U.S. 1(1991)] in upholding a punitive damages award, we concluded that an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. We cited that 4-to-1 ratio again in [BMW of North America, Inc. v.] Gore, [517 U.S. 559 (1996)]. The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing that sanctions of double, treble, or quadruple damages to deter and punish. While these ratios are not binding, they are instructive. They demonstrate what should be obvious: Single-digit multipliers are more likely to comport with due process, while still achieving the State's goal of deterrence and retribution, than awards with ratios in range of 500 to 1, or, in this case, 145 to 1.” Boyd v. Goffoli, 608 S.E.2d 169 (W.Va. 2004) In this case, the Supreme Court of Appeals encountered a similar situation, but declined to overturn the award, finding the ratio of damages, even with potentially inflated compensatory damages, to be acceptable: “In addition, even if we were to consider a portion of the compensatory damages in this case to be punitive damages so as to result in a ratio of 8.4:1, such a ratio is by no means necessarily unconstitutional. As the Supreme Court noted in Campbell, while single-digit multipliers (meaning a ratio of up to 9 to 1) are more likely to comport with due process, there are no rigid benchmarks that a punitive damages award may not surpass. In sum, there is nothing in our jurisprudence or that of the United States Supreme Court that renders the ratio of the punitive damages award to the compensatory damages award in this case improper.”
  • 17. 17 Perrine, et al. v. E.I. du Pont de Nemours and Co., et al., No. 34333, 34334, 34335 (W.Va. 2010) This environmental class action case featured an appeal from a judgment of the Circuit Court of Harrison County, which denied defendants’ motions for judgment as a matter of law or, in the alternative, to decertify the class, for a new trial, and to vacate or reduce the award of punitive damages. Defendants were found liable to plaintiffs in the amount of $381,737,522 for off-site arsenic, cadmium, and lead contamination which emanated from defendant's zinc smelter facility in Spelter, West Virginia. Among other findings, the Supreme Court of Appeals held that punitive damages may not be awarded on a cause of action for medical monitoring. The verdict was conditionally affirmed, but the punitive damages award was reversed and the case was remanded. F. Fee Shifting Statutes West Virginia code contains seven fee shifting statutes. In Workers’ Compensation cases the Workers’ Compensation an attorney representing a claimant who prevails on his/her claim is entitled to a twenty percent (20%) attorney’s fee award, determined by the base award amount. W. Va. Code § 23-5-16. The West Virginia Surface Mining and Reclamation Act also allows for the recovery of attorney’s fees. W. Va. Code § 22-3-1, et seq. A plaintiff who substantially prevails under the West Virginia Human Rights Act is also entitled to recover attorney’s fees. W. Va. Code § 5-11-1, et seq. Under the West Virginia Whistleblower statute a plaintiff who substantially prevails on his/her claims may also recover attorney’s fees. W. Va. Code § 6C-1-1, et seq. Any individual who requests the release of documents pursuant to a Freedom of Information request may recover attorney’s fees if the circuit court rules the documents should be released. W. Va. Code § 29B-1-1, et seq. There is no recovery limitation set forth in the statutes. Even a $500 verdict is sufficient to trigger the fee shifting statute. The fee shifting provision potentially opens up the recovery to substantially more than the jury verdict. The Court determines the appropriate attorney’s fees, which can vary and is determined by the judge on a case-by- case basis. For example, a jury finds that a Plaintiff was terminated due to her age and awards the Plaintiff $500.00. Even though Defendant incurred $100,000 in defense costs at a rate of $175 per hour, a Judge may find that Plaintiff reasonably incurred $250,000 at a rate of $250 per hour, in prevailing on her claim Under Federal law there are several provisions allowing for the recovery of attorney’s fees to a plaintiff who substantially prevails on his her claims. This includes claims filed pursuant to 42 U.S.C. § 1983 and § 42 U.S.C. § 1988. An individual who prevails on a claim under the ADA is also entitled to recover attorney’s fees. 42 U.S.C. § 2205. Such fees are also available in Family Medical Leave Act violation cases. 29 U.S.C. § 2617(a) (3). An plaintiff in a Fair Labor Standards Act claim may also recover attorney’s fees. 29 U.S.C. § 216. Federal statutes also permit the recovery of attorney’s fees in Civil Rights Act of 1964 public accommodation cases (42 U.S.C. § 2000a-3(b)), Equal Employment Opportunity Commission (42 U.S.C. § 2000e-5(k)), Fair housing Act (42 U.S.C. § 3613 (c)), Age Discrimination in Employment Act (42 U.S.C. § 2000e(k)), Voting Rights Act (42 U.S.C. § 1973l(e)), and Age Discrimination Act (42 U.S.C. § 1997a(b)). IV. Governmental Tort Claims and Insurance Reform Act Article 12A of Chapter 29 of the West Virginia Code is the statute that regulates actions against political subdivisions (i.e., not the State or its agencies). According to its stated purpose, the Governmental Tort Claims and Insurance Reform Act (“Tort Immunities Act”), was enacted “to limit liability of political subdivisions and provide immunity to political subdivisions in certain instances and to regulate the costs and coverage of insurance available to political subdivisions for such liability.” The Legislature found that
  • 18. 18 the political subdivisions of this state were unable to procure adequate liability insurance coverage at a reasonable cost due to: “The high cost in defending such claims, the risk of liability beyond the affordable coverage and the inability of political subdivision to raise sufficient revenues for the procurement of such coverage without reducing the quantity and quality of traditional governmental services.” The Tort Immunities Act applies to most county or municipal public bodies that are charged by law with the performance of a government function. Both governmental and proprietary functions are covered by the provisions of the Tort Immunities Act. "Employee" means an officer, agent, employee, or servant, whether compensated or not, whether full-time or not, who is authorized to act and is acting within the scope of his or her employment for a political subdivision."Employee" includes any elected or appointed official of a political subdivision."Employee" does not include an independent contractor of a political subdivision. "Municipality" means any incorporated city, town or village and all institutions, agencies or instrumentalities of a municipality. "Political subdivision" means any county commission, municipality and county board of education; any separate corporation or instrumentality established by one or more counties or municipalities, as permitted by law; any instrumentality supported in most part by municipalities; any public body charged by law with the performance of a government function and whose jurisdiction is coextensive with one or more counties, cities or towns; a combined city- county health department created pursuant to article two, chapter sixteen of this code; public service districts; and other instrumentalities including, but not limited to, volunteer fire departments and emergency service organizations as recognized by an appropriate public body and authorized by law to perform a government function: Provided, That hospitals of a political subdivision and their employees are expressly excluded from the provisions of this article. "Scope of employment" means performance by an employee acting in good faith within the duties of his or her office or employment or tasks lawfully assigned by a competent authority but does not include corruption or fraud. "State" means the state of West Virginia, including, but not limited to, the Legislature, the supreme court of appeals, the offices of all elected state officers, and all departments, boards, offices, commissions, agencies, colleges, and universities, institutions, and other instrumentalities of the state of West Virginia."State" does not include political subdivisions. A. Immunities Subject to certain exclusions, addressed herein, a political subdivision cannot be held liable for damages in any civil action for injury, death, or loss to person or property allegedly caused by an act or omission of the public entity or an employee of the public entity. Actions for prospective or extraordinary relief (mandamus, injunction, prohibition, etc.) are not restricted by the provision of the Tort Immunities Act. Generally speaking, a public entity can be held liable for injury, death, or loss to person or property caused by a negligent act or omission of an employee who is acting within the scope of his or her authority. A political subdivision enjoys absolute immunity, irrespective of the presence of negligence, for losses or claims resulting from any of the following:  Legislative or quasi-legislative functions;  Judicial, quasi-judicial or prosecutorial functions;  Execution or enforcement of the lawful orders of any court;  Adoption or failure to adopt an ordinance, policy, statute, rule, regulation or other law;
  • 19. 19  Civil disobedience or the method of providing police, law enforcement or fire protection.  Snow or ice conditions or temporary or natural conditions on any public way or other public place due to weather conditions, unless the condition is affirmatively caused by the negligent act of a political subdivision;  Natural conditions of unimproved property of the political subdivision;  Assessment or collection of taxes lawfully imposed or special assessments, license or registration fees or other fees or charges imposed by law;  Licensing powers or functions including, but not limited to, the issuance, denial, suspension or revocation of or failure or refusal to issue, deny, suspend or revoke any permit, license, certificate, approval, order or similar authority;  Inspection powers or functions, including failure to make an inspection, or making an inadequate inspection, of any property, real or personal, to determine whether the property complies with or violates any law or contains a hazard to health or safety;  Any claim covered by any worker's compensation law or any employer's liability law;  Misrepresentation, if unintentional;  Any court-ordered or administratively approved work release or treatment or rehabilitation program;  Provision, equipping, lawful operation or maintenance of any prison, jail or correctional facility, or injuries resulting from the parole or escape of a prisoner;  Any claim or action based on the theory of manufacturer's products liability or breach of warranty or merchantability or fitness for a specific purpose, either expressed or implied;  The operation of dumps, sanitary landfills, and facilities where conducted directly by a political subdivision; or  The issuance of revenue bonds or the refusal to issue revenue bonds. An employee of a political subdivision is immune from liability unless one of the following applies: 1. If the employee’s acts or omissions were manifestly outside the scope of employment or official responsibilities; 2. If the employee’s acts or omissions were performed with malicious purpose, in bad faith, or in a wanton and reckless manner; or 3. If liability is imposed upon the employee by a provision of the West Virginia Code. It should be noted that the immunity afforded an employee does not affect or limit the liability of the political subdivision for an act of the employee. The Tort Immunities Act contains a strict prohibition against awards of punitive or exemplary damages. W. Va. Code §29-12A-7(a). Damages for economic losses are not capped. Non-economic damages are capped at five hundred thousand dollars ($500,000.00). W. Va. Code §29-12A-7(b). As a practical consequence of the expansion of government and the proliferation of bodies charged with conducting the State’s business, we have recognized that “proceedings against boards and commissions, created by the Legislature, as agencies of the State, are suits against the state within the meaning of Article VI, Section 35, of the Constitution of West Virginia, even though the State is not named as a party in such proceedings.”
  • 20. 20 Hamill v. Koontz, 134 W.Va. 439, 443 S.E.2d 879, 882 (1950); see also Hesse v. State Soil Conservation Committee, 153 W.Va. 111, 115, 168 S.E.2d 293, 295 (1969) (constitutional immunity “relates not only to the State of West Virginia but extends to an agency of the state to which it has delegated performance of certain of its duties.”) Arnold Agency v. W. Va. Lottery Comm'n, 206 W. Va. 583, 590-91, 526 S.E.2d 814, 821- 22 (1999) (emphasis added). B. Special Duty Doctrine Some immunities are statutory, such as the immunity contained in West Virginia Code § 29-12A-5(a)(9), which provides that a political subdivision is immune from liability if a loss or claim results from “licensing powers or functions including, but not limited to, the issuance, denial, suspension or revocation of or failure or refusal to issue, deny, suspend or revoke any permit, license, certificate, approval, order or similar authority.” Another immunity is contained in West Virginia Code § 29-12A-5(a)(10), which provides immunity for “inspection powers or functions, including failure to make an inspection, or making an inadequate inspection, of any property, real or personal, to determine whether the property complies with or violates any law or contains a hazard to health or safety.” In Syllabus Point 4, Hose v. Berkeley County Planning Commission, 194 W.Va. 515, 460 S.E.2d 761 (1995), the court held: Pursuant to W. Va. Code § 29-12A-4(c)(2) (1986) and W. Va. Code § 29-12A-5(a)(9) (1986), a political subdivision is immune from liability if a loss or claim results from licensing powers or functions such as the issuance, denial, suspension or revocation of or failure or refusal to issue, deny, suspend or revoke any permit, license, certificate, approval, order or similar authority, regardless of whether such loss or claim is caused by the negligent performance of acts by the political subdivision’s employees while acting within the scope of employment. Generally, “[t]he duty imposed upon a governmental entity is one owed to the general public, and unless the injured party can demonstrate that some special relationship existed between the injured person and the allegedly negligent entity, the claim is barred.” Jeffrey v. West Virginia Dep’t of Pub. Safety, Div. of Cor., 198 W.Va. 609, 614, 482 S.E.2d 226, 231 (1996). [T]he public duty doctrine is a principle independent of the doctrine of governmental immunity, although in practice it achieves must the same result.” Benson v. Kutsch, 181 W.Va. 1, 2, 380 S.E.2d 36, 37 (1989). The public duty doctrine is not an immunity; but rests on the principle that recovery may be had for negligence only if a duty has been breached which was owed to the particular person seeking recovery. Parkulo w. West Virginia Bd. of Probation & Parole, 199 W.Va. 161, 172, 483 S.E.2d 507, 518 (1996). Under the public duty doctrine the governmental entity’s liability for nondiscriminatory governmental functions may not be predicated upon the breach of a general duty owed to the public as a whole; instead, only the breach of a duty owed to the particular person injured is actionable.” Wolfe v. City of Wheeling, 182 W.Va. 252, 256, 387 S.E.2d 307, 310 (1989). The linchpin of the “public duty doctrine” is that some governmental acts create duties to the public as a whole and not to the particular private person or private citizen who may be harmed by such acts. Parkulo, 199 W.Va. at 172, 482 S.E.2d at 518. A special relationship only exists when there exists:
  • 21. 21 (1) An assumption by the state governmental entity, through promises or actions, of an affirmative duty to act on behalf of the party who was injured; (2) knowledge on the part of the state governmental entity’s agents that inaction could lead to harm; (3) some form of direct contact between the state governmental entity’s agents and the injured party; and (4) that party’s justifiable reliance on the state governmental entity’s affirmative undertaking. Syllabus Point 10, Id., 199 W. Va. At 164, 483 S.E.2d at 510. The determination of a “special duty” is generally a question of fact for the trier of fact. Syllabus Point 11, Id. C. Insurance When a public entity or its employee is insured under a liability insurance policy, the terms of the policy govern rights and obligations of the public entity and the insurer with respect to the investigation, settlement, payment, and defense of suits against the public entity, or its employees covered by the policy. W. Va. Code § 29-12A-5. Many policies incorporate by reference the language of any applicable West Virginia statutes and expressly mandate that statutory language supersedes policy language where conflicts between the two are present. Parkulo v. West Virginia Bd. of Probation and Parole, 199 W.Va. 161, 483 S.E.2d 507 (1996). This, of course, requires diligence on the part of the underwriter to know and understand the statutory and regulatory provisions of West Virginia law. W. Va. Code § 33-11-1, et seq. A public entity has a right of indemnity against an insurer up to the limits of the policy. A public entity and its employees cannot be held liable for any costs, judgments or settlements paid through an applicable policy of insurance. WV Code § 29-12A-9. D. Judgments Any judgment entered against a political subdivision for a loss caused by an act or omission of the political subdivision or its employee cannot be satisfied by execution, judicial sale, garnishment, or attachment of the political subdivision’s real or personal property, money, accounts or investments. W. Va. Code § 29-12A-10(a). Judgments can only be paid from funds allocated by the political subdivision allocated for that purpose. W. Va. Code § 29-12A-10(b). If insufficient funds have been allocated, the taxing authority of the political subdivision will place the item on the next annual fiscal year budget. Id. E. Defense of Employees A political subdivision must provide for the defense of an employee in any state or federal court in any civil action or proceeding to recover damages for injury, death, or loss to persons or property caused by an act or omission of the employee if the act or omission is alleged to have occurred while the employee was acting in good faith and not manifestly outside the scope of his employment or official responsibilities. W. Va. Code § 29-12A-11. Funds expended by a public entity in defending its employees can be apportioned from funds appropriated for such a purpose or pursuant to a contractual agreement between the public entity and its insurer. Id. Thus, when it is plead that an officer or employee of a public entity has acted maliciously, criminally or in bad faith, a compelling argument can be presented that neither the political subdivision, nor its insurer, has a duty to defend the employee. Id. If a political subdivision refuses to provide a defense to an employee, an employee may file an action for declaratory relief to determine the veracity of such refusal. W. Va. Code § 29-12A-11(c). In West Virginia the duty to defend is broader than the duty to indemnify. Bower v. Hi-Lad. Inc., 216 W.Va. 634, 651 609 S.E.2d 895, 912 (2004).
  • 22. 22 Under this rule, if one allegation of the complaint would be covered under the applicable terms of the insurance policy then the insurance company is required to defend the insured on all claims although the company may ultimately not owe any duty to indemnify. F. Indemnification of Employees With respect to indemnification, the Tort Immunities Act provides that an employee is to be indemnified for the amount of any judgment rendered against the employee in a state or federal court that is for damages for injury, death, or loss to persons or property caused by an act or omission of the employee, if the employee was acting in good faith and within the scope of his employment or official responsibilities. Thus, unless and until such a determination has been made, no duty to indemnify arises on the part of the political subdivision. Be mindful, however, an insurer has a greater obligation to defend than indemnify. It has been argued that, although this provision of the Tort Immunities Act expressly notes that there is no obligation on the part of the political subdivision to indemnify an employee for acts committed in bad faith or outside the scope of employment, the employee indemnify provisions contain no similar protection for an insurer of a public entity. We are aware, however, of no instances in which the proposition was successfully mounted because, as stated before, the terms of the applicable policy govern the rights and obligations of the public entity with respect to settlement, payment, and defense of suits against the public entity or its employees covered by the policy. In most instances, an applicable policy will contain an intentional or criminal acts exclusion whereby coverage is precluded in the event the insured has acted intentionally or criminally to bring about the harm caused. A public entity has the right to seek recoupment for fees, costs, and payments made on behalf of an employee if it is shown that the conduct of the employee which gave rise to the claim or action as outside the scope of his employment or if the employee fails to cooperate in good faith in the defense of the claim or action. In 42 U.S.C. § 1983 actions state and local officials may be sued in their “personal” capacity where the suit seeks to impose individual, personal liability on the government officer for actions taken under color of state law with the badge of state authority. Hafer v. Melo, 502 U.S. 21 (1991). There may be instances in which the position of the public entity and an employee are adverse and additional counsel will need to be retained for each. G. Procedure From a procedural standpoint, actions against a public entity are located or where the cause of action arose. When a suit is instituted under the authority of the Tort Immunities Act, the public entity must be named as a defendant. An employee acting within the scope of his employment cannot be named as a defendant. Thus, if an employee of the public entity is named as a defendant, it can be argued that circumstantial evidence exists that the plaintiff believes the employee was acting outside the scope of employment. In that event, coverage for the employee’s acts or omissions would be precluded under the provisions of the Tort Immunities Act. As matter of practice, however, the term “scope of employment” should be broadly construed. On the other hand, we have successfully argued that if an employee is named without specific allegations that their actions were manifestly outside the scope of their employment or performed with malicious purpose, in bad faith, or in a wanton and reckless manner, that the employee is immune and must be dismissed.
  • 23. 23 V. Qualified Immunity The common law immunity of the State in suits brought under the authority of W. Va. Code § 29-12-5 with respect to judicial, legislative, and executive (or administrative) policy-making acts and omissions is absolute and extends to the judicial, legislative, and executive (or administrative) officials when performing those functions. Syllabus Point 7, Parkulo, 199 W.Va. at 161, 483 S.E.2d at 507. A public executive official who is acting within the scope of this authority and is not covered by the provisions of the Governmental Tort Claims and Insurance Reform Act, W. Va. Code § 29-12A-1, et seq., is entitled to qualified immunity from personal liability for official acts if the involved conduct did not violate clearly established laws of which a reasonable official would have known. There is no immunity for an executive official whose acts are fraudulent, malicious, or otherwise oppressive. Syllabus Point 8, Parkulo, 199 W.Va. at 161, 483 S.E.2d at 507. “In cases arising under W. Va. Code § 29-12-5, and in the absence of express provisions of the insurance contract to the contrary, the immunity of the State is coterminous with the qualified immunity of a public executive official whose acts or omissions give rise to the case. Syllabus Point 9, Id. As such, the qualified immunity available to a state official is also available to the State. However, on occasion, the State will be entitled to immunity when the official is not entitled to the same immunity; in others, the official will be entitled to immunity when the State is not. The existence of the State’s immunity of the State must be determined on a case-by-case basis. Id. The common law doctrine of qualified immunity is designed to protect public officials from the threat of litigation resulting from difficult decisions which must be made in the course of their employment. Clark v. Dunn, 195 W.Va. 272, 465 S.E.2d 374 (1995). In Clark, the Supreme Court of Appeals concluded that the doctrine of qualified immunity bars a claim of mere negligence against the Department of Natural Resources, a state agency not within the purview of the West Virginia Government of Tort Claims and Insurance Reform Act, and against Officer Dunn, an officer of that department acting within the scope of his employment, with respect to the discretionary judgments, decisions, and actions of its public officers. Id. at 380. To overcome this immunity for claim against a State agency or its employees or officials acting within the scope of their authority, a plaintiff must establish that the agency employee or official knowingly violated a clearly established law, or acted maliciously, fraudulently, or oppressively. Parkulo v. West Virginia Board of Probation and Parole, 199 W.Va. 161, 483 S.E.2d 507 (1996); Clark, 465 S.E.2d 394 (citing State v. Chase Securities, Inc., 188 W.Va. 356, 424 S.E.2d 591 (1991)). In other words, the State, its agencies, officials and employees are immune for acts or omissions arising out of the exercise of discretion in carrying out their duties, so long as they are not violating any known law or acting with malice or bad faith. Syl. pt. 8, Parkulo. The simple use of the words “willful, deliberate, or intentional” is insufficient to overcome the Defendant’s entitlement to qualified immunity. See Pinder v. Johnson, 54 F.3d 1169, 1173 (4th Cir. 1996)(stating that for a right to be clearly established, it must be established in a particularized and relevant sense, not merely as an overarching entitlement to due process."). The common law doctrine of qualified immunity was scrutinized and analyzed in detail by the West Virginia Supreme Court of Appeals in State v. Chase Securities, Inc., 188 W.Va. 356, 424 S.E.2d 591 (1992). The Court determined that: “The provision of immunity rests on the view that the threat of liability will make federal officials timid in carrying out their official duties, and that effective government will be promoted if officials are freed the costs of vexations and often frivolous damages suits.” Id. (quoting Westfall v. Erwin, 484 U.S. 292, 295 (1988)). In Chase, the West Virginia Supreme Court of Appeals adopted the test used by federal courts to determine the applicability of the doctrine of qualified immunity for the acts of public officials. Specifically, the Court employed the standard developed by the United States Supreme Court in Harlow v. Fitzgerald, holding that “government officials performing discretionary functions generally are shielded from civil damages insofar as their conduct does not violate clearly
  • 24. 24 established statutory or constitutional rights of which a reasonable person would have known.” Id. at 362, 424 S.E.2d at 597 (quoting Harlow v. Fitzgerald, 457 U.S. 800, 812 (1982). The Court explained further that the term “reasonable person” is defined as a “a reasonable public official occupying the same position as the defendant public official.” Id. at n. 16 (citing Anderson v. Creighton, 483 U.S. 635 (1987)). The Supreme Court of the United States established a rigid two-step sequence for determining a defendant's entitlement to qualified immunity. A court must first decide whether the facts alleged set forth a violation of a constitutional right and if the plaintiff has satisfied this first step, the court must decide whether the right at issue was 'clearly established' at the time of the defendant's alleged misconduct. Pearson v. Callahan, 129 S. Ct. 808, 815-16, 172 L. Ed. 2d 565 (2009) (citing Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001) (internal citations omitted)). Without modifying the elements of the qualified immunity analysis, the Supreme Court recently held that courts no longer need to adhere to the rigid sequence of the analysis established in Saucier, but may instead determine which prong should be addressed first based upon the facts of the case before it. See Pearson, supra. “Immunities under West Virginia law are more than a defense to a suit in that they grant governmental bodies and public officials the right not to be subject to the burden of trial at all.” Hutchinson v. City of Huntington, 198 W.Va. 139, 479 S.E.2d 649 (1996) (emphasis added). Indeed “[t]he very heart of the immunity defense is that it spares the defendant from having to go forward with an inquiry into the merits of the case.” Id. (emphasis added.)(citing Swint v. Chambers County Commission, 514 U.S. 35 (parallel citations omitted) (1995)). As Justice Cleckley in Hutchinson wrote: As assertion of qualified or absolute immunity should be heard and resolved prior to any trial because, if the claim of immunity is proper and valid, the very thing from which the defendant is immune – a trial – will absent a pretrial ruling occur and cannot be remedied by a later appeal. On the other hand, the trial judge must understand that a grant of summary judgment based upon immunity does not lead to a loss of right that cannot be corrected on appeal. Id. at note 13. Similarly, the United States Supreme Court used almost identical reasoning as Justice Cleckley did in Hutchinson when it recognized the importance of a government official’s right to be summarily dismissed from litigation when qualified immunity is applicable. Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 2156 (2001). “The privilege of immunity from suit is an immunity rather than a mere defense to liability, and like absolute immunity it is effectively lost if a case is erroneously permitted to go to trial.” Id. (emphasis added). Further, Saucier holds that immunities spare governmental defendants from the other burdens of litigation. Id. Other burdens of litigation have been held to include discovery. See Yoak v. Marshall University Bd. of Governors, 672 S.E.2d 191 (2008). VI. Deliberate Intent A “deliberate intent” cause of action is one in which an injured employee sues his or her employer as a result of a workplace accident resulting in bodily injury. This cause of action seeks damages against an employer over and above benefits provided by workers compensation insurance coverage. The West Virginia Legislature has authorized these lawsuits to proceed under the “deliberate intent” statute, West Virginia Code § 23-4-2(d) (2). Employers who are frequently sued for deliberate intent include trucking and mining operations, building and construction contractors, oil and gas drillers, heavy machinery operators, and other industrial and manual labor-related fields. Any employer, however, can be the target of a deliberate intent case.
  • 25. 25 There are two types of deliberate intent claims. The first type is very uncommon and is brought forth pursuant to West Virginia Code § 23-4-2(d)(2)(i). This statutory provision permits claimants to bring suit where the employer's conduct is done with the deliberate intention to produce the specific resulting injury or death. This type of case requires a showing of an employer’s actual, specific intent to harm the employee. Merely establishing negligence, gross negligence, willful, wanton or reckless conduct does not meet the threshold required under part (i) of the statute. Because this section essentially requires plaintiffs to establish malice on the part of the employer, punitive damages are available. Due to the high threshold that must be met, there are very few cases brought under part (i). The overwhelming number of deliberate intent cases are brought forth under part (ii). With respect to West Virginia Code § 23-4-2(d)(2)(ii), it must be understood that the term “deliberate intent” is a misnomer, as the claimant need not establish that the employer intended to cause injury, but rather, that the employer intentionally exposed the employee to an unsafe working condition. Punitive damages are not recoverable under part (ii). The five element test set forth in part (ii) is as follows: The trier of fact determines, either through specific findings of fact made by the court in a trial without a jury, or through special interrogatories to the jury in a jury trial, that all of the following facts are proven: (A) That a specific unsafe working condition existed in the workplace which presented a high degree of risk and a strong probability of serious injury or death; (B) That the employer, prior to the injury, had actual knowledge of the existence of the specific unsafe working condition and of the high degree of risk and the strong probability of serious injury or death presented by the specific unsafe working condition; (C) That the specific unsafe working condition was a violation of a state or federal safety statute, rule or regulation, whether cited or not, or of a commonly accepted and well-known safety standard within the industry or business of the employer, as demonstrated by competent evidence of written standards or guidelines which reflect a consensus safety standard in the industry or business, which statute, rule, regulation or standard was specifically applicable to the particular work and working condition involved, as contrasted with a statute, rule, regulation or standard generally requiring safe workplaces, equipment or working conditions; (D) That notwithstanding the existence of the facts set forth in subparagraphs (A) through (C), inclusive, of this paragraph, the employer nevertheless intentionally thereafter exposed an employee to the specific unsafe working condition; and (E) That the employee exposed suffered serious compensable injury or compensable death as defined in section one, article four, chapter twenty-three whether a claim for benefits under this chapter is filed or not as a direct and proximate result of the specific unsafe working condition.”
  • 26. 26 Common items used to establish unsafe working conditions include:  lock out/tag out failures (repairing vehicles, repairing equipment);  improper or lack of training and safety training (operation of equipment such as forklifts or cranes by untrained employees);  improper or lack of safety equipment (crib blocks, barriers);  improper modification of equipment (using equipment outside the scope of its intended use, or adding devices to equipment);  improperly constructed work areas (slopes, ditches, scaffolding);  unsafe and improper loading and unloading procedures. The second element in part (ii) is normally viewed as the most important and difficult hurdle that the employee must clear. The statute requires the employee to demonstrate that the employer, via a supervisor, manager, foreman, or safety officer, had actual knowledge of the unsafe working condition. Typical examples of demonstrating the actual knowledge requirement are as follows:  prior similar accidents;  prior complaints;  prior safety violations and/or fines;  employer having observed the workplace condition or conduct;  employer directing the employee to engage in unsafe conduct;  employer having prior knowledge of the actual unsafe condition;  failure to perform mandatory hazard assessment. The third element requires the claimant to prove that the unsafe condition was a violation of some regulatory code, rule, law, or commonly accepted industry standard, and not just a general safety standard or rule. Claimants typically assert violations of OSHA, ANSI, MSHA, or other laws and regulations that apply to working conditions. Usually, an expert witness with a background in these areas is retained to offer an opinion as to the whether the law or regulation was violated, and whether a subsequent injury or death was the result. It is important emphasize that the alleged violation must be a specific, applicable standard, and not simply “a statute, rule, regulation or standard generally requiring safe workplaces, equipment or working conditions.” The fourth element of the statute requires a claimant to demonstrate that the employer intentionally exposed its employee to the unsafe working condition. This is typically done by showing that the employer directed the claimant to perform the work, that the activity was part of the claimant's typical job duties and responsibilities, and/or acquiescence on the part of the employer. The final element of the five-part test requires the claimant to have suffered a serious compensable injury or death as a proximate result of the specific unsafe working condition. A claimant is not likely to file a lawsuit without alleging some sort of debilitating injury, such as back pain, neck pain, nerve damage, shoulder problems, or psychological problems, which renders him or her unable to work. A few things should be noted when defending against a deliberate intent lawsuit:
  • 27. 27  There is no consideration of contributory negligence on the part of the claimant, except when the employer has proof of the employee's intent to self-injure or commit suicide, or if there is evidence of drug/ alcohol intoxication (Roberts v. Consolidated Coal Co., 590 S.E.2d 651 (2000)).  While contributory negligence is not a defense to a deliberate intent cause of action, an employer does not have the requisite actual knowledge of an unsafe working condition if the unsafe working condition existed solely as a result of the employees conduct. Deskins v. SW Jack Drilling, 600 S.E.2d 237 (W.Va. 2004).  If an accident is a completely anomaly with no prior similar incidents, the Supreme Court of Appeals has held that there may be no evidence that the employer exposed its employee to an unsafe condition in violation of any rule or regulation. Sedgmeyer v. McElroy Coal, 640 S.E.2d 129 W.Va. (2006).  An employer cannot avoid liability under the deliberate intent statute by claiming ignorance of an unsafe working condition as a result of failing to do a mandatory hazard assessment. Ryan v. Clonch Industries, 639 S.E.2d 756 (W.Va. 2006).  An employer’s third-party claims administrator is the employer's “agent” and is entitled to its immunity under the deliberate intent statute. Wetzel v. Employers Service Corp. of WV, 656 S.E.2d 55 (2007).  With respect to an unsafe working condition allegedly arising out of a failure to train, not remembering and not knowing regulations and safety procedures and precautions are two different things, and so long as the requisite training was provided, not remembering certain aspects as an employee does not automatically render the employer liable. Ramey v. Contractor Enterprises, Inc., No. 34804 (2010). “Actual knowledge is a high threshold that cannot be successfully met by speculation or conjecture; this requirement is not satisfied merely by evidence that the employer reasonably should have known of the specific unsafe working condition and of the strong probability of serious injury or death presented by that condition. Instead, it must be shown that the employer actually possessed such knowledge. Moreover, knowledge of the specific unsafe working condition alone is insufficient; rather, a defendant must also have realized the high degree of risk and strong probability of serious injury or death presented by the specific unsafe working condition.” Harbolt v. Steel of W. Va., Inc., 640 F. Supp. 2d 803, (S.D.W. Va. 2009). In the case of an employee's death, a personal representative of the decedent's estate may assert a deliberate intention claim against a decedent's employer on behalf of any persons identified in West Virginia Code § 55-7-6, so long as the decedent could have maintained the action against the employer by satisfying the deliberate intention statutory criteria. Murphy v. E. Am. Energy Corp., 680 S.E.2d 110 (W.Va. 2009).
  • 28. 28  Employers are entitled to an offset for whatever sums have been paid to a claimant under workers' compensation benefits. This is generally the entirety of the claimant's medical bills, his or her lost wages (typically around 70%), and any disability payments. In cases where the injury is severe, permanent, and debilitating, a claimant can allege and demonstrate damages in the millions of dollars, which workers compensation does not pay, including pain and suffering, loss of household services, future lost wages and benefits until retirement age, loss of the capacity to enjoy life, costs for future medical services and life-care plans, and spousal loss of consortium.  As a practical matter, even when the hurdles to a deliberate intent action are explained, the jury will nonetheless tend towards employing a negligence standard in rendering its decision.  The immunity from liability extended to political subdivisions by West Virginia Code § 29-12A-5(a)(11) (1992) includes immunity from “deliberate intent” causes of action brought pursuant to West Virginia Code § 23-4-2(c)(2) (1994). Syllabus Point 4, Michael v. Marion Cty Bd. of Educ., 198 W.Va. 523, 482 S.E.2d 140 (1996). Recent Case Law – 2011 to the present Smith v. KWV Operations, LLC, U.S. Dist Lexis 18827 (S.D.W.Va. 2011) The United States District Court for the Southern District of West Virginia recently concluded that 28 U.S.C. § 1445(c) does not bar removal of deliberate intent actions to federal court. After the defendant employer removed the plaintiff employee's deliberate intent and loss of consortium action based on diversity jurisdiction, the employee sought remand on the basis that 28 U.S.C.S. § 1445(c) prohibited removal to federal court any civil action in state court arising under workers compensation laws. The District Court found that a West Virginia court’s interpretation of West Virginia Code § 23-4-2(d)(2) was not determinative of whether a deliberate intention claim arose under workmen's compensation laws for purposes of 28 U.S.C.S. § 1445(c). Blatt v. Steel of West Virginia, Inc., 2011 W.Va. LEXIS 289 (W.Va. 2011) This memorandum decision was decided under the new rules of Appellate Procedure. The plaintiff was hired as a production worker for defendant. Believing that a piece of metal fell into a “cyclodyne” machine, plaintiff made an effort to retrieve it. In so doing, his leg fell into a hole on the machine which caused him to suffer permanent injury. Plaintiff asserts that he was never properly trained to operate this machinery and that defendant knew the machine was dangerous. Defendant maintained that there was no reason plaintiff should be working in or around the “cyclodyne” machine, defendant had no reason to know plaintiff would be around the machine, and defendant had never received any complaints regarding the machine. On motion for summary judgment, the Circuit Court of Cabell County found for the defendant company on grounds that plaintiff did not satisfy the intentional exposure element of the deliberate intent statute. On appeal, the Supreme Court of Appeals of West Virginia affirmed the trial court’s reasoning. Unfortunately, because this was a memorandum decision under the new rules, the Court did not discuss the merits of the arguments or the reasoning behind the affirmation of the trial court’s ruling.
  • 29. 29 Addair v. Litwar Processing Co., 2012 W. Va. LEXIS 12 (W.Va. 2012) In this memorandum decision, nine petitioners appealed an order of the Circuit Court of Wyoming County granting summary judgment to multiple employers in deliberate intent actions premised upon chemical exposure. The circuit court granted summary judgment on the ground of collateral estoppel because each of the plaintiff petitioners had previously filed a related workers’ compensation claim that had resulted in a final order finding that the claimant had not sustained a compensable workplace injury. The circuit court concluded that, because of the existence of a final adjudication finding no compensable injury with respect to each of the plaintiff petitioners, they each were estopped from re-litigating the issue and were, therefore, unable to prove a mandatory element of their deliberate intent claims. In lieu of addressing the issue of collateral estoppels, the Supreme Court of Appeals noted that the trial court had imposed a sanction upon the plaintiff petitioners that precluded them from presenting any expert witness in connection with their cases underlying the appeal. In order to prevail, the plaintiff petitioners must have been able to establish that they suffered “serious compensable injury or compensable death” and that such “serious compensable injury or compensable death” was “a direct and proximate result” of chemical exposure to which they were subjected in the course of their employment. In order to establish the element of causation, the Supreme Court of Appeals believed that expert testimony is necessary. In upholding the trial court’s ruling, the Supreme Court of Appeals held, “Because the plaintiff petitioners have been prohibited from presenting such evidence by virtue of sanctions imposed on them by the circuit court, they are unable, as a matter of law, to meet their burden of proof as to this element of their claim. This inability to make a sufficient showing on an essential element of their case, for which they bear the burden of proof, renders summary judgment proper.” Persinger v. Peabody Coal Company, 196 W. Va. 707 (1996) The Supreme Court of Appeals of West Virginia created a new cause of action for fraudulent misrepresentation, which takes place in the context of an employer’s defense of a worker’s compensation claim. While Persinger is not a new cause of action, the frequency with which plaintiffs’ attorneys in West Virginia have asserted the claim has recently increased. In Persinger, an employee was injured while driving a coal truck. The employee brought an action against the employer for knowingly filing a false statement with the West Virginia Workers' Compensation Fund in opposition to the employee's claim. The Supreme Court of Appeals held that a claimant could maintain the private cause of action for fraudulent misrepresentation against an employer for knowingly and intentionally filing a false statement. The Supreme Court of Appeals further held that the employee could maintain the action even though he or she was ultimately awarded workers’ compensation benefits. The rationale was that the employee was not attempting to recover damages for the initial workplace injury, but instead for the harm suffered from the fund originally denying benefits. Importantly, the Supreme Court of Appeals held that punitive damages and attorney's fees were recoverable. VII. Joint and Several Liability The law of joint and several liability in West Virginia is codified in West Virginia Code § 55 -7-24 and applies to causes of action that accrued on or after July 1, 2005. Under the law, if any defendant is found to be 30% or less at fault, then such defendant’s liability to the plaintiff will be several and not joint, which means that the defendant is only liable to the plaintiff for the damages attributable to the defendant. For example, if a particular defendant is found to be 20% at fault and the damages are determined to be $10,000.00, then that defendant is only liable to the plaintiff in the amount of $2,000.00 (subject to reallocation as discussed below).
  • 30. 30 The exceptions to the new joint and several liability rule apply to those defendants who are determined by a jury to have: (1) Acted with intent to inflict injury or damage; (2) Acted in concert with other defendants as part of a common plan or design resulting in harm; (3) Negligently or willfully caused the unlawful emission or disposal or spillage of a toxic or hazardous substance; or (4) Manufactured or sold a defective product in which strict liability is imposed. If a claimant is unable through good faith efforts to collect from a liable defendant, the claimant may, not later than six months after the judgment becomes final through lapse of time for appeal or through exhaustion of appeal (whichever occurs later), request reallocation of any uncollected amount among the other parties to the suit. It is for the Court (not a jury) to decide whether all or a part of a defendant’s proportionate share is uncollectible and to reallocate the uncollected amount among the other parties based upon the percentages of fault at issue, which includes the plaintiff’s percentage if this plaintiff’s determined to be partially at fault. However, a court cannot reallocate to any defendant an uncollectable amount greater than that defendant’s percentage of fault multiplied by such uncollected amount. A defendant subject to reallocation still maintains any rights and obligations of indemnity and contribution which the defendant may maintain or owe as against any other party. An exception to reallocation is triggered when a defendant’s percentage of fault is equal to or less than the plaintiff’s percentage of fault or the percentage of fault of the defendant is less than 10%. In such a case, the defendant’s obligation to the plaintiff may not be increased by way of reallocation. It should be noted, however, that when the exception is applied to a particular defendant such that said defendant’s obligation to the plaintiff is not increased, the portion of the judgment which is not applied to the exempt defendant shall be reallocated to the other parties who are not exempt according to their respective percentage of fault. Under the Governmental Tort Claims Act the joint and several liability doctrine is modified. The court in assigning the total amount awarded as damages shall enter judgment of joint and several liability against every defendant who bears 25% or more of the negligence attributable to all defendants. W. Va. Code § 29- 12A-7(d). The judgment is several, but not joint, among all defendants who bear less than 25% of the negligence attributable to all defendants. Id. A defendant who is assessed joint and several liability is liable to each plaintiff for all or any part of the total dollar amount awarded regardless of the percentage of negligence attributable to him. W. Va. Code § 29-12A-7(e). A right of contribution exists in favor of each defendant who has paid to a plaintiff more than the percentage of the dollar amount awarded attributable to him relative to the percentage of negligence attributable to him. Id. The total amount of recovery is limited to the amount paid by the defendant to a plaintiff in excess of the percentage of total dollar amount awarded attributable to him relative to the percentage of negligence attributable to him. Id. No right of contribution exists against a defendant who engages in a good faith settlement with the plaintiff prior to the jury’s report of its findings to the court or the court’s findings as to total dollar amount awarded as damages. Id. VIII. Collateral Source The West Virginia Supreme Court of Appeals has held that money a plaintiff has received from a collateral source is not admissible. Pack v. Van Meter, 177 W.Va. 485, 354 S.E.2d 581 (1986). The collateral source rule normally operates to preclude the offsetting of payments from health and accident companies and other collateral sources against the damages claimed by the injured party. Ratlief v. Yokum, 167 W.Va. 779, 280 S.E.2d 584, 589-590 (1981). The Court held that “[t]he collateral source rule was
  • 31. 31 established to prevent the defendant from taking advantage of payments received by the plaintiff as a result of his own contractual arrangements entirely independent of the defendant.” Id. at 590. The Court has applied the harmless error rule where evidence of a collateral source was introduced, but the jury found against the plaintiff on liability therefore it never addressed the issue of damages. Id. The West Virginia Supreme Court of Appeals has not specifically addressed the issue of write-downs or write-offs, however West Virginia law does not require that a plaintiff actually have paid medical expenses in order to recover them. Syllabus Point 14, Long v. Weirton, 158 W.Va. 741, 214 S.E.2d 832 (1975). Public entities, however, are granted greater leeway in collateral sources when it comes to temporary total disability benefits under the West Virginia Workers’ Compensation system. West Virginia Code § 23-4-1(a) sets forth that when an employee of the state and its political subdivisions, including: Counties; municipalities; cities; towns; any separate corporation or instrumentality established by one or more counties, cities or towns as permitted by law; any corporation or instrumentality supported in most part by counties, cities or towns; any public corporation charged by law with the performance of a governmental function and whose jurisdiction is coextensive with one or more counties, cities or towns; any agency or organization established by the Department of Mental Health for the provision of community health or mental retardation services and which is supported, in whole or in part, by state, county or municipal funds; board, agency, commission, department or spending unit, including any agency created by rule of the Supreme Court of Appeals, who have received personal injuries in the course of and resulting from their covered employment, the employees are ineligible to receive compensation while the employees are at the same time and for the same reason drawing sick leave benefits. State employees may collect sick leave benefits until receiving temporary total disability benefits. The employee may have sick leave benefits restored following the receipt of temporary total disability benefits by paying the employer the temporary total disability benefits received or an amount equal to the temporary total disability benefits received. IX. Procedural Strategies A. Offers of Judgments Either party may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. If the offer is accepted the parties then file with the court a notice of acceptance with proof of service and the court shall direct entry of the judgment by the clerk. When there is a statutory provision that specifically creates a right to attorney fees and defines attorney’s fees as being in addition to, or separate and distinct from costs, the circuit court must determine attorney’s fees separately from the offer of judgment. When the offer of judgment does not explicitly provide that the amount of the offer is inclusive of costs and attorney fees, the circuit court then must determine costs and fees in addition to the amount of the offer of judgment. Therefore, it is imperative that an offer of judgment explicitly state that is inclusive of costs and attorney fees. If the offer is not accepted then it is considered withdrawn. Should the case proceed to trial and the judgment obtained by the opposing party is not more favorable the opposing party then bears the costs incurred following the making of the offer. The fact that an offer is made but not accepted, or accepted as part payment, does not preclude a subsequent offer.
  • 32. 32 There is a difference in the West Virginia and Federal Rules of Civil Procedure for offers of judgment. In state court, an offer of judgment must be at any time more than 10 days before the trial begins. Under the Federal rules an offer of judgment must be made at least 14 days before the date set for trial. B. Third Party Practice West Virginia Rules of Civil Procedure Rule 13(a) requires that a pleading state as a counterclaim any claim which at the time of serving the pleading the pleader has against the opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claims and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. A defendant may bring a third-party complaint at any time after commencement of the action. W. Va. R. Civ. Pro. Rule 14(a). Leave of the court is not required if the third-party complaint is filed within ten (10) days after serving the original answer otherwise the party must obtain leave of court. Id. Under Rule 18 of the West Virginia Rules of Civil Procedure a party is permitted to assert a claim of relief as an original claim, counterclaim, cross-claim, or third-party claim, as the party has against an opposing party. Joinder is also permitted if (1) in the person’s absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person’s absence may (i) as a practical matter impair or impede the person’s ability to protect that interest, or (ii) leave any of the persons already parties subject to substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest. W. Va. R. Civ. Pro. Rule 19(a). When joinder is not feasible the court must determine whether to allow the action to proceed in the absence of that party or be dismissed, the absent person being considered indispensible. Id., Rule 19(b). A party may join an existing action as a plaintiff is they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action. W. Va. R. Civ. Pro. Rule 20(a). Misjoinder of parties is not a ground for dismissal of the action and parties may be added or dropped by order of the court or on motion of any party or of its own initiative at any stage of the action and on such terms as are just. W. Va. R. Civ. Pro. Rule 21. When a party has a claim against the plaintiff he/she may be joined as a defendant and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability. W. Va. R. Civ. Pro. Rule 22. X. Uninsured/Underinsured Motorist West Virginia uninsured and underinsured motorist coverage is controlled by statute found at West Virginia Code § 33-6-31. These two coverages are not the same, and have different laws applicable to each. Uninsured coverage is mandatory in West Virginia. Every motor vehicle liability insurance policy issued in this State must also contain uninsured motorist coverage. There are four possible scenarios as to how a vehicle may be “uninsured” by statute: 1. The tortfeasor may not have bodily injury liability insurance and property damage liability insurance both in the amounts specified by section two, article four, chapter seventeen-d of this code, as amended from time to time [currently $20,000 per person and $40,000 per occurrence for bodily injury claims, and $10,000 in property damage claims];
  • 33. 33 2. There is liability insurance, but the insurance company writing the same denies coverage thereunder; 3. There is no certificate of self-insurance issued in accordance with the provisions of said section; or 4. If the owner or operator thereof is unknown (i.e., John Doe driver). In uninsured motorist claims involving John Doe drivers, West Virginia law requires that there be physical contact between the John Doe vehicle and your insured’s vehicle. If there is not physical contact, the insured can still maintain an uninsured motorist claim by establishing a close and substantial physical nexus between an unidentified hit-and- run vehicle and the insured vehicle. A close and substantial physical nexus exists when an insured can establish by independent third-party evidence to the satisfaction of the trial judge and the jury, that but for the immediate evasive action of the insured, direct physical contact would have occurred between the unknown vehicle and the victim. Hamric v. Doe, 499 S.E.2d 699 (1997). The “but for” test in Hamric is satisfied and the uninsured motorist claim can go forward only if the injured insured presents independent third-party testimony by disinterested individuals which clearly shows the negligence of an unidentified vehicle was a proximate cause of the accident. Testimony by close family members, close personal friends, by those who might share in the award or have a direct pecuniary interest in the outcome of the case, and all others similarly situated is not testimony which is sufficient to allow the claim to proceed. While uninsured motorist coverage is mandatory, underinsured coverage is optional. At the time of the initial application, the insured is presented with the option of purchasing underinsured coverage at an additional cost. An “underinsured” motor vehicle means a vehicle with respect to the ownership, operation or use of which there is liability insurance applicable at the time of the accident, but the limits of that insurance are either: 1. Less than limits the insured carried for underinsured motorists' coverage; or 2. Has been reduced by payments to others injured in the accident to limits less than limits the insured carried for underinsured motorists' coverage. In effect, if the claimant has injuries which then exhaust the tortfeasor’s available liability coverage, then the claimant will then turn to his or her own underinsured coverage. Historically, it was necessary for the claimant to exhaust the liability coverage before proceeding against the underinsured coverage. However, that changed in 2004 when the Supreme Court decided Horace Mann Ins. Co. v. Adkins when the Court fashioned a new theory called “constructive exhaustion.” This means that even if the claimant does not exhaust the available liability limits, s/he may nonetheless assert a claim for underinsured coverage. However, the underinsured insurance carrier will be given “credit” for the amount of the liability limits.
  • 34. 34 For example, let’s assume State Farm, as the liability carrier, for the tortfeasor, has a policy with bodily injury limits of 25/50. The claimant settles her claim with State Farm for $18,000. The claimant then asserts a UIM claim. The UIM carrier gets “credit” for the entire $25,000 before its liability would begin such that, if the matter went to trial and the jury returned a verdict in the amount of $22,000, the UIM carrier would not be required to pay anything towards the judgment (as opposed to paying $4,000 [$22,000-$18,000]). XI. Unfair Trade Practices A. Statutory Law Chapter 33 of the West Virginia Code provides the primary framework for regulation of the insurance industry within the State. The following selected definitions are provided for in Chapter 33 and apply to individuals or entities conducting the business of insurance in West Virginia:  “Insurer” is every person engaged in the business of making contracts of insurance;  “Person” includes an individual, company, insurer, association, organization, society, reciprocal, partnership, syndicate, business trust, corporation or any other legal entity;  “Domestic insurer” is an insurer formed under the laws of West Virginia;  “Foreign insurer” is an insurer formed under the laws of the United States or of another state of the United States;  “Alien insurer” is an insurer formed under the laws of a country other than the United States; and  “Mutual insurer” is an incorporated insurer without permanent capital stock and the governing body of which is elected by the policyholders. Generally speaking, in West Virginia, the business of insurance is regulated by the Office of the Insurance Commissioner. It has plenary power to promulgate rules and regulations pertaining to the business of insurance, as well as the duties and obligations of insurers in handling claims. The insurance regulations are found in Title 114 of the West Virginia Code of State Rules. Of particular note is Series 65, which provides rules and regulations pertaining to self-insurance pools for political subdivisions. While such arrangements are authorized, they must contain a financial plan, have sufficient capital, and contain a policy agreement. Importantly, the West Virginia Insurance Guaranty Association does not provide coverage for claims made against the pooling entities in the event of default or insolvency. Over the past few years, the legal landscape of West Virginia insurance law has been significantly altered. The changes are primarily due to the passage of certain legislation in 2005 relating to third-party "unfair trade practices" claims and changes in the law regarding joint and several liability. The information contained in this section is intended to update the reader on this legislation and the accompanying rules, as well as to report on significant insurance-related decisions of the West Virginia Supreme Court of Appeals from June 2005 to present.
  • 35. 35 During the 2005 regular session of the West Virginia Legislature, Senate Bill 418 was enacted into law. This legislation, which became effective on July 7, 2005, prohibited "third-party claimants" from bringing a lawsuit against any person for an "unfair claim settlement practice." A "third-party claimant" is defined as any individual, corporation, association, partnership, or any other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity insured under an insurance contract for the claim in question. An "unfair claim settlement practice" means a violation of the provisions of West Virginia Code § 33-11-4(9). In relation to both first and third-party claims, West Virginia Code § 33-11-4(9) provides that no person shall commit or perform with such frequency as to indicate a general business practice, among other things, any of the following: 1. Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; 2. Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies; 3. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; 4. Refusing to pay claims without conducting a reasonable investigation based upon all available information; 5. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; 6. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear; 7. Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; 8. Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; 9. Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; 10. Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
  • 36. 36 With the passage of the revised West Virginia Code § 33-11-4(9), a third-party claimant's sole recourse for an unfair claim settlement practice is to bring an administrative complaint with the Insurance Commissioner. The time frame by which a complaint must be submitted is within one year following the actual or implied discovery of the alleged unfair claim settlement practice. Upon a "sufficiently complete administrative complaint," the Commissioner is to provide the person against whom the complaint is filed with written notice of the alleged violation. The complaint will be closed by the Commissioner if the recipient of the notice substantially corrects the circumstances that gave rise to the violation or makes an offer to resolve the complaint in a manner found reasonable by the Commissioner within sixty 60 days of receiving the notice. If the complaint is resolved, the recipient of the notice is to report the resolution to the Commissioner within 15 days of the disposition, but no later than 60 days from the notice's receipt. If the third-party claim is not resolved within this 60-day period, the Commissioner shall conduct any investigation that he or she considers necessary to determine whether the allegations contained in the complaint are meritorious. Should merit be found by the Commissioner, an administrative hearing may be held to determine if an unfair claim settlement practice has been committed with such frequency as to constitute a general business practice. The hearing is to be held in the geographical region of the state where the complainant resides and must occur within 90 days from the filing of the complaint. However, the hearing may be continued by mutual agreement of the parties or by the Commissioner for good cause. If the Commissioner finds that an unfair claim settlement practice has been committed, the Commissioner may provide restitution from the Unfair Claims Settlement Practice Trust Fund to a claimant who has suffered damages as a result of a general business practice or from an "egregious act" by a person whether or not the act fell within a general business practice. Restitution may include noneconomic damages, not to exceed $10,000, and actual economic damages. Restitution may not be given for attorney fees and punitive damages. The Commissioner may also impose a monetary penalty up to $10,000 if the act in question involves an intentional violation of West Virginia Code § 33-11-4(9) and even though it has not been established that the person engaged in a general business practice. If the Commissioner finds that an insurer committed or performed an unfair claim settlement practice with such frequency as to indicate a general business practice, he or she may penalize the insurer up to $250,000. Any finding by the Commissioner that the actions of a company constitute a general business practice may only be based on the existence of substantially similar violations in a number of separate claims or causes of action. In addition to placing insurers at risk of large penalties, unlimited awards for economic damages, license revocation and the authority of the Insurance Commissioner to independently investigate and act on alleged unfair claims conduct, the new third-party complaint process can result in findings of "egregious acts" or "a general business practice" that potentially may be used at trial in first-party bad faith cases to justify the award of punitive damages. Accordingly, compliance with the new standards and deadlines for investigating and settling claims should be strictly adhered to and any third- party administrative complaints should be aggressively defended if they cannot otherwise be resolved within the first 60 days of the complaint being filed.
  • 37. 37 As of January 26, 2007, there were 467 third party administrative complaints filed with the Insurance Commissioner since the effective date of Senate Bill 418 (July 8, 2005). Of the 467 complaints, 169 were resolved in the 60-day "cure" period, 14 were declared to be outside the jurisdiction of the Insurance Commissioner, 29 lacked sufficient information for the matter to continue, and 227 were referred to the Legal Division of the Offices of the Insurance Commissioner for a merit determination. Of the complaints referred to the Insurance Commission's Legal Division, the overwhelming majority have either been found to lack merit or were resolved prior to the occurrence of an administrative hearing. B. Regulatory Law: 114 CSR 14-1, et seq. In April of 2006, two sets of final administrative rules governing provisions of Senate Bill 418 were adopted and approved by the Legislature and incorporated in the West Virginia Code of State Rules. The adoption of these rules caused many substantive and procedural changes in the way insurance companies must adjust or otherwise handle insurance claims. Highlights include:  Defines certain practices that constitute unfair methods of competition or unfair or deceptive acts or practices and establish certain minimum standards and methods of settling both first-party and third-party claims.  Does not prohibit using additional methods above the stated minimums if they do not violate this rule or any other West Virginia statute or rule.  Applies to all insurance policies and insurance contracts except Workers' Compensation.  Is not exclusive. Other acts, not specified in the rule, also may constitute unfair claim settlement practices.  Does not create or recognize, either exclusively or impliedly, any new or different cause of action not otherwise recognized by law. Does not change former definitions of "Claimant," "First-Party Claimant," "Person," "Insurer," "Investigation," "Notification of Claim," "Third-Party Claimant," "Settlement of Claims," "Insurance Policy," "Insurance Contract," or "Claim."  Deletes in the "Claimant" definition any reference to a "designated legal representative, designated member of claimant's immediate family, or any other person named by the insured" who may legally act on his/ her behalf and who so acts without any compensation.  Adds "Commissioner" to mean West Virginia's Insurance Commissioner.  Adds "Licensee" to mean any person holding a license or certificate of authority from the Commissioner, or any other entity for whom the Commissioner's consent is required before transacting business in the State of West Virginia or with residents of West Virginia.
  • 38. 38 File and Record Documentation 1. Requires all communications and transactions from or by the insurer to be dated and maintained in the claim file; 2. Requires the date and substance of all oral communications to be recorded in the claim file; and 3. Requires a record or copy of all forms sent to claimants to be in the claim file. Representation of Policy Provisions & Benefits An insurer is barred from requiring a first-party claimant to provide notification or proof of a claim within a specified time, unless it is required by the policy or set by statute or rule. Standards for Acknowledging Pertinent Communications Each producer or other licensee, in addition to each insurer, must furnish the Commissioner with a complete written response to any inquiry within 15 working days of the date appearing on the inquiry (the sole exception is responding to the notice of a third-party administrative complaint, per new rules at 114 CSR 76-1, et seq.). A "complete written response" must address all issues raised by the claimant or the Commissioner and must include copies of any documentation requested. This rule is not intended to permit delay in responding to Office of the Commissioner in conjunction with a scheduled examination of the insurer's premises. Standards for Prompt Investigation & Fair and Equitable Settlement Every insurer is required to promptly conduct and diligently pursue a thorough, fair, and objective investigation and may not unreasonable delay resolution by persisting in seeking information that is not reasonably required for or material to the resolution of a claim dispute. For medical professional liability claims, the Medical Professional Liability Act (MPLA), West Virginia Code § 55-7B-1, et seq., applies. An insurer is required to establish investigatory procedures that: 1. Require an investigation of any claim to commence within 15 working days of receipt of notice of claim; 2. Require the insurer to notify each first-party claimant (or authorized representative) of all items, statements and forms the insurer reasonably believes to be required of such claimant within 15 working days of receiving notice of the claim; 3. Deems a claim to have been filed with an insurer unless an agent of the insurer who receives it does not promptly notify the claimant that the agent is not authorized to receive notices of claims; and 4. Within 10 working days of completing its investigation, an insurer is required to deny the claim in writing or make a written offer, subject to policy limits. For medical professional liability claims, the MPLA applies.
  • 39. 39 Offers of Settlement & Prohibition of Unreasonably Low Settlements An insurer is prohibited from attempting to settle a claim by making a settlement offer that is "unreasonably low." To determine whether an offer is "unreasonably low," the Commissioner shall consider any evidence offered regarding the following factors: 1. The extent to which the insurer considered evidence submitted by the claimant to support the value of the claim; 2. The extent to which the insurer considered legal authority or evidence made known to it or reasonably available; 3. The extent to which the insurer considered the advice of its claims adjuster as to the amount of damages; 4. The extent to which the insurer considered the opinions of independent experts; 5. The procedures used by the insurer in determining the amount of damage; 6. The extent to which the insurer considered the probable liability of the insured and the likely jury verdict or other final determination of the matter; and 7. Any other credible evidence presented to the Commissioner that demonstrates that the final amount offered in settlement of the claim by the insurer is or is not below the amount that a reasonable person would have offered in settlement of the claim after taking into consideration the relevant facts and circumstances at the time the offer was made. Denial of Claims 1. An insurer cannot deny a claim on the grounds of a specific policy provision, condition or exclusion unless reference to such provision, condition or exclusion is included in the denial; and 2. A denial must be given to a claimant in writing or, if by means other than a writing, a notation must be recorded in the insurer's claim file. Notice of Necessary Delay in Investigating Claim If an insurer needs more than thirty 30 calendar days from the date of receipt of a proof of loss from a first-party claimant or a notice of claim from a third-party claimant to determine whether the claim should be accepted or denied, the insurer is required to: Provide written notification to claimant within 15 working days after the 30- day period expires; and Provide written notification to the claimant every 45 calendar days thereafter 1. as long as an investigation remains incomplete, stating why the additional time is needed. If a claim is being investigated as a suspected fraudulent claim, the insurer is not required to disclose any information that could be reasonably expected to alert a claimant to that fact; however, there must be "a reasonable basis supported by specific
  • 40. 40 information" available for review by the Insurance Commissioner that a claimant has fraudulently caused or contributed to the loss before the insurer is relieved of the requirements of this rule. Time Limits Every insurer must pay any amount finally agreed upon in settlement of all or part of a claim not later than 15 working days from the receipt of such agreement by the insurer or from the date of the performance by the claimant of any condition set by such agreement, whichever is later. The rule has been amended to require written notice be given to a first-party claimant in not less than 30 days and to third-party claimants in not less than 60 days before the expiration date of a time limit (statute of limitations or policy or contract time limit) that may affect the rights of a claimant who is neither an attorney nor represented by an attorney. Otherwise, any negotiation for the settlement of a claim with such a claimant is barred. Other Investigation & Settlement Standards  A provision prohibits insurers from offering incentives or compensation to its employees, agents or contractors based on savings to the insurer as a result of improperly denying the payment of claims.  An insurer is barred from deducting premiums owed on one policy from a claim payment made under another policy unless the insured consents.  An insurer may not ask or require a claimant to submit to a polygraph examination or other truth detection device in connection with the settlement of a claim unless: 1. Authorized under the applicable insurance contract; 2. Authorized under state law; and 3. The claimant gives written consent prior to use of the device.  Any notice rejecting any element of the claim must contain the identity and the claims processing address of the insurer and the claim number. The notice also must state that the claimant has the option of contacting the Commissioner and include the Commissioner's mailing address, telephone number and website address.  No claimant can be required to travel unreasonably either to inspect a replacement motor vehicle or to obtain a repair estimate. Reference to "a specific repair shop" is deleted.  An insurer may furnish to the claimant names of one or more conveniently located motor vehicle repair shops that will perform repairs. However, an insurer may not require a claimant to use a particular repair shop or location to obtain the repair.  Added to the fifth criteria required of motor vehicle valuation sources other than a valuation manual is that deductions made for the condition of the insured vehicle "must be reasonably based on a physical attribute that has the effect of decreasing the vehicle's value."
  • 41. 41 Training and Certification Within 90 days of April 24, 2006 (effective date of rule), every insurer must adopt and communicate to all of its claims agents written standards regarding the prompt investigation and processing of claims. Highlights of 114 CSR 76-1, et seq. (Administrative Complaint Process for Third- Party Claimants) Definitions Applicable to the Rule  "Claimant" means the third-party claimant as defined in 114 CSR 14-2.8.  "Complaint" means the administrative complaint filed by a third-party claimant pursuant to West Virginia Code § 33-11-4a(b).  "Egregious Act" means conduct that is either: (1) fraudulent, or (2) malicious and reckless, whether or not the act constituted a pattern corresponding to an unfair claim settlement practice committed with such frequency as to constitute a general business practice. An act, or failure to act, that is due to negligence, lack of judgment, incompetence, or bureaucratic confusion, is not an egregious act.  "Respondent" means a person against whom a complaint is filed with the Commissioner pursuant to West Virginia Code § 33-11-4a(b).  "Sixty day period" means the 60 days following the respondent's receipt of a Complaint. Representation of Claimants and Respondents  Claimants who are natural persons (i.e., not created by law) may appear at and represent themselves in any matter before the Insurance Commissioner.  Partners may represent their partnership with the Insurance Commissioner's permission.  Corporations only can be represented by an attorney duly licensed or authorized to practice law in the State of West Virginia, although a corporation's employee may testify at a hearing without the presence of counsel.  No party can be represented in any matter before the Commissioner by a spokesperson, lay representative or any other natural person not admitted or authorized to practice law in the State of West Virginia.  Any out of state attorney appearing before the Commissioner must have obtained a pro hac vice admission to the West Virginia State Bar and documentation of that permission must be supplied to the Insurance Commissioner before any such attorney files any papers or makes an appearance. Filing of an Administrative Complaint A written Complaint must be received by the Insurance Commissioner no later than one year after the actual or implied discovery of the alleged unfair claim settlement practice.
  • 42. 42 A Complaint is deemed filed on the date on which a written document describing acts that could reasonably be construed as an unfair claim settlement practice is received by the Insurance Commissioner, regardless of whether the document is on the following described form. A Complaint is to be on a form provided by the Insurance Commissioner (attached hereto) and must state with specificity the following: 1. The statutory provision, if known, which the person allegedly violated; 2. The facts and circumstances giving rise to the violation; 3. The name of any individual or other entity involved in the violation; 4. The specific policy language that is relevant to the violation, if known; and 5. Any other information the Commissioner may require. If a Complaint does not provide sufficient information:  The Commissioner must contact the claimant within 15 days of its receipt advising of the Complaint's insufficiency.  The claimant may amend the original Complaint within an additional 15 days from the date of the Commissioner's contact to clarify the Complaint, add and/ or delete parties, and make any other necessary changes.  No further action on the Complaint is to be taken if the claimant does not provide, in the 15 days allowed, the information needed for a sufficiently complete complaint. If a sufficiently complete Complaint is received:  The Commissioner must provide to any respondent (by mail or electronic means) a copy of the Complaint within 5 working days of receiving a satisfactory Complaint. A respondent must, within 45 days of receiving a Complaint, inform the Commissioner in writing of the status of the negotiations with the claimant unless: 1. Complaint has been resolved and the Commissioner is so advised; or 2. The respondent has advised the Commissioner that it does not intend to take any further action to resolve the Complaint. If a Complaint is unresolved and remains open after the 60-day period, the Commissioner is to conduct an investigation to determine the merits of the allegations. If merit is found:  The Complaint must be forwarded to the Office of Consumer Advocacy ["OCA"] who may advocate for the claimant's interest at any hearing or during judicial review of any administrative order.  The Commissioner may order further investigation or a hearing.
  • 43. 43 Resolution Without a Hearing The Commissioner is to close a Complaint and take no further action (except as provided in West Virginia Code § 33-11-4(a)(I) and Rule 5.4) if it is determined that the respondent: 1. Substantially corrected the circumstances that gave arise to the Complaint within the 60-day period; 2. Offered to resolve the Complaint in a reasonable manner within 60- day period; or 3. Gave sufficient information to satisfy the Commissioner that the Complaint lacks merit. The Commissioner can close a Complaint any time after the 60-day period expires, including during or after a hearing. A claimant has the right to demand a hearing in writing pursuant to West Virginia Code § 33-2-3 on the issue of whether the Commissioner properly decided to close a Complaint. If error is found, the Complaint is re -opened and proceeds as if no closure occurred. Other deadlines applying to a Complaint are tolled until a determination is made after an improper closure hearing. Despite any closure of a Complaint by the Commissioner under this rule, the Commissioner has the authority to consider evidence related to the factual allegations of the Complaint in determining (in the context of a proceeding other than the one involving the closed claim itself) whether the alleged unfair settlement practice was, when considered in conjunction with other similar violations, part of the general business practice. Determining the Need for a Hearing After the 60-day period has expired without a resolution of the Complaint or the respondent declares that no further action will be taken to resolve the Complaint within the 60-day period, the Commissioner may conduct an investigation deemed necessary to determine whether the allegations contained within the Complaint are meritorious. If there is a finding that an unfair claim settlement practice has been committed, the Commissioner also may conduct an investigation to determine whether the violation was committed with such frequency as to constitute a general business practice. For any Complaint not closed or that has been ordered to be reopened, and the Commissioner makes a preliminary finding that the Complaint has merit, a complete copy of the Complaint and the respondent's response, if any, must be forwarded to the "Office of Consumer Advocacy." Complaint Hearings  Shall be held within 90 days from the date a Complaint is filed unless it is continued by agreement of all parties or by the Commissioner for "good cause." "Good cause" includes, but is not limited to, the Commissioner's determination that additional investigation is necessary.  Shall be assigned a time and place by the Commissioner by notice to the parties at least 10 days in advance of the hearing.  Shall be conducted in the geographic region of the state where the complainant resides, as determined by the Commissioner.  May be conducted by telephonic conference call, if all parties concur.
  • 44. 44  Shall be conducted pursuant to 114 CSR 13, except for conflicts with this rule.  Shall determine pre-hearing matters pursuant to 114 CSR 13.4.  Shall record testimony and evidence stenographically or by mechanical means.  Shall have findings made by the Commissioner of whether or not the respondent committed an unfair claim settlement practice. If an unfair claim settlement practice is found, the Commissioner is required to determine: 1. Whether the violation was intentional; 2. Whether the violation was the result of an egregious act; and 3. Whether the violation was committed with such frequency as to constitute a general business; and 4. Whether a hearing is necessary brought pursuant to an administrative proceeding initiated by the Commissioner.  May be continued or adjourned from day to day or to a later date to hear evidence related to the required determinations that the Commissioner must make. Commissioner's Authority Nothing in the rule limits the authority of the Commissioner to conduct an investigation of, or to take action against, a respondent whom the Commissioner has reason to believe has: 1. Intentionally committed an unfair claim settlement practice; 2. Committed an unfair settlement practice with such frequency as to constitute a general business practice; or 3. Consistently uses the 60-day period to resolve or settle a third-party claim. Penalties, Restitution & Judicial Review If the Commissioner determines at the hearing that a respondent has committed an unfair claim settlement practice, the Commissioner must:  Enter an Order directing the respondent to cease and desist the practice  The Commissioner may also assess penalties as prescribed by West Virginia Code § 33-11-6 (a) through (e), including: 1. A fine up to $1,000 for each UTPA violation to an aggregate of $10,000 if the violation was not intentional and not conducted with such frequency so as to constitute a general business practice. 2. A fine up to $5,000 for each UTPA violation to an aggregate of $100,000 in a six-month period if the insurer knew or should have known it was a UTPA violation. 3. A fine up to $10,000 for each UTPA violation without an aggregate limit if the Commissioner finds the act was intentional, but not conducted with such frequency so as to constitute a general business practice.
  • 45. 45 4. A fine up to $250,000 if the Commissioner finds that a violation occurred with such frequency as to constitute a general business practice. Such a finding of a general business practice must involve substantially similar violations in a number of separate actions. 5. Revoke or suspend the license of any persons who knew or reasonably should have known, they were in violation of the UTPA. 6. Order restitution to be awarded to the claimant to be paid form the Unfair Claim Settlement Practice Trust Fund established by West Virginia Code § 33-11-4 (b).  If the Commissioner determines that the claimant has suffered damages a a result of a general business practice of the respondent or an egregious act that was made by the respondent, regardless of whether the act occurred as a general business practice, the Commissioner may award the claimant actual economic damages and up to $10,000 for non-economic damages. There can be no award for attorney fees or punitive damages. Judicial review is available for any person aggrieved by any act of the Commissioner, which includes the entry of an Order, or by a failure of the Commissioner to act, pursuant to West Virginia Code §§ 33-2-14 and 33-11-6(g).  An appeal must be filed: 1. Within 30 days after the Commissioner’s order (or order denying a rehearing) has been mailed or delivered to the persons entitled to receive it. 2. By written petition to the Kanawha County Circuit Court with a copy to the Commissioner who, in turn, must transmit the record of the proceedings to the clerk of that court. The petitioner must give written notice to the Commissioner of the time and place the judge has set for a hearing at least 15 days prior to the hearing. The judge, without a jury, is to hear and determine the matter upon the record of the proceedings before the Commissioner and enter an order revising or reversing the order of the Commissioner for further proceedings. If good cause is shown, the Judge may permit additional evidence to be introduced. Pending such appeal, the order of the Commissioner shall be in full force and effect unless stayed until final determination by the Commissioner of the court or judge before whom the appeal is pending. The State Supreme Court of Appeals may review the circuit court's judgment on appeal in the same manner as other civil cases to which the State is a party. XII. Insurance Related Case Law Below is a brief summary of significant insurance-related decisions of the Supreme Court of Appeals of West Virginia over the past several years.
  • 46. 46 Satterfield v. Erie Insurance Property and Casualty, 618 S.E.2d 483 (June 30, 2005) The Court determined that where an insured who holds more than one automobile insurance policy with the same insurer acquires an additional vehicle, the named inclusion of the additional vehicle on one insurance policy does not operate to remove coverage extended by the "newly acquired auto clause" in a separate policy, barring language that (1) expressly terminates coverage in such circumstances, or (2) requires the insured to make an election as to the specific policy under which coverage is sought. Glen Falls Ins. Co. v. Smith, 617 S.E.2d 760 (July 1, 2005) Based on a prior decision, the Court held that when a homeowners' or automobile policy does not otherwise define the phrase "resident of your household," that phrase means a person who dwells, though not necessarily under a common roof, with other individuals who are named insureds in a manner and for a sufficient Based on a prior decision, the Court held that when a homeowners' or automobile policy does not otherwise define the phrase "resident of your household," that phrase means a person who dwells, though not necessarily under a common roof, with other individuals who are named insureds in a manner and for a sufficient length of time so that they could be considered to be a family living together. The factors to be considered in determining whether that standard has been met include, but are not limited to, the intent of the parties, the formality of the relationship between the person in question and the other members of the named insureds' household, the permanence or transient nature of that person's residence therein, the absence or existence of another place of lodging for that person, and the age and self-sufficiency of that person. Ferrell v. Nationwide Mutual Ins. Co., 617 S.E.2d 790 (July 8, 2005) In this case, the Court was asked to answer the following certified question: "May an insurance company seek reimbursement of medical expense payments made to an insured, where (a) the insurance policy allows the insurance company to seek "reimbursement" of those medical expense payments from the insured out of any recovery obtained by the insured from a third party; (b) the proceeds of the recovery from the third party duplicate the insurance company's medical expense payments to the insured; and (c) the insurance company is the liability insurer of the third party"? Before answering this certified question, the Court summarized West Virginia's position regarding subrogation clauses in insurance policies. The Court stated that, generally speaking, this state's public policy permits insurers to pursue subrogation of medical payments from their own insureds. The Court went on to say that insurers can, in fact, pursue subrogation against an insured who receives benefits under the policy if the insured successfully recovers from a tortfeasor, although the insurer must reimburse the insured its share of the attorney fees and costs of obtaining the recovery from the tortfeasor. A different result occurs, however, when an insurer seeks subrogation of medical expense payments from a plaintiff-insured when both the plaintiff-insured and the tortfeasor are insured by the same insurance company. In this instance, the Court noted a previous decision where it held that no right of subrogation can arise in favor of an insurer against its own insured since by definition subrogation arises only with respect to rights of the insured against third persons to whom the insurer owes no duty.
  • 47. 47 The Court then noted that a different outcome might be reached if an insurer were to have policy language that clearly created a contractual right to "reimbursement" of medical payments it had advanced to its insured to the extent such medical payments were compensated by a settlement with or judgment against a tortfeasor who it also insured. Hicks v. Jones, 617 S.E.2d 457 (July 8, 2005) In this case, the Court addressed the meaning of the phrase "fair and equitable settlement," as stated in the Unfair Trade Practices Act at West Virginia Code § 33-11-4 (9)(f). It was held that a fair and equitable settlement was one that is made by the insurer impartially, honestly, and free from prejudice, self-interest or other improper influence. Moreover, the Court went on to state that such a settlement implies a disposition of a claim for an element of damages that has a basis in evidence and in reason, and achieves a fitting and right balance of considerations that is free from favoritism, and is fair and equal to all concerned. Newark Ins. Co. v. Brown, 624 S.E.2d 783 (Nov. 18, 2005) The Court found that West Virginia Code § 33-6-31(b), which requires an automobile liability policy to provide an option of uninsured and underinsured motorist coverage, does not require an offer of such coverage when an insured purchases umbrella liability policy. However, West Virginia Code § 33-6-31f(a), which was enacted after West Virginia Code § 33-6-31(b) in 2001, does require an offer of such coverage by an insurer issuing an excess or umbrella policy covering automobile liability. Because West Virginia Code § 33-6-31f(a) is more specific in nature, it prevails over the more general provision of West Virginia Code § 33-6-31(b). Thus, as of July 2001, which was the effective date of West Virginia Code § 33-6-31f(a), insurers who issue (or issued) excess or umbrella policies covering automobile liability must provide the insured the option of purchasing uninsured and underinsured motorist coverage. Aluise v. Nationwide Mutual Fire Ins., 625 S.E.2d 260 (Dec. 1, 2005) The Court held that, absent policy language to the contrary, a homeowner’s policy defining “occurrence” as “bodily injury or property damage resulting from an accident” does not provide coverage for an insured homeowner who is sued by a home buyer for economic losses as a result of the insured negligently or intentionally failing to disclose defects in the home. Dairyland Ins. Co. v. West Virginia National Auto Ins. Co., 624 S.E.2d 599 (Dec. 2, 2005) It was determined by the Court that if an insurance company chooses to issue a new policy of automobile liability insurance and the insured fails to pay the initial premium or otherwise provide consideration for the new policy, the insurer may cancel the policy but must provide the insured with at least 10 days notice of the cancellation as required by West Virginia Code § 33-6A-1(e). Where there has been an invalid cancellation of an automobile liability policy, the policy remains in effect until the end of its term or until a valid cancellation notice is provided to the insured, whichever occurs first.
  • 48. 48 Gibson v. Northfield Ins. Co., 631 S.E.2d 598 (Dec. 2, 2005) An insurance company may incorporate into a governmental entity’s motor vehicle insurance policy limiting terms and conditions that violate the statutory requirement that a policy contain coverage that protects the named insured against liability for death, bodily injury, loss or damage that results from negligence in the operation or use of a vehicle. However, the limiting terms and conditions in such a policy are statutorily required to be determined by the political subdivision in its discretion as set forth by W. Va. Code § 29-12-16(a). In other words, the limiting terms and conditions must be the result of some choice, judgment, volition, wish or inclination as a result of investigations or reasoning by the governmental entity. Enforcement of the limiting terms and conditions will not occur merely because they are different from those found in the typical insurance policy. Jenkins v. State Farm Automobile Ins. Co., 632 S.E.2d 346 (May 18, 2006) The Court found that underinsured motorist ("UIM") coverage under a policy issued to the insured's spouse did not apply while the insured was driving his mother's vehicle. Even though the spouse's policy allowed for UIM benefits up to the highest limit of liability of any applicable policy, it unambiguously made UIM coverage inapplicable for injury to the insured while occupying or otherwise using a vehicle owned by a relative if the vehicle was insured for UIM coverage under a policy issued by the same insurer. Gauze v. Reed, 633 S.E.2d 326 (July 5, 2006) The underlying dispute arose from a single-car accident that occurred on September 4, 2001. The complaint filed by the plaintiff alleged that the defendant negligently operated her vehicle in which he was riding as a passenger. The vehicle involved in the accident was owned by the Human Resource Development Foundation (HRDF), a non-profit agency and an administrator of a state-funded program that provided lower income applicants with transportation for job purposes. The vehicle was leased to the defendant under a lease-to-own arrangement. In the lease agreement, HRDF acknowledged sole ownership of the vehicle and agreed to provide insurance coverage on the vehicle. The insurance company that provided coverage was declared insolvent shortly after the accident, and liquidation was ordered by the Circuit Court of Cook County, Illinois. As a result of the insolvency order, the appellee West Virginia Insurance Guaranty Association (Guaranty Association) stepped into the insolvent insurer’s place and assumed the defense of the defendant. As a non-profit agency, HRDF also qualified for insurance coverage provided through the State of West Virginia by the Board of Risk and Insurance Management, as authorized by West Virginia Code § 29-12-5. The Board of Risk and Insurance Management purchased automobile liability insurance from National Union Fire Insurance Company (“NUFIC”) for vehicles owned by HRDF, including the vehicle leased to Ms. Reed. The statute which creates the Guaranty Association requires that a plaintiff exhaust all potential solvent sources of insurance coverage before recovering from it. This provision is commonly referred to as the non-duplication provision of the Insurance Guaranty Association Act.
  • 49. 49 Following the insolvency of the liability insurer, NUFIC contended that its policy did not provide liability insurance coverage for the plaintiff's claim, as its policy was an “excess” insurance policy rather than a primary liability insurance policy. NUFIC pointed to “other insurance” language contained in the certificate of liability insurance indicating that if HRDF “has other primary insurance” from another source, then there was no coverage provided by NUFIC's policy except to the extent that the “amount of loss exceeds the limit of liability” of the other primary insurance policy. NUFIC therefore argued that because HRDF had purchased other primary insurance, and the Guaranty Association had assumed responsibility for the insolvent insurer’s policy once the company was declared insolvent, then the Guaranty Association was responsible for providing the primary liability insurance coverage for the defendant’s negligence. In short, NUFIC argued that it provided only excess insurance coverage to HRDF, and that its responsibility under the policy would only be triggered when the Guaranty Association had exhausted its obligation to provide primary coverage. The Guaranty Association argued that the NUFIC policy explicitly defines the coverage provided as “primary” for any covered auto owned by the insured. The policy stated, under the title “other insurance”: “For any covered ‘auto’ you own, this Coverage Form provides primary insurance. For any covered ‘auto’ you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance.” The policy defined HRDF as an additional insured. The Guaranty Association therefore asserted that because HRDF owned the auto involved in the accident, the coverage under the NUFIC policy was primary liability coverage by the policy's own terms and conditions. The Guaranty Association also noted that the language of the NUFIC policy was ambiguous, and should be construed against NUFIC. In an order dated February 15, 2005, the circuit court rejected NUFIC's argument that its policy was nothing more than an excess liability insurance policy that was intended to provide coverage only after primary insurer had fulfilled its obligations. The circuit court concluded that the terms of the NUFIC policy, “. . . identify it as a primary insurer. . . Thus, the plain language of the policy is such that it provides primary insurance to automobiles owned and operated by the insureds, [HRDF and the defendant].” In finding for the Guaranty Association, the Supreme Court held: “When an insurance company (a) issues a primary liability insurance policy; and (b) has contracted for and received a premium for a risk as though it were a primary insurer; but (c) the insurance company has become a secondary insurer by operation of an ‘other insurance’ clause in the policy and the existence of another primary insurance carrier, then if that other insurance carrier is declared insolvent, the insurance company is responsible for coverage of the loss as though it were the sole primary liability insurer.” State ex rel. Erie Insurance Property & Casualty Co. v. Mazzone, et al., 648 S.E.2d 31 (June 7, 2007) In this case, the Supreme Court denied a writ of prohibition sought by insurer in a third- party bad faith action to prevent enforcement of an order requiring disclosure of relevant reserves information to the plaintiff below. In short, the issue was whether case reserves information is privileged from disclosure. In the following enumerated syllabus points, the Court held as follows:
  • 50. 50 “(4) When individual case reserves information is set by an attorney or by a non-lawyer representative with the primary intent of preparing for litigation, then the individual case reserves information is subject to protection from discovery as opinion work product pursuant to Rule 26(b)(3) of the West Virginia Rules of Civil Procedure. (5) For the purposes of Rule 26(b)(3) of the West Virginia Rules of Civil Procedure, aggregate reserves documents compiled for specific litigation either by a lawyer or by a non-lawyer representative are opinion work product and merit greater protection from discovery. However, aggregate reserves documents not developed primarily in anticipation of specific litigation but produced for general business purposes are not protected by the work product rule. (6) Reserves documents determined to be opinion work product are generally protected from disclosure under the provisions of Rule 26(b)(3) of the West Virginia Rules of Civil Procedure unless the party seeking discovery demonstrates compelling need for the materials, which shall include proof that the opinion materials qualify for a recognized exclusion from application of the work product doctrine.” With regard to the disclosures at issue, the Court held that there was no basis in the limited record to conclude that the reserves were set for reasons other than the ordinary course of business, and that Erie did not prove that the principal reason for setting the reserves was anticipation of litigation. Strum, et al. v. Swanson, 653 S.E.2d 667 (Oct. 26, 2007) In this case, an insured, as personal representative of automobile accident victim's estate, brought action against personal automobile insurer to recover underinsured motorist (UIM) benefits for wrongful death of victim even though victim was not an insured. In adopting the majority view of other jurisdictions, the Court held that the West Virginia wrongful death statute does not support a cause of action seeking benefits through a claimant's personal UIM insurance policy, where that claimant is acting in his or her legal capacity as a personal representative of an estate and the decedent was not insured under the UIM policy at issue. Keefer v. Farrell, 655 S.E.2d 94 (Nov. 8, 2007) The operator of a farm tractor was injured by an uninsured motorists while attempting to load the farm tractor on a tractor trailer for transport. Operator brought an action against tractor trailer owner and its insurer seeking to recovery against uninsured motorists benefits provided in the policy of insurance covering the tractor trailer. The issue before the Court was whether the act of loading, or attempting to load, the farm tractor constituted “use” of the tractor trailer for the purpose of coverage. The Court held: “Tractor operator, injured in collision with uninsured motorist on roadway while attempting to load tractor onto trailer, was ‘occupying’ the insured truck to which the trailer was attached, thus supporting award of uninsured motorist (UM) benefits to tractor operator under truck owner's business auto policy; although tractor was yet thirty feet away from truck and trailer when accident occurred, operator was in the process of ‘getting on’ the truck, as the sole reason operator was driving the tractor, as well as the sole reason for the truck being in the driveway, attached to a trailer, with the trailer's ramps down, was to load the tractor onto the truck.”
  • 51. 51 Nationwide Mutual Insurance Company v. Kaufman, 658 S.E.2d 728 (Jan. 25, 2008) This case involves a motor vehicle accident and a companion claim for a non-bad faith case of action against Nationwide. During written discovery, the Plaintiff requested documents and claim file materials. Counsel for Nationwide lodged a blanket objection to these materials and asserted the attorney-client and/or work/product privilege. Furthermore, counsel for Nationwide filed a motion in Circuit Court to stay the discovery in this matter because of the pending non-bad faith third party action. The court held, “[t]hat the general procedure involved with the discovery of allegedly privileged documents is as follows: (1) the party seeking the documents must do so in accordance with the reasonable particularity requirement of Rule 34(b) of the West Virginia Rules of Civil Procedure; (2) if the responding party asserts a privilege to any of the specific documents requested, the responding party shall file a privilege log that identifies the document for which a privilege is claimed by name, date, custodian, source and the basis for the claim of privilege; (3) the privilege log should be provided to the requesting party and the trial court; and (4) if the party seeking documents for which a privilege is claimed files a motion to compel, or the responding party files a motion for a protective order, the trial court must hold an in camera proceeding and make an independent determination of the status of each communication the responding party seeks to shield from discovery.” With respect to Nationwide’s motion for a protective order and to stay discovery, the Court held that the following factors will be considered before staying the proceedings in a pending non-bad faith third party action, “(1) the number of parties in the case; (2) the complexity of the case; (3) whether undue prejudice would result to the plaintiff if discovery is stayed; (4) whether a single jury will ultimately hear both cases; (5) whether partial discovery is feasible on the claim against the insurer, and (6) the burden placed on the trial court by imposing a stay on discovery. The party seeking to stay discovery has the burden of proof on the issue.” SER Nationwide Mutual Insurance Co. v. Judge M. Karl, 664 S.E.2d 667 (Feb. 14, 2008). After Plaintiff settled for policy limit with liability carrier, Nationwide, as UIM carrier, appeared and defended in name of tortfeasor. Counsel appearing in the name of the tortfeasor and representing Nationwide was employed by Nationwide as in-house counsel and worked for Nationwide Trial Division that operated as Law Offices of W. Stephen Flesher. While in-house counsel operated as Law Offices of W. Stephen Flesher, the office answered the phones Nationwide Trial Division and Nationwide Trial Division appeared on all letterhead, business cards and other documents. Just prior to trial, the defendant objected to a question contained in the Plaintiff’s proposed voir dire that would have caused the Court to ask the jury panel if they were familiar with “Nationwide Trial Division.” The defendant objected because it would likely have the effect of putting the jury on notice that insurance was available to pay any judgment rendered.
  • 52. 52 When the Court refused to strike the proposed questions, the defense moved the Court to continue the trial so that the matter could be taken up to the West Virginia Supreme Court of Appeals. The plaintiff, not wanting to delay the trial attempted to withdraw the question. However, the Court refused to allow the question to be withdrawn and continued the trial. The West Virginia Supreme Court of Appeals held that, during voir dire, when in-house counsel is utilized by the defense, it is proper to inquire of the jury panel if they are familiar with anyone associated with the defense firm. If the defense happens to be provided by a “captive firm” operated by an insurance company and holding itself out to the public as a division of the insurance company, then it is proper to use the name of the insurance company. The Court held that this would not violate the rules of evidence because it was not being done to suggest that insurance was available but rather for the purpose of determining if any potential jury was biased in favor or against defense counsel. While the issue of the use of captive firms was not directly addressed by the Court, in a footnote Justice Benjamin made it clear that he had serious questions about the ability of in-house counsel to remain loyal to their client when they were directly employed by the insurer. Horkulic v. Galloway, 665 S.E.2d 284 (Feb. 19, 2008) This matter was initially presented as a legal malpractice action filed by Jeffrey Horkulic, Rebecca Horkulic, and Jeffrey Horkulic as natural parent and legal guardian of Stephanie Horkulic and Benjamin Horkulic (“Appellees”) against their former attorney, Mr. William O. Galloway and Galloway Law Offices. The Appellees amended their complaint to assert a third-party bad faith claim against TIG, Cambridge Professional Liability Services, and Acordia of West Virginia. After the bad faith claim was stayed and bifurcated, the Circuit Court of Hancock County granted Appellees’ motion to compel enforcement of settlement agreement, and awarded former clients attorney fees incurred in connection with the motion. Insurer appealed and petitioned for a writ of prohibition. After consolidating the appeal and the writ petition, the Supreme Court of Appeals held that: (1) findings in court order granting motion to compel enforcement of judgment, which included attorney/insured's confession of judgment in excess of policy limits, would not be binding on insurer in subsequent third-party bad faith action against insurer; (2) a consent or confessed judgment against an insured party was not binding on that party's insurer in subsequent litigation when the insurer was not a party to the proceeding; (3) attorney/insured's waiver of attorney-client privilege in settlement agreement did not affect insurer's rights to assert any attorney-client privilege belonging to insurer; and (4) insurer could not be ordered to pay former clients' attorney fees without a full evidentiary hearing and the opportunity to participate fully. Fauble v. Nationwide Mutual Fire Insurance Company, 664 S.E.2d 706 (June 16, 2008) The Faubles owned a home that was covered by a policy of homeowners’ insurance issued by Nationwide. A third-party caused damage to the Faubles home while performing construction blasting on nearby property. The Faubles made a claim to Nationwide and the claim was paid in the amount of $49,843.43. The Faubles then made a claim against the third-party and reached a pre-suit settlement of $80,000.00.
  • 53. 53 After learning of the settlement agreement, Nationwide demand that it be repaid dollar for dollar out of the settlement proceeds in the amount of $49,843.43. The Faubles, relying upon a prior opinion of the West Virginia Supreme Court of Appeals asserted that Nationwide must take a one-third reduction to pay its pro-rata share of attorney’s fees from the total settlement of $80,000.00. When Nationwide refused to accept the reduction, the Faubles were forced to file suit against the third-party to preserve their claim. Nationwide intervened in the suit and a declaratory judgment action was commenced regarding the amount of the total settlement to be subrogated back to Nationwide. The circuit court ultimately found as a matter of law that Nationwide’s subrogation interest must be reduced to reflect its pro-rata share of attorney’s fees. Nationwide’s petition for appeal was denied. After Nationwide’s petition for appeal was denied, the Faubles then filed a motion with the circuit court seeking to recover attorney’s fees from Nationwide related to bringing the action after a settlement agreement had been reached but could not be concluded because of Nationwide’s refusal to take a reduce payment. The circuit court denied the Faubles motion. On appeal, the West Virginia Supreme Court of Appeals found that it was well settled law that the insurer must take a reduced payment equal to its pro-rata share of attorney’s fees. By Nationwide’s refusal to accept this reduction, the Faubles were forced to commence litigation, during which they substantially prevailed. The Court further found that because the Faubles’ entitlement to reduce Nationwides’s subrogation amount was a necessary element of the subrogation clause contract, the prinicpals of Hayseeds applied and the Faubles were entitled to recover attorney’s fees from Nationwide. Savarese v. Allstate Insurance Company, 672 S.E.2d 255 (Sept. 26, 2008) Plaintiff, an Allstate insured was an Ohio resident who was injured in an automobile accident occurring Ohio with another Ohio resident. The plaintiff retained a West Virginia attorney (David Jividen of Wheeling, West Virginia), who filed the personal injury action in Ohio. At the time of the accident, the plaintiff had an insurance policy with the defendant Allstate which included $25,000.00 in medical payments coverage. Both parties to the policy contracted for the policy in Ohio and it was expressly subject to Ohio law. The plaintiff, through his West Virginia attorney set about trying to collect on his medical payments coverage. The claims were handled by co–defendant adjusters located in Ohio and Alabama. During the course of the handling of the medical payments claim, requests for information and notification of benefits and coverage were directed to the plaintiff’s West Virginia attorney pursuant to the attorney’s notice of representation. Three years after the subject accident, the plaintiff filed suit in Ohio County, West Virginia against Allstate, an Illinois corporation with a principal place of business in Illinois, and against the individual adjusters for first party bad faith and breach of contract. After a removal to federal court and a remand to Ohio County, Allstate moved to dismiss on the basis of a lack of venue and subject matter jurisdiction. The plaintiff responded asserting that Allstate’s communications with his lawyer in West Virginia served as a basis for both venue and subject matter jurisdiction. The Circuit Court of Ohio County agreed and dismissed the case. The plaintiff appealed to the West Virginia Supreme Court of Appeals.
  • 54. 54 The Supreme Court of Appeals found that the West Virginia venue statute, West Virginia Code § 56-1-1 clearly controlled: “Effective for actions filed after the effective date of this section, a nonresident of the state may not bring an action in a court of this state unless all or a substantial part of the acts or omissions giving rise to the claim asserted occurred in this state.” The Supreme Court of Appeals found that Allstate and the individual defendants were required to direct communications to plaintiff’s attorney in West Virginia solely due to his decision to retain a West Virginia attorney. But for this decision, the Court reasoned the such an obligation would not exist. Recognizing that the attorney is an agent of the client, the Court further reasoned where the agent’s acts are not at issue, the mere presence of the agent in a jurisdiction should not be the “sole foundation to support venue in that jurisdiction.” The Court also noted: “Indeed, a fundamental tenet of agency law is that the principal is liable for the acts of the agent. Where the acts of the agent are not at issue in determining liability, the location of the agent is not relevant to a venue determination.” As the defendant pointed out, any contractual obligation to the plaintiff belonged to the plaintiff in Ohio, not to his attorney in West Virginia. American Modern Home Ins. Co. v. Corra, 671 S.E.2d 802 (Dec. 15, 2008) American Modern brought a declaratory judgment action seeking to have the Court declare that a homeowner knowing allowing underage adults to drink in his home did not constitute an “occurrence” under the policy that would trigger coverage. Mr. Corra had been sued after one of the minors was killed and several injured as a result of automobile collision. The Court held that: “Absent policy language to the contrary, a homeowner’s insurance policy defining ‘occurrence’ as ‘an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in . . . . bodily injury or property damage’ does not provide coverage where the injury or damage is allegedly caused by the homeowner’s conduct in knowingly permitting an underage adult to consume alcoholic beverages on the homeowner’s property.” State of West Virginia ex rel. Nationwide Mutual Insurance Co. v. The Honorable John Lewis Marks, Jr., 676 S.E.2d 156 (Mar. 27, 2009) This case came before the Supreme Court of Appeals of West Virginia on petition for writ of prohibition filed by Nationwide to prohibit the circuit court from ordering the production of confidential settlement agreements. The insured, Mr. George, was injured in collision and brought a first-party bad faith claims against Nationwide pursuant to West Virginia Code § 33-6-31(b), alleging a failure to make a reasonable offer of underinsured motorist (UIM) coverage.
  • 55. 55 In discovery requests, the Georges asked whether Nationwide had paid any money, settled or resolved any first party un-fair insurance claims practices; bad faith settlement conduct, or unfair trade practices violations asserted by insured or third party. The interrogatories then requested the details of the settlement, verdicts, judgments, and resolutions, and to produce a copy of the same in writing, including any “confidential settlement” or “resolution” for each dispute. Nationwide objected on basis that the requests were overly broad, oppressive, and burdensome, as well as that the documents are confidential. Nationwide responded, but with a disclaimer stating that the list provided is an incomplete, partial list of cases created for litigation purposes only. Thereafter, the Georges filed their Motion to Compel Discovery, and the circuit court granted the Motion ordering Nationwide to completely respond and produce documents. However, the court also issued a protective order concerning the confidential settlement agreements. In response, Nationwide sought a writ of prohibition from the Supreme Court of Appeals arguing that the production of the documents is improper due to their confidential nature. Because Nationwide only plead one narrow issue, the Court would not address the argument that the request for production of settlement agreements entered into by insurer was overly burdensome, the insurer failed to brief the issue of the discovery requests being overly burdensome. In a footnote, the Court emphasized that it was troubled by Nationwide's failure to accurately reflect the lower court's rulings in its petition for writ of prohibition. The Court found that Nationwide failed to accurately reflect the mandate of the circuit court's order: it didn’t order all privileged documents to be produced. In its analysis, the Court analogized the case to SER Nationwide Mut. Ins. Co. v. Kaufman, 222 W.Va. 37, 658 S.E.2d 728 (2008) and reiterated the standard for issuing a writ of prohibition and reviewed the general procedure involved with the discovery of allegedly privileged documents. The Court found that the rule to show cause was improvidently granted, and denied Nationwide’s petition for writ of prohibition. Boniey v. Kuchinski, 677 S.E.2d 922, (May 14, 2009) Plaintiff was injured while riding as a passenger on an ATV. At the time of the subject injury, the ATV was being operated off-road. The Plaintiff initially made a claim against the liability policy held by defendant. When liability carrier denied the claim because the ATV was not covered, the Plaintiff made a claim for uninsured benefits against two State Farm policies under which she was insured. The Court held that: “As noted above, uninsured motorist coverage is intended to provide the equivalent of motor vehicle liability coverage under our financial responsibility law. In other words, unisured motorist coverage is intended to place a motorists who is injured by the negligence of an uninsured motorist in the position he or she would have been in if the negligent motorist had complied with the financial responsibility law and procured the required amount of liability insurance.” Because no liability coverage is required for off-road vehicles, such as ATV’s, no uninsured coverage is mandated to provide the equivalent of such coverage. As such, the Plaintiff’s attempt to collect against her uninsured coverage failed.
  • 56. 56 Blankenship v. City of Charleston, 2009 WL 1740184 (June 18, 2009) This case involves a declaratory judgment action within a personal injury action pursuant the West Virginia Supreme Court of Appeals’ ruling in Christian v. Sizemore, 185 W.Va. 409, 407 S.E.2d 715 (1991). Plaintiff Blankenship slipped on spilled beer adjacent to a concession stand at the Charleston Civic Center while attending a concert and was injured. He sued the City of Charleston and through discovery learned that the concession stand was operated by Lakewood Swim Club, a private pool club. Charleston sued Lakewood in a third party action and Lakewood presented its claim to Evanston Insurance Company, its commercial general liability insurer. Determining that the claim was outside the policy’s provisions, Evanston declined to defend or indemnify Lakewood, and Lakewood filed a fourth party complaint against Evanston seeking a declaration that coverage was available for a defense and indemnification. At the circuit court, Evanston argued that there was no coverage for the plaintiff’s claims and therefore no duty to defend based on the clear and unambiguous policy language. The circuit agreed and granted Evanston summary judgment on the declaratory judgment action. Lakewood appealed to the West Virginia Supreme Court of Appeals. In affirming the circuit court, the Supreme Court of Appeals examined the language in an endorsement which confined coverage for those claims arising out of the ownership of the premises and/or the operation of the project shown on the endorsement’s schedule. In this case, both the premises and project was the private pool. The Court applied the rule that where policy provisions are clear and ambiguous, they are not subject to judicial construction, but that the language should be given its plain, ordinary meaning. Syl. Pt.1 Christopher v. U.S. Life Ins. Co., 145 W.Va. 707, 116 S.E.2d 864 (1960); Syl.Pt. 1 Solvia v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986), overruled on other grounds by Nationwide Mut. Ins. Co. V. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987). Because the policy endorsement clearly contemplated that the policy would cover claims only arising from the ownership or use of the pool, fund raising events such as operating a beer concession at the Civic Center were clearly outside the policy’s coverage provisions. Accordingly, the Court reasoned, Evanston owed Lakewood neither a defense nor indemnity. State ex rel. State Farm Mut. Auto. Ins. Co. v. Bedell, 2010 W. Va. Lexis 79 (June 16, 2010) This case involved a Protective Order entered by the circuit court which required the insurer to return or destroy the plaintiff’s medical records upon the conclusion of the civil action. State Farm objected to the Protective Order, arguing that legislative rules promulgated by the West Virginia Insurance Commissioner prohibited this conduct and that if it were to adhere to the court’s Protective Order, then the insurer would be in violation of the legislative rules. The Supreme Court held that a regulation proposed by an agency and approved by Legislature is a legislative rule and as such has the force and effect of law. A valid legislative rule is entitled to substantial deference and can be ignored only if the agency has exceeded its constitutional or statutory authority or is arbitrary or capricious. Thus, a court may not issue a protective order directing an insurance company to return or destroy a claimant’s medical records prior to the time period set forth by the Insurance Commissioner in §§ 114-15-4.2(b) and 114-15-4.4(a) of the Code of State Rules.
  • 57. 57 These rules require an insurer to maintain records for the current calendar year plus five calendar years, from the closing date of the period of review for the most recent examination by the commissioner, or a period otherwise specified by statute as the examination cycle for the insurer. In addition, the Court addressed the plaintiff’s challenge that State Farm electronically stored the plaintiff’s medical records and that it should be prohibited from doing such, believing that State Farm would disseminate such private information to third parties such as the National Insurance Crime Bureau (NICB), thereby violating her rights to privacy and confidentiality. The Court found that the Protective Order was issued without any basis, as there were no facts to support plaintiff’s allegations. The Court did, however, leave open the possibility that the dissemination of such private information may be prohibited. Michael, et al. v. Appalachian Heating, LLC and State Auto Ins. Co., 2010 W. Va. Lexis 69 (June 11, 2010) The plaintiffs, Doris Michael, Kitrena Michael and Todd Battle, are African Americans who resided together in a public housing apartment that caught fire, allegedly due to the negligence of Appalachian Heating, causing a total loss of the plaintiffs’ personal property. State Auto insured Appalachian Heating. Following the fire, State Auto settled the plaintiffs’ claims but paid only $2,500 in general damages to Doris Michael and Todd Battle and nothing to Kitrena Michael. The plaintiffs filed suit, alleging that State Auto had violated the West Virginia Human Rights Act in settling their claims due to their race and because they resided in public housing. The Court held that the West Virginia Human Rights Act, West Virginia Code § 5 -11-9(7)(A), prohibits unlawful discrimination by a tortfeasor’s insurer in the settlement of a property damage claim when the discrimination is based upon race, religion, color, national origin, ancestry, sex, age, blindness, disability or familial status. In doing so, the Court rejected State Auto’s argument that the Unfair Trade Practices Act precludes a third-party action against the insurer such that the plaintiff’s sole remedy is to file an administrative complaint with the Insurance Commissioner. Putnam Bancshares, Inc. v. Progressive Classic Ins. Co., 692 S.E.2d 658 (2010) This case involves a denial of coverage by the insurer after the insured failed to renew the insurance coverage. The issue before the court was whether the insurer was required to provide notice to the insured and the loss payee of cancellation of the policy. In August 2006, Terry Daniel purchased a vehicle from T.C.’s Used Cars and was financed by Putnam County Bank. The loan was contingent upon Daniel obtaining and maintaining an insurance policy sufficient to cover any physical damage to the vehicle and that the policy list Putnam County Bank as a loss payee. On August 23, 2006, Progressive issued an insurance policy to Daniel with Putnam County Bank as a loss payee. The policy was effective for a 6-month period through February 23, 2007. On January 29, 2007, Progressive offered to renew Daniel’s policy by mailing him a renewal invoice which also included a Declarations Page and Proof of Insurance cards for the renewal period. The declarations page noted that it was effective only if Daniel paid the renewal premium. The renewal invoice also expressly noted that the renewal premium was due by February 23, 2007.
  • 58. 58 On February 9, 2007, Progressive mailed a renewal reminder to Daniel, advising him that his policy would expire on February 23 if payment was not received. Daniel did not pay the renewal premium by the due date. On February 27, Daniel was involved in an accident, resulting in the vehicle being declared a total loss. On February 28, Daniel paid the minimum of the premium amount required to renew his policy with Progressive. However, the receipt expressly informed Daniel that the policy would renew with a lapse in coverage, and the renewal effective date would be one day after payment is made. Subsequently, Putnam County Bank made a claim with Progressive regarding the total loss, which Progressive denied, noting that the claim had expired four days prior to the loss. The Court held that where an insurance company has extended an offer to renew an automobile liability or physical damage insurance policy, and the insured does not accept the offer and does not pay the premium due for renewal, thus allowing the underlying policy to expire, there is no duty imposed upon the insurance company to provide a notice to the insured that the policy has expired. Further, the law does not impose a duty upon the insurance company to provide notice to a loss payee that the insured did not renew the policy or that the insurance policy expired. Finally, the Court confirmed that even if the insured makes payment after the policy has expired, thus reinstating the same, there is nonetheless a lapse in coverage between the date of the expiration of the policy and the reinstatement date, and a reinstated policy begins a new coverage period. State Farm Mut. Auto Ins. Co. v. Rutherford, 229 W.Va. 73, 726 S.E.2d 41 (2011). Ms. Rutherford was injured in a car accident and filed suit against Olive McClanahan and the Kanawha County Commission and provided notice of suit to her underinsured motorist carrier State Farm. Following these actions, Ms. Rutherford entered into settlement agreements with Ms. McClanahan for $100,000.00 and the Kanawha County Commission for $30,000.00. Ms. Rutherford then proceeded against State Farm who elected to defend the action in the name of Ms. McClanahan and challenged liability and damages at trial. The jury returned a verdict in favor of Ms. Rutherford for $175,000.00 with $170,000.00 in special damages. State Farm received a pro tanto offset of $130,000.00 and a dispute arose regarding prejudgment interest. The circuit court order prejudgment interest as follows: This Court finds that as a matter of law the figure used to calculate the Plaintiff's prejudgment interest for the period of July 13, 2002 through March 9, 2004 is $ 170,000. This Court further finds that for the period of March 10, 2004, the date upon which plaintiff received $ 100,000 from Defendant Olive McClanahan's liability carrier, to March 16, 2008, the figure used to determine the plaintiff's prejudgment interest is $ 70,000. This Court further finds that for the period from March 17, 2008, the date upon which the Plaintiff received $ 30,000 from the Defendant, Kanawha [6] County Commission, through September 29, 2008, the date of the jury verdict, the figure used to determine plaintiff's prejudgment interest is $ 40,000. Therefore, the Plaintiff, Sheila Rutherford, is entitled to prejudgment interest in the amount of $ 58,517.81.
  • 59. 59 On appeal the West Virginia Supreme Court of Appeals considered whether the circuit court properly awarded prejudgment interest. The Court ruled the circuit court erred in awarding prejudgment and should have calculated prejudgment interest only on the special damages portion of $45,000.00 judgment against State Farm and not the special damages portion of the entire verdict. The Court further noted that Ms. Rutherford willingly entered into the $130,000.00 settlements and that prejudgment interest was included in the settlements or was waived by Ms. Rutherford by agreeing to the settlements. The Court next considered whether prejudgment interest was properly calculated from the date of accident rather than the date the cause of action accrued against State Farm as the underinsurance carrier. The Court held the circuit court correctly calculated prejudgment interest against State Farm from the date of the car accident. State Farm also disputed the calculation of prejudgment interest by 10% rather than the language contained in the 2006 version of West Virginia Code § 56-6-31. The Court held the 1981 version of the statute applied and interest was properly calculated at 10%. Casaccio v. Curtiss, 228 W.Va. 156, 718 S.E.2d 506 (2011). Following a vehicle accident the executor of the decedents’ estates filed a wrongful death action against John Tanner and Hartley Trucking Company, which was bankrupt but insurance coverage for the accident was available through a policy issued to Hartley Trucking by Converium. On March 2, 2006, the circuit court ordered the parties to complete mediation in the case by November 17, 2006. During the first mediation, Ms. Jo Knapp appeared as the designated representative for Converium. Prior to the mediation, Converium was purchased National Indemnity through a “Stock Purchase Agreement”. This Agreement contained a clause limiting Converium’s settlement authority to amounts less than $500,000.00. No representative of National Indemnity appeared at the mediation. Despite the limits of the agreement, Ms. Knapp made an unqualified offer of $700,000.00 to settle the case, which was rejected. Ms. Knapp then recommended and agreed to seek approval for a settlement of $900,000.00 which the executor accepted. Ms. Knapp then revealed the settlement could not be finalized without the approval of National Indemnity who subsequently refused to agree to the settlement offer. The circuit court ordered an additional mediation on November 27, 2006, and instructed the mediator to inform the parties that certain individuals were to attend, including a representative of National Indemnity. Mr. Casaccio was designated as National Indemnity’s representative but did not appear, claiming he missed his connecting flight. Mr. Casaccio participated by telephone during the mediation. Another mediation was scheduled for November 28, 2006, which Mr. Casaccio attended. The parties settled the case for $850,000.00 during this mediation. The circuit court then held a summary proceeding and ratified the settlement and proposed distribution of settlement proceeds. During the same hearing the circuit court sua sponte informed the parties that it was setting for hearing the issue of whether the conduct of Mr. Casaccio or National Indemnity warranted sanctions under West Virginia Trial Court Rule 25.10 or the inherent powers of the circuit court. The circuit court entered an order granting the plaintiff $50,000.00 as the difference between the first settlement and the subsequent settlement; $25,000.00 as compensation for injuries caused by Mr. Masaccio’s and National Indemnity’s conduct; $150,000.00 to punish Mr. Casaccio and National Indemnity; and attorney fee’s expended by the plaintiff from the first mediation through the date of the final order imposing sanctions.
  • 60. 60 Mr. Casaccio and National Indemnity appealed asserting the circuit court erred in imposing sanctions under West Virginia Trial Court Rule 25.10 to a representative of an insurance company who fails to attend mediation and whether there was sanctionable conduct in this case. Under Trial Court Rule 25.10, the circuit court may order the following individuals: if furnished reasonable notice, are required to appear at the mediation session: (1) each party or the party's representative having full decision-making discretion to examine and resolve issues; (2) each party's counsel of record; and (3) a representative of the insurance carrier for any insured party, which representative has full decision-making discretion to examine and resolve issues and make decisions. Any party or representative may be excused by the court or by agreement of the parties and the mediator. If a party or its representative, counsel, or insurance carrier fails to appear at the mediation session without good cause or appears without decision- making discretion, the court sua sponte or upon motion may impose sanctions, including an award of reasonable mediator and attorney fees and other costs, against the responsible party. The Supreme Court of Appeals held that the insurance carrier for an insured party is considered a party to court-ordered mediation, and, thus, may be sanctioned by a trial court for its unauthorized failure to participate in mediation through the presence of a representative who has full decision-making discretion to examine and resolve issues and make decisions in connection with the mediation. The Court also determined that there was no sanctionable conduct by Mr. Casaccio or National Indemnity in failing to attend the November 27, 2006, mediation. Loudin v. Nat’l Liab. & Fire Ins. Co., 228 W.Va. 34, 716 S.E.2d 696 (2011). Thomas Loudin was performing maintenance on its 1993 International truck with the assistance of his brother, William Loudin. At some point, William Loudin backed the truck over Thomas Loudin causing severe and permanent injuries. The truck was insured under a policy issued by National Liability & Fire Insurance Company under which Thomas Loudin filed a claim for Auto Medical Payments provision. National paid Thomas Loudin the liability limit of $5,000.00 under the auto Medical Payments provision of the policy. Thomas Loudin also filed a Liability Coverage provision based upon the negligence of William Loudin as a permissive operator of Thomas Loudon’s truck. National investigated and refused to pay Thomas Loudin’s liability claim. The Loudins’ filed a negligence action against William Loudin and included claims against National, Jack Sergent, D.L. Thompson, and Consolidated Claim Services, Inc. The complaint specifically asserted claims against National for common law bad faith, breach of the insurance contract, breach of the implied duty of good faith and fair dealing, violations of the Unfair Trade Practices Act, and the tort of outrage. National eventually settled the claim against William Loudin for $150,000.00. The Loudins then filed an Amended Complaint removing William Loudin as a defendant. National filed a motion for summary judgment asserting it was entitled to summary judgment because the Loudins’ were third-party claimants and were barred as a matter of law from bringing their claims. The circuit court granted summary judgment in favor of National finding that the Loudins’ claims were precluded because they were third-party claimants and there was no material issue of fact on the tort of outrage.
  • 61. 61 The Supreme Court of Appeals considered the Loudins’ appeal regarding the third-party claim and tort of outrage. It held that West Virginia defines a third-party claimant as an individual…asserting a claim against any individual…insured under an insurance policy or insurance contract of an insurer. W. Va. Code R. § 114-14-2.8. The Loudins’ claim was unusual in that Thomas Loudin was the named insured under the policy, thus, the issue involved questions of first and third-party claims. The Court held that “when a named policyholder files a claim with his/her insurer, alleging that a nonnamed insured under the same policy caused him/her injury, the policyholder is a first-party claimant in any subsequent bad faith action against the insurer arising from the handling of the policyholder’s claim.” The Court also held the circuit court erred in granting summary judgment for the tort of outrage which involves questions of fact for the jury. State ex rel. State Farm Mut. Auto. Ins. Co. v. Bedell, 228 W.Va. 252, 719 S.E.2d 722 (2011). In this case, the Plaintiff disputed the use to which State Farm could make of her medical records in the defense of the lawsuit filed by the Plaintiff. The Plaintiff and her husband were involved in a vehicle accident which resulted in the death of Plaintiff’s husband along with the other driver. Plaintiff was also injured in the accident. During discovery State Farm requested Plaintiff and her husband’s medical records. Plaintiff sought a protective order with the court to ensure the confidentiality of the requested medical records. The circuit court granted the protective order and State Farm sought a writ of prohibition asserting the protective order was too restrictive and interfered with its ability to maintain claims files as required by West Virginia insurance law. The Supreme Court of Appeals granted the writ and remanded the case to the circuit court for further proceedings. Prior to the start of trial following this decision the Plaintiff submitted a “Temporary Protective Order Granting Plaintiff Protection for Her Confidential Medical Records and Medical Information.” This Order was signed by the circuit court which restricted State Farm’s ability to use the medical records, imposed time limits on retention, and prohibited from disclosing to third parties without the third party signing a confidentiality agreement. State Farm filed another writ of prohibition to prevent the circuit court from enforcing the second protective order. The Supreme Court of Appeals noted that the first protective order did not include any good cause establishing the need for a protective order and precluding State Farm from electronically storing her medical records. Plaintiff established good cause for issuing the second protective order and the Supreme Court of Appeals affirmed the protective order. State Farm Mut. Auto. Ins. Co. v. Schatken, 737 S.E.2d 229 (2012). Mr. and Mrs. Schatken were injured in a vehicle accident. Under the tortfeaser's Nationwide policy there was a $25,000.00 liability coverage which Nationwide paid out to Plaintiffs for injuries to Mrs. Schatken. Mr. and Mrs. Schatken were insured under a State Farm policy which included $5,000.00 in medical payments coverage and $25,000.00 in underinsured motorists coverage. State Farm consented to the $25,000.00 Nationwide settlement and waived subrogation. The $5,000.00 in medical payments coverage was exhausted in partial payment of Mrs. Schatken’s medical bills. State Farm then informed Mr. and Mrs. Schatken that under the “non-duplication” provision of the policy State Farm reduced their settlement offer by the $25,000.00 settlement and $5,000.00 medical payments coverage already received. The circuit court granted partial summary judgment on the non-duplication provision, denied the motion to strike the Schatken’s declaratory judgment count, and established a new briefing schedule on the reimbursement issue.
  • 62. 62 The circuit court eventually ruled that the non-duplication provision violated the plain language of West Virginia Code § 33-6-31(b) which prohibits the reduction of “sums payable” under underinsured motorist coverage by payments made under the insured’s policy. The Supreme Court of Appeals held a “non-duplication” of benefits provision in an underinsured motorist policy which permits an insurer to reduce an insured’s damages by amounts received under medical payments coverage does not violate the “no sums payable” language of West Virginia Code § 33-6-31(b), insofar as it does not serve to reduce the underinsured motorist coverage availability under the insured’s policy. State ex rel. State Farm Mut. Auto. Ins. Co. v. Marks, 741 S.E.2d 75 (2012). In this appeal, the Supreme Court of Appeals considered whether medical protective orders are valid and enforceable to limit the dissemination and retention of medical records obtained through discovery. The Supreme Court of Appeals previously upheld such protective orders. State Farm and Nationwide asserted that such protective orders precluded them from fulfilling their mandatory reporting obligations imposed by the federal government, the State, and sister states. The Supreme Court of Appeals affirmed the protective orders because each included language allowing for the insurance companies to comply with their statutory and regulatory obligations. The Supreme Court of Appeals also found the provision to “return or destroy” was not burdensome. There was also an argument that the protective orders violated the insurance companies’ right to free speech under the First Amendment of the United States Constitution which the Supreme Court of Appeals also rejected. State ex rel. Mass. Mut. Life Ins. Co. v. Sanders, 228 W.Va. 749, 724 S.E.2d 353 (2012); State ex rel. Mass. Mut. Life Ins. Co. v. Sanders, 737 S.E.2d 61 (2012). In both appeals the Supreme Court of Appeals considered a writ of prohibition filed by Massachusetts Mutual Life Insurance Company to prohibit the circuit court from enforcing two Orders requiring the Chief Executive Officer and Chairman of Massachusetts Mutual to submit to depositions. As a basis for the writ, Massachusetts Mutual asserted the CEO did not have personal or unique knowledge about the case and the order was an abuse of the circuit court’s discretion. The Supreme Court of Appeals considered the determination of whether to allow the deposition of the CEO involves an examination of the apex deposition rule, which provides that before a plaintiff may take the deposition of a high-ranking or “apex” governmental official or corporate officer, the plaintiff must demonstrate that the person possesses superior or unique information relevant to the issues being litigated and that the information cannot be obtained by a less intrusive method. The Supreme Court of Appeals granted the writ for prohibition and held the circuit court could not order the deposition of the CEO. After the Supreme Court of Appeals entered its order the circuit court entered another order compelling the deposition of the CEO for which Massachusetts Mutual filed another writ of prohibition. The Supreme Court of Appeals held the plaintiffs failed to engage in less intrusive discovery methods for the information requested and the circuit court did not properly consider the apex rule in granting the plaintiff’s motion to depose the CEO. The circuit court was directed to enter a protective order prohibiting the deposition of the CEO.
  • 63. 63 New Hampshire Ins. Co. v. RRK, Inc., 736 S.E.2d 52 (2012). Plaintiffs purchased a floating barge and two strings of docks, and obtained a policy of insurance from the insurance company. Prior to agreeing to purchase the insurance policy, the Plaintiffs reviewed the insurance policy and paid the required premium. The Plaintiff’s did not receive the same policy. Insurance Systems eventually realized that the barge was not listed as covered property under the insurance policy and requested the insurance company to add the barge and its contents to the policy. The new policy also failed to include the barge and contents as covered property under the policy but once again the Plaintiffs did not read the policy. The barge eventually sank and Plaintiffs filed a claim with the insurance company for the barge and its contents. The insurance company denied the claim asserting the barge and its contents were not listed in the policy as covered property. Eventually the insurance company engaged in additional investigation and found the barge and contents were covered property but denied coverage under the wear-and-tear exclusion of the policy. The Plaintiff filed suit against the insurance company asserting breach of contract and bad faith and seeking declaratory judgment on coverage. Plaintiff filed a motion for summary judgment asserting the cause of the barge sinking was irrelevant and the insurance company should be strictly liable for the loss without regard to policy exclusions. The circuit court granted the motion for summary judgment and the insurance company appealed while the underlying action was stayed by the circuit court. The Supreme Court of Appeals held that the doctrine of reasonable expectations applied in this case. In a summary judgment motion under this doctrine the court must find that the insured had an objectively reasonable expectation of coverage under the insurance contract. The circuit court did not rule on the issue of whether the wear-and-tear exclusion was placed in such a way to allow the Plaintiff to reasonably expect the existence of the exclusion. The Supreme Court of Appeals held the reasonable expectations doctrine is a question of fact and reversed and remanded the circuit court order on this issue. Plaintiff’s also appealed on the issue of whether the renewal policy was mailed and received by the Plaintiff and upheld the circuit court order on this issue. Am. States Ins. Co. v. Surbaugh, 2013 W. Va. LEXIS 49 (2013). This case arose following the accidental shooting and subsequent death of Gerald Kirchner. Robbie Bragg was in the process of showing a customer how to load a handgun for sale in the store when the shooting occurred. Mr. Kirchner’s mother, Ms. Surbaugh filed a wrongful death action against Mr. Kirchner’s employer, Grimmett Enterprises and Mr. Bragg. Mr. Bragg and Grimmett Enterprises entered into a settlement agreement for $1.5 million with Ms. Surbaugh in return for Mr. Bragg and Grimmett Enterprises assigning all claims they might have against their respective insurers for refusing to provide a defense and coverage. Ms. Surbaugh then filed an amended complaint asserting a declaratory judgment action against Grimmett Enterprises’ insurer, American States. Ms. Surbaugh and American States each filed cross motions for summary judgment. Ms. Surbaugh asserted the employee exclusion was ambiguous, was not conspicuous, and had not been brought to the attention of Mr. Grimmett and American States argued in opposition to this position. The circuit court held that the exclusionary language of the policy was not ambiguous and ruled the issue of whether the exclusion was disclosed to Mr. Grimmett was a question to be resolved by the jury. The case was submitted to a jury which determined that the exclusionary language was not disclosed to Mr. Grimmett and the circuit court entered an order finding the employee exclusion unenforceable. American States appealed.
  • 64. 64 The Supreme Court of Appeals considered whether the circuit court properly whether the jury should consider whether the exclusion was communicated to Mr. Grimmett and whether the circuit court erred in denying American State’s motion for summary judgment. The circuit court had held that a jury was required to determine whether the exclusionary language at issue in the case was brought to the attention of Mr. Grimmett. The Supreme Court of Appeals held there was no necessity to submit the issue to the jury.”[A]s a general rule, the issue of whether an insurer has brought a policy exclusion to the attention of the insured is to be resolved by the trial court.” The circuit court previously held the policy exclusion was not ambiguous, made conspicuous in the policy, and communicated to Mr. Grimmett. In West Virginia the insured has a duty to read the insurance policy and Mr. Grimmett failed to do so. Under this analysis the circuit court erred by not granting summary judgment in favor of American States. XIII. Coverage Principals 1. An insurer’s duty to defend is greater than its duty to indemnify. If part of the claims against an insured fall within the coverage of the applicable liability insurance policy and part do not, the insurer must defend all claims, although it might eventually be required to pay only some. Included in the consideration of whether an insurer has a duty to defend is whether the allegations in the complaint are reasonably susceptible of an interpretation that the claim may be covered by the terms of the insurance policy; there is no requirement that the facts alleged in the complaint specifically and unequivocally make out a claim within the coverage under the insurance policy. Prior to 2013, the West Virginia Supreme Court of Appeals consistently held that poor workmanship is not a covered “occurrence” under the provisions of a commercial general liability policy (“CGL”). Erie Ins. Property and Cas. Co. v. Pioneer Home Improvements, Inc., 206 W.Va. 506, 526 S.E.2d 28 (1999)(A claim for faulty workmanship is not covered by a CGL policy.”). This holding was clarified in Syllabus Point 2, Corder v. William W. Smith Excavating Co., 210 W.Va. 110, 556 S.E.2d 77 (2001), which held: Commercial general liability policies are not designed to cover poor workmanship. Poor workmanship, standing alone, does not constitute an “occurrence” under the standard policy definition of this term as an “accident including continuous or repeated exposure to substantially the same general harmful conditions.” This was further elaborated on in Webster County Solid Waste Authority v. Brackenrich and Assoc., Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005) which found that a CGL does not provide coverage for a product or work performance that fails to meet contractual requirements, the policy is specifically designed to insure the risk of tort liability for physical injury to persons or property sustained by third parties as a result of the product or work performed or damages sustained by others from the completed product or finished work.
  • 65. 65 In Cherrington v. Erie Ins. Property & Casualty, 2013 W.Va. LEXIS 724, 2013 WL 3156003 (June 18, 2013, W.Va.), the Supreme Court of Appeals reconsidered these prior holdings in light of recent developments in state courts around the country supporting “occurrences” for bodily injury and property damage resulting from poor workmanship. In order for a claim to be covered by a CGl policy, it must evidence “bodily injury” or “property damage” that has been caused by an “occurrence.” Id., p. *33. An occurrence is “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. The circumstances giving rise to the claimed damages or injuries must not have been “deliberate, intentional, expected, desired, or foreseen” by the insured. Id., p. *34. In Syllabus Point 6 of Cherrington, the Supreme Court of Appeals held: Defective workmanship causing bodily injury or property damage is an “occurrence” under a policy of general liability insurance. To the extent our prior pronouncements in Syllabus Point 3 of Webster County Solid Waste Authority v. Brackenrich and Assoc., Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005); Syllabus Point 2 of Corder v. William W. Smith Excavating Co., 210 W. Va. 110, 556 S.E.2d 77 (2001); Syllabus Point 2 of Erie Ins. Property and Casualty Co. v. Pioneer Home Improvement, Inc., 206 W.Va. 506, 526 S.E.2d 28 (1999); and Syllabus Point 2 of McGann v. Hobbs Lumber Co., 150 W. Va. 364, 145 S.E.2d 476 (1965), and their progeny are inconsistent with this opinion, they are expressly overruled. 2. Where provisions of an insurance policy contract are clear and unambiguous, they are not subject to judicial construction or interpretation, and full effect will be given to the plain meaning intended. Ambiguities in an insurance policy are construed against the insurer. If language in an insurance policy is ambiguous, then the doctrine of “reasonable expectations” applies, which holds that objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of policy provisions would have negated those expectations. 3. Exclusionary language contained in an insurance policy is strictly construed against an insurer in order that the purpose of providing indemnity not be defeated. When an insurance company seeks to avoid liability through the operation of an exclusion, the insurance company has the burden of proving the exclusion applies to the facts in the case. When an insurance policy exclusion applies, a liability insurer must look beyond the bare allegations contained in the third party's pleadings and conduct a reasonable inquiry into the facts in order to ascertain whether the claims asserted may come within the scope of the coverage.
  • 66. 66 4. An insurer can only deny coverage under an “intentional acts” exclusion if the policyholder (1) committed an intentional act; and (2) expected or intended the specific resulting damage. When an intentional acts exclusion uses language to the effect that insurance coverage is voided when the loss was "expected or intended by the insured," courts must employ a subjective rather than objective standard for determining the policyholder's intent. 5. An underinsured motorist carrier occupies the position of an excess or additional insurer in regard to the tortfeasor's liability carrier, which is deemed to have primary coverage. Consequently, the tortfeasor's liability carrier, having primary coverage, should ordinarily control litigation on behalf of tortfeasor insured. However, the primary insurance carrier has a duty to act in good faith with respect to the excess or additional insurance carrier when defending claim on behalf of a primary insurance carrier's insured. If an excess carrier can demonstrate that the primary insurance carrier is defending claim in bad faith manner, the underinsured motorist carrier may petition the court to allow it to assume primary control of defense. XIV. Handling Indemnity Issues There are two basic types of indemnity – express and implied. Express indemnity arises when one party is contractually obligated to indemnify another. Implied indemnity arises when one party, for equitable reasons, is required to indemnify another. Today, more than ever, parties in litigation look to each other for reimbursement of defense costs and payment of judgments/settlements. In order for a party to secure its right to indemnity, it is imperative to be informed and organized, and to stay diligent and aggressive. Conversely, when defending against a demand for indemnity, a party must be prepared to invest time and energy to cover all bases and defend against all theories. Again, being informed and organized is imperative. Speaking in general terms, indemnity language is construed to either have a fault or no- fault requirement. Under a fault scenario, the indemnitor’s obligations are triggered by a finding of fault on the part of the indemnitor. Under a no-fault scenario, the indemnitor’s obligations are triggered irrespective of whether the indemnitor is at fault. As illustrated below, the scope of the indemnitor’s obligations and the precise language that triggers them can take on a variety of looks. A. Implied Indemnity Parties will often assert cross-claims against each other, asserting therein a right to implied indemnity. The primary consideration that must be made in analyzing a claim for implied indemnity is whether the party asserting the right is without fault. Under West Virginia law, a party who bears fault may not seek a right of implied indemnity from another: “The requisite elements of an implied indemnity claim in West Virginia are a showing that: (1) an injury was sustained by a third party; (2) for which a putative indemnitee has become subject to liability because of a positive duty created by statute or common law, but whose independent actions did not contribute to the injury; and (3) for which a putative indemnitor should bear fault for causing because of the relationship the indemnitor and indemnitee share.” Syl. Pt. 4, Harvest Capital v. W. Va. Dep't of Energy, 211 W. Va. 34, 560 S.E.2d 509 (2002).
  • 67. 67 In short, implied indemnity is a difficult claim to prosecute, and before succumbing to a demand for implied indemnity, a brief investigation should be conducted regarding the scope of liability, if any, attributable to the party making the demand. B. Rules for Interpreting Contractual Indemnity Language When handling a claim of express indemnity, it is important to determine whether the intent of the parties is clearly expressed in the language of the subject contract. If it is not, be prepared to go to battle. In West Virginia, general contract principles apply to claims for express indemnity. A few of the more important principles to recognize are as follows:  Under West Virginia law, contracts for indemnity against one’s own negligence do not contravene public policy and are valid. Syl. pt. 3, Riggle v. Allied Chemical Corp., 378 S.E.2d 282 (W.Va. 1989).  Under West Virginia law, the rules governing the requisites and validity of contracts generally apply to contracts of indemnity and in construing a contract of indemnity and determining the rights and liabilities of the parties thereunder, the primary purpose is to ascertain and give effect to the intention of the parties. Dawson v. Norfolk & Western Ry. Co., 475 S.E.2d 10, 17 (W.Va. 1996).  A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent. Syl. Pt. 1, Cotiga Development Co. v. United Fuel Gas Co., 128 S.E.2d 626 (W.Va. 1962).  The term “ambiguity” is defined as language reasonably susceptible of two different meanings or language of such doubtful meaning that reasonable minds might be uncertain or disagree as to its meaning. Syl. Pt. 4, Estate of Tawney v. Columbia Natural Res., LLC, 633 S.E.2d 22 (W.Va. 2006).  The mere fact that parties do not agree to the construction of a contract does not render it ambiguous. The question as to whether a contract is ambiguous is a question of law to be determined by the court. Syl. Pt. 1, Berkeley County Pub. Serv. Dist. v. Vitro Corp. of America, 162 S.E.2d 189 (W.Va. 1968).  Uncertainties in an intricate and involved contract should be resolved against the party who prepared it. Jochum v. Waste Mgmt. of W. Va., Inc., 680 S.E.2d 59, 64 (W.Va. 2009) (quoting Syl. Pt. 1, Charlton v. Chevrolet Motor Co., 174 S.E. 570 (W.Va. 1934)). C. Fault-Based Contractual Indemnity  Contractual indemnity language can take on a variety of appearances. In each and every case, the indemnity language must be closely scrutinized and all possible arguments for and against indemnity should be mapped out. Some common variations of contractual indemnity language follow, with explanations of possible interpretations.
  • 68. 68 Example 1 - Party A shall defend, indemnify, and hold harmless Party B, its officers, officials, employees, and volunteers from and against all claims, damages, losses, and expenses, including attorney fees arising out of the negligent acts or omissions of Party A, any sub-contractor, anyone directly or indirectly employed by any of them, or anyone for whose acts any of them may be liable. The above language presents two separate issues. First, it could be logically argued that Party A must be found to have been negligent before its defense and indemnity obligations are triggered. Second, the language would appear to limit the scope of Party A’s indemnity obligation to the percentage of liability attributable directly to its acts or omissions, and not liability attributable to Party B or any other party. Example 2 - Party A shall defend, indemnify, and hold harmless Party B, its officers, officials, employees, and volunteers from and against all claims, damages, losses, and expenses, including attorney fees arising out of the performance of the work described herein, caused in whole or in part by any negligent act or omission of Party A, any sub-contractor, anyone directly or indirectly employed by any of them, or anyone for whose acts any of them may be liable. This language would appear to require Party A to provide 100% defense and indemnity to Party B, irrespective of whether any other party, including Party B, is liable. In this scenario, however, Party A must, at the very least, be partially at fault. Again, based upon the language of the indemnity clause, it could be argued that a finding of negligence on the part of Party A is a prerequisite to owing indemnity to Party B. Obviously, if an investigation is conducted and reveals that a finding of liability is all but certain, then hedging your bets on the theory that negligence must first be established may not be advisable. Incidentally, we have seen multiple instances of language being added to similar indemnity clauses which eliminates Party A’s indemnity obligation entirely when Party B is at fault. Such language generally states something to the effect of “except where caused by the active negligence, sole negligence, or willful misconduct of the Party B.” D. No-Fault Contractual Indemnity No-fault indemnity language attempts to broaden the scope of the indemnitor’s defense and indemnity obligation by eliminating the requirement of fault being found on the part of the indemnitor. Thus, the indemnity obligation exists by simply virtue of the fact that the indemnitor participated in an activity related to the subject of the contract: Party A shall indemnify, defend, and hold harmless Party B, its officers, officials, employees, and volunteers from and against any and all liability, claims, damage, cost, expenses, awards, fines, judgments, and attorney fees
  • 69. 69 (including, without limitation, costs, attorney fees, expert witness fees, and other expenses of litigation) of every nature arising out of or in connection with Party A’s performance of work hereunder, or its failure to comply with any of its obligations contained in the agreement. Arguably, this language does not require Party A to have even acted negligently before its indemnification obligation arises. E. Liability vs. Indemnity We often see parties seek summary judgment on the issue of liability by asserting that another party owes them indemnity. In other words, they argue that they cannot be found liable by a jury because another party has contractually agreed to indemnify them. This is not a viable argument. Whether a party can be held liable and whether it is owed indemnity are two different issues. Strategically, it may be in the interest of the party against whom indemnity is sought to accept a tender in order to be able to control the defense of the purported indemnitee, but this must be analyzed on a case-by-case basis. Of course, if there is a dispute as to whether indemnity is owed, a tender is likely to be rejected, notwithstanding concerns over being able to control the defense. F. Enforcing the Right of Indemnity In the event, it is desirable to enforce a right of indemnity against another party, it is important to immediately begin the fact-gathering process. Ideally, a party would have the following information in hand prior to issuing tender/demand letters:  Copies of all complaints, responsive pleadings, and dispositive motions;  Copies of all contracts that are at issue in the litigation;  Copies of all contracts of insurance issued to the parties which provide or potentially provide insurance coverage;  A written summary from defense counsel as to the role of any parties who may arguably owe indemnity; and  Business registration and service of process information for entities who may owe indemnity. After obtaining and analyzing the above information, it is time to begin the process of trying to secure precious indemnity dollars. The very first thing that should be done is to prepare a formal letter demanding indemnity. This letter should contain an explanation as to why indemnity is owed, and should state that it should be construed as a formal tender of defense. If the party against whom indemnity is sought is being represented by counsel, the letter should be sent to counsel. The letter should be sent by defense counsel, and not the Claims Professional, as the insured is technically the entity who is owed indemnity. Request that the tender be provided to the party’s insurer and that a response to the tender be provided within 10 days of receipt. Ask the party to provide the name of its insurer, along with the applicable policy identification number. Advise the indemnitor that a claim for indemnity will be prosecuted in civil court if no response is provided, or if the tender is denied. If a trial date has been set, state so in the letter. Send the letter via certified mail, return receipt requested. Send follow-up letters every 15-30 days, until such time as it is necessary to file suit. Keep potential indemnitors informed of major case developments, including the mediation date.
  • 70. 70 If a potential indemnitor refuses to accept a tender, a written explanation should be requested. It is crucial to understand the basis for the refusal and explore whether it is valid. Contact the party’s insurer to discuss the tender, and request a letter advising whether coverage exists. Ultimately, throwing away good money to go after bad is never a good thing. The key is to stay informed and to make informed decisions. If a tender is not accepted, it may be necessary to litigate the issue. If the party against whom you are seeking indemnity is a party to the action, prepare and file an appropriate cross-claim. If they are not already a party, you may need to file a third-party action. Don’t forget to ascertain and calendar the date upon which the statute of limitations expires! G. What to Do if a Tender Has Been Submitted to You or Your Insured First and foremost, a tender of defense can be submitted in multiple ways. Generally, this is done through written correspondence, or by virtue of asserting a claim for indemnity via pleading. No case law exists in West Virginia which indicates whether a tender can be effected verbally, but we suspect that the Supreme Court of Appeals would find a verbal tender valid. Accordingly, in the event you are put on notice of a claim for defense or indemnity from an insured or purported indemnitee, it would be wise to treat the notice as a valid tender. Once a party has tendered its defense, it is important to analyze the scope and extent of obligations assumed by the insured to defend and indemnify. Review contract documents carefully to determine ambiguities and whether the indemnity clause contains a fault- based indemnity requirement. Consult with defense counsel to ascertain whether indemnification is required and to map out a strategy for responding to the tender and, if necessary, litigating the issue. Review the applicable insurance policy to determine whether the obligations assumed by the insured are covered by the policy. Remember, just because an insured has entered into an agreement to indemnify another party does not necessarily mean that the obligation is covered by an applicable insurance policy. In most instances, the policy will contain an “insured contract” provision, but the policy should be analyzed for potential applicable exclusions and whether the indemnity agreement constitutes an insured contract. In addition, as discussed below, ascertain whether the agreement contains an “additional insured” provision and study the policy to determine under what circumstances an indemnitee is conferred “additional insured” status. H. Insured Additional Insured and Certificates of Insurance It is crucial to immediately ascertain whether a purported indemnitee is an “additional insured” under a policy of insurance issued to the insured. If so, then the indemnitee may have a first-party bad faith claim against the insurer if coverage is wrongfully denied. When the issue of whether a party is entitled to additional insured status surfaces, it will be crucial to comply with the laws of West Virginia governing unfair trade practices. As a rule of thumb, any and all correspondence should be responded to within 15 days. A proper investigation should be conducted regarding whether coverage exists. In most instances, coverage counsel should be retained to issue an opinion and provide guidance on how to proceed.
  • 71. 71 As for certificates of insurance, they can evidence multiple things. In some instances, a certificate of insurance simply evidences that the insured has a valid policy of insurance in effect. In other instances, a certificate of insurance may be issued to evidence that coverage exists for an indemnitee of the insured. In many situations, the retail or wholesale insurance broker issues the certificate of insurance. In the event that a valid certificate of insurance is required as a prerequisite to being conferred additional insured status, and in the event the broker fails to issue a proper certificate, the insured may be subject to a breach of contract claim and, in turn, may have a claim against the broker. If this occurs, it will be important to monitor the status of that matter to ensure that the insurer is protected and insulated from liability. XV. Medicare Secondary Payer Act (MSP) / Medicare/Medicaid and SCHIP Extension Act (MMSEA) In order to recover monies paid out by the government for medical expenses incurred by individuals as a result of the negligence of a third-party, Congress enacted MMSEA and MSP. If a Medicare subrogation claim is not satisfied out of the settlement proceeds, insurers, attorneys and claimants alike may be forced to satisfy the claim. Accordingly, insurers and attorneys alike need to make certain that the claimant/plaintiff is not a Medicare recipient and that none of the medical bills incurred by the claimant/plaintiff have been paid by Medicare. Importantly, the right to subrogation is absolute, and the insurer has the obligation to determine if there is a Medicare lien. Unlike liens from other insurance carriers, Medicare does not have to provide you with notice of the law; rather, you have the obligation to investigate to see if Medicare has, in fact, paid any of the medical bills and, thus, to determine if Medicare has a lien. In nearly every case, the claims adjuster should: 1. Gather, as soon as possible, all information possible regarding whether or not a claimant/plaintiff receives or is entitled to receive Medicare benefits relative to his or her claim-related injury or condition. Oftentimes, you may be able to look through the medical records and bills to determine if they have been paid by Medicare or Medicaid. Regardless, you should also have the claimant/plaintiff provide you with a Consent to Release form which you will then need to provide to Medicare. This will: (a) let Medicare know about the claim and the insurer’s involvement; and (b) get you in touch with Medicare relative to benefits paid and nature and extent of any Medicare right of subrogation 2. If your investigation reveals a Medicare lien, then you should make it known to the claimant/plaintiff or his or her lawyer regarding the lien and that you are required to protect this lien. Most lawyers will understand that you are not only protecting yourself but also all of the parties involved (i.e., claimant, attorneys and insurer). This should be addressed prior to settlement if at all possible. 3. After settlement is perfected, but before payment has been made, you must confirm the amount of the Medicare lien.
  • 72. 72 4. Different lawyers are asking that the lien be satisfied in different manners: Preferably, a check should be cut directly to Medicare to satisfy the lien, with the remainder of the settlement to be paid to the claimant/plaintiff. A few attorneys would prefer the entire settlement amount be paid to the claimant/plaintiff/Medicare so that the check can be then sent to Medicare for payment, and Medicare would then reimburse. Go over the attorney’s preference prior to drafting the settlement check. 5. Some lawyers will promise to pay the Medicare lien out of the settlement proceeds and ask that the entire settlement be sent to him/her. This is a dangerous venture and should be viewed with caution. Only if you are certain that the lawyer will pay the lien should you agree to such an agreement, as the civil penalties for not paying a Medicare lien are significant. Target claimants for Medicare, Medicaid and SCHIP include:  Someone who has applied for Social Security Disability Benefits  Someone who has been denied Social Security Disability Benefits and has re-filed for such benefits or appealed the decision denying them  Someone who has been denied Social Security Disability Benefits and has put you on notice of intent to re-file or appeal  Someone 65 years of age or older  Someone who has been receiving Social Security Disability Benefits for 24 months or longer  Someone who is 62 years and 6 mos. old (an anticipation of qualifying for Medicare in the next 30 mos.)  Someone with end stage renal disease but does not yet qualify for Medicare XVI. Employment Law for Public Entities A. Malice in Employment Termination While West Virginia is an at-will doctrine state, an employer may not terminate an employee for any reason that contravenes a substantial public policy. Generally, an employee has a duty to mitigate their damages by accepting a similar employment. However, if a jury finds that the “wrongful discharge was malicious” mitigation is not to be considered by a jury when awarding damages and a jury may award front pay, back pay, incidental damages (i.e., humiliation, embarrassment, emotional and mental distress, loss of personal dignity, etc.). The West Virginia Supreme Court has defined malice in this context to mean that “the discharging agency or official willfully and deliberately violated the employee's rights under circumstances where the agency or individual knew or with reasonable diligence should have known of the employee's rights . . . .” Mason County Bd. of Educ. v. State Superintendent of Sch., 295 S.E.2d 719 (W. Va. 1982); see also, Peters v. Rivers Edge Mining, Inc., 680 S.E.2d 791, 815 (W. Va. 2009).
  • 73. 73 For example, a Plaintiff is 40 years old and was making $40,000 per year when she was terminated. If a jury finds that the termination was malicious, she is entitled to back and front pay (up to the age of 67) regardless of the fact that she found a new job 3 months after she was terminated and began making $50,000 per year. If there are not specific immunities against punitive damages, a jury may also award punitive damages. Punitive damages are normally available in these cases; however, such damages are not available against public entities. The rule that an employer has an absolute right to discharge an at will employee must be tempered by the principle that where the employer’s motivation for the discharge is to contravene some substantial public policy principal, then the employer may be liable to the employee for damages occasioned by this discharge. Syllabus Point 1, Harless v. First Nat’l Bank, 162 W.Va. 116, 246 S.E.2d 270 (1978). A determination of the existence of public policy in West Virginia is a question of law, rather than a question of fact for the jury. Swears v. RM Roach and Sons, Inc., 225 W.Va. 699, 696 S.E.2d 1 (2010); Cordle v. General Hugh Mercer Corp., 174 W.Va. 321, 325 S.E.2d 111 (1994). It is only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a Court may constitute itself the voice of the community so declaring. Swears, 174 W.Va. at 705, 696 S.E.2d at 7. The sources determinative of public policy are, among others, our federal and state constitutions, our public statutes, our judicial decisions, the applicable principles of the common law, the acknowledged prevailing concepts of the federal and state governments relating to and affecting the safety, health, morals and general welfare of the people for whom government—with us—is factually established. Cordle v. General Hugh Mercer Corp., 174 W.Va. at 325, 325 S.E.2d at 114 (quoting Allen v. Commercial Casualty & Ins. Co., 131 N.J.L. 475, 478, 37 A.2d 37, 39 (1944)). Substantial public policy exists in circumstances where an employee is terminated following the filing of a grievance with the West Virginia Public Employees Grievance Board; (Armstrong v. W. Va. Division of Culture & History, 229 W.Va. 538, 729 S.E.2d 860 (2012)); sexual discrimination or sexual harassment in employment (Williamson v. Greene, 200 W.Va. 421, 490 S.E.2d 23 (1997)); refusal to take a polygraph test (Cordle, 174 W.Va. at 321, 325 S.E.2d at 111); employee making a claim for overtime wages not paid (McClung v. Marion County Comm’n, 178 W.Va. 444, 360 S.E.2d 221 (1987)); self defense (Feliciano v. 7-Eleven, Inc., 210 W.Va. 740, 559 S.E.2d 713 (2001); Substantial public policy is not violated when an employer terminates an employee for the reporting of potential criminal misconduct in the absence of an identified constitutional, legislative enactment, legislatively approved regulations, or judicial opinion (Swears, 225 W.Va. at 699, 696 S.E.2d at 1); when there is another mechanism available to enforce the public policy at issue (Hill v. Stowers, 224 W.Va. 51, 680 S.E.2d 66 (2009)); general admonitions as to the requirement of good care for patients by social workers do not constitute substantial and clear public policy (Birthisel v. Tri-Cities Health Services Corp., 188 W.Va. 371, 424 S.E.2d 606 (1992); B. Whistleblower The West Virginia Whistleblower statute is found in West Virginia Code § 6C-1-1, et seq. Under the provisions of this statute an employer may not discharge, threaten or otherwise discriminate or retaliate against an employee by changing the employee’s compensation, terms, conditions, locations or privileges of employment because the employee, acting on his own volition, or a person acting on behalf or under the direction of the employee, makes a good faith report or is about to report, verbally or in writing, to the employer or appropriate authority an instance of wrongdoing or waste.
  • 74. 74 W. Va. Code § 6C-1-3(a). The employer may not discharge, threaten or otherwise discriminate or retaliate against an employee by changing the employee’s compensation, terms, conditions, location or privileges of employment because the employee is requested or subpoenaed by an appropriate authority to participate in an investigation, hearing or inquiry held by an appropriate authority or in a court action. W. Va. Code § 6C-1-1-3(b). For a report to be made in “good faith” the report must be made without malice or consideration of personal benefit and which the person making the report has reasonable cause to believe is true. W. Va. Code § 6-C-2(d). A report of waste consists of conduct or omissions which result in substantial abuse, misuse, destruction or loss of funds or resources belonging to or derived from federal, state, or political subdivision sources. W. Va. Code § 6C-1-2(f). Wrongdoing is a violation which is not of a merely technical or minimal nature of a federal or state statute or regulation, of a political subdivision ordinance or regulation or of a code of conduct or ethics designed to protect the interest of the public or the employer. W. Va. Code § 6C-1-2(h). An individual qualifies as a whistleblower when the individual witnesses or has evidence of wrongdoing or waste while employee with a public body and who makes a good faith report of, or testifies to, the wrongdoing or waste, verbally or in writing, to one of the employee’s superiors, to an agent of the employer or to an appropriate authority. W. Va. Code § 6C-1-2(g). All reports must be made to an “appropriate authority” which includes a federal, state, county, or municipal government body, agency or organization having jurisdiction over criminal law enforcement, regulatory violations, professional conduct or ethics, or waste; or a member, officer, agent, representative or supervisory employee of the body, agency or organization. W. Va. Code § 6C-1-2(a). This also includes, but is not limited to, the office of the attorney general, the office of the state auditor, the commission on special investigations, the Legislature and committees of the Legislature having the power and duty to investigate criminal law enforcement, regulatory violations, professional conduct or ethics, or waste. Id. It is the employees’ burden to establish by a preponderance of the evidence that he/she had reported or was about to report in good faith, verbally or in writing, an instance of wrongdoing or waste to the employer or an appropriate authority. W. Va. Code § 6C-1-4(b). The defense of a Whistleblower action occurs when the employer proves by a preponderance of the evidence that the action complained of occurred for separate and legitimate reasons, which are not merely pretexts. W. Va. Code § 6C-1-4(c). The court may order reinstatement of the employee, the payment of back wages, full reinstatement of fringe benefits and seniority rights, actual damages or any combination of remedies, including all or a portion of the costs of litigation, including attorney’s fees and witness fees. W. Va. Code § 6C-1-5. A person, either employer or under color of an employer’s authority, violates the article is liable for a civil fine of not more than five hundred dollars, and, except for public office holders, if the court specifically finds that the person, while in the employment of the state or a political subdivision, committed a violation with the intent to discourage disclosure of the information, may order the person’s suspension from public service for not more than six months. W. Va. Code § 6C-1-6. Any cause of action asserting a Whistleblower claim under West Virginia Code § 6C-1-1, et seq., must be brought within 180 days of the underlying claim. W. Va. Code § 6C-1-4(a). A Whistleblower claim also subsumes any potential common law claims plead in the cause of action within the 180 statute of limitations. Broschart v. W. Va. Dep’t of Health & Human Res., 2013 W.Va. LEXIS, 2013 WL 2301777 (May 24, 2013, W. Va.). C. 42 U.S.C. § 1983 Under this provision: Every person who, under color or any statute, ordinance, regulation, custom, or usage, of any state or
  • 75. 75 territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and law, shall be liable to the party injured in an action at suit, suit in equity, or other proper proceeding for redress. The number of cases that have been brought under section 1983 has dramatically increased since 1961 when the Supreme Court decided Monroe v. Pape, 365 U.S. 167 (1961). In Monroe, the Supreme Court held that a police officer was acting “under color of state law” even though his actions violated state law. This was the first case in which the Supreme Court allowed liability to attach where a government official acted outside the scope of the authority granted to him by state law. Since Monroe was decided, an extensive body of law has developed to govern section 1983 claims. Only “persons” under the statute are subject to liability. Will v. Michigan Dept. of State Police, 491 U.S. 58 (1989). A state is not a person subject to suit under section 1983 (Id.), but a state officer can be sued in his official capacity for prospective or injunctive relief despite the fact that an suit against a government official in his official capacity represents nothing more than a suit against the government entity itself. Ex Parte Young, 209 U.S. 123 (1908); Hafer v. Melo, 502 U.S. 25, 31 (1991); Kentucky v. Graham, 473 U.S> 159, 165 (1985). Despite this logical inconsistency, the current state of the law is that a state may not be sued for damages, but may be sued for declaratory or injunctive relief. Monell v. Dept. of Social Services of New York, 436 U.S. 658, 701 (1978); Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). Id., Hafer v. Melo, 502 U.S. 25 (1991); City of Oklahoma City v. Tuttle, 471 U.S. 808 (1985); Graham, 473 U.S. at 165. Municipalities and local governments are persons subject to suit for damages and prospective relief, but the United States government is not. Individual employees of federal, state, and local government may be sued in their individual capacities for damages, declaratory or injunctive relief. The traditional definition of acting under the color of state law requires that the defendant have exercised power “possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law,” and such actions may result in liability even if the defendant abuses the position given to him by the state. West v. Atkins, 487 U.S. 42, 49 (1988), Monroe, 365 U.S. at 172. A private actor may also act under color of state law under certain circumstances. Wyatt v. Cole, 504 U.S. 42 (1988). For all practical purposes, the “color of state law” requirement is identical to the “state action” prerequisite to constitutional liability. Lugar v. Edmondson Oil Co., 457 U.S. 922, 929 (1982). Section 1983 does not impose a state of mind requirement independent of the underlying basis for liability, but there must be a causal connection between the defendant’s action and the harm that results. Pratt v. Taylor, 451 U.S. 527 (1981), overruled in part, Daniels v. Williams, 474 U.S. 327 (1986); Mt. Healthy City School Bd. of Educ. V. Doyle, 429 U.S. 274, 285-87 (1977). In order to hold a local government liable under section 1983, the Supreme Court has interpreted this causation element to require that the harm be the result of action on the part of the government entity that implemented or executed a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body’s officers, or the result of the entity’s custom. Monell v. Dept. of Social Services of the City of New York, 436 U.S. 658, 690-91 (1978). Further, the entity’s policy or custom must have been the “moving force” behind the alleged deprivation. Id., 436 U.S. at 694. This “custom or policy” requirement is a dramatic departure from the rule of respondeat superior that prevails in many common law actions. Id., 436 U.S. at 691-95.
  • 76. 76 Section 1983 is not itself a source of substantive rights, it merely provides a method for the vindication of rights elsewhere conferred in the United States Constitution and Laws. Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 617 (1979). Therefore, a plaintiff may prevail only if he can demonstrate that he was deprived of rights secured by the United States Constitution or federal statutes. There is no requirement that the plaintiff sue in federal court because state courts have concurrent jurisdiction, and the usual rule is exhaustion of administrative and judicial state remedies is not a prerequisite to a section 1983 action. Howlett v. Rose, 496 U.S. 356 (1990); Monroe, 365 U.S. at 183. The Supreme Court has noted that the basic purpose of a section 1983 damages award is to compensate the victims of official misconduct, and therefore held that there is no limit on actual damages if they can be proven. Carey v. Piphus, 435 U.S. 247 (1978). But where they are not proved, only nominal damages of $1.00 may be awarded. Punitive damages may also be awarded, but not against a municipality. Farrar v. Hobby, 506 U.S. 103, 112 (1992). States and state agencies are entitled to Eleventh Amendment immunity in federal court, but local governments have no immunity from damages flowing from their constitutional violations, and may not assert the good faith of its agents as a defense to liability. Edelman v. Jordan, 415 U.S. 651 (1974); Owen v. City of Independence, MO, 445 U.S. 621 (1980). Further, state law sovereign immunity and state law limitations on damages do not protect local governments from liability under section 1983, and state laws requiring pre-suit notification prior to initiating an action against the state or its subdivisions do not apply. Howlett, 496 U.S. at 356; Felder v. Casey, 487 U.S. 131 (1988). Individual capacity defendants are protected by qualified immunity. Harlow v. Fitzgerald, 457 U.S. 800 (1982). This is a powerful tool that shields individual officials who are performing discretionary activities unless their conduct violates “clearly established statutory or constitutional rights of which a reasonable person would have known.” Id., 457 U.S. at 817. A government official is entitled to qualified immunity unless his “act is so obviously wrong, in the light of preexisting law, that only a plainly incompetent officer or won who was knowingly violating the law would have done such a thing.” The qualified immunity inquiry is purely objective—the subjective intentions of the actor is irrelevant. Crawford-El v. Britton, 523 U.S. 574 (1998). Qualified immunity is not only immunity from liability, but it is immunity from suit as well, and shields individual capacity defendants even where a constitutional violation may have occurred. Siegert v. Gilley, 500 U.S. 226, 232 (1991). Supervisory inaction can expose municipalities to § 1983 liability if plaintiff can show: (1) that the supervisor had actual or constructive knowledge that his subordinate was engaged in conduct that posed “a pervasive and unreasonable risk” of constitutional injury to citizens like the plaintiff; (2) that the supervisor’s response to that knowledge was so inadequate as to show “deliberate indifference to or tacit authorization of the alleged offensive practices”; and (3) that there was an actual “affirmative causal link” between the supervisor’s inaction and the particular constitutional injury suffered by the plaintiff. Shaw v. Stroud, 13 F.3d 791, 799 (4th Cir. 1994); See also Johnson v. Baltimore City Police Dep’t, 2013 U.S. Dist. LEXIS 13780 (4th Cir., January 29, 2013).
  • 77. 77 Generally, 42 U.S.C. § 1983 causes of action revolve around police practices and prison conditions. Cases may be brought for other circumstances as well. In Crosby v. City of Gastonia, 635 F.3d 634, 638 (4th Cir. ), the United States Fourth Circuit Appeals Court considered an action filed by retirees asserting that their employer, the City of Gastonia, interfered with their vesting rights in retirement benefits. Municipalities may also be sued under 42 U.S.C. § 1983 for ordinances Greater Baltimore Ctr. For Pregnancy Concerns, Inc. v. Mayor & City Counsel Baltimore, 2013 U.S. App. LEXIS 13607 (4th Cir., July 3, 2013); the passage of resolutions, Centro Tepeyac v. Montgomery Cty., 2013 U.S. App. LEXIS 13606 (4th Cir., July 3, 2013); for asserted violations of a plaintiff’s First Amendment freedom of speech rights, Cooksey v. Futrell, 2013 U.S. App. LEXIS 13232 (4th Cir., June 27, 2013). D. Americans With Disabilities Act Title II of the Americans With Disabilities Act (“ADA”) prohibits “public entities” from discriminating against disabled individuals. 42 U.S.C. § 12132. A public entity is considered to be any state or local government, any department, agency, special purpose district, or other instrumentality of the State or States or local government. 42 U.S.C. § 12131(1). The provisions of the ADA do not apply in employment cases. Elwell v. Okla. ex rel. Bd. of Regents of Univ. of Okla., 693 F.3d 1303 (10th Cir. 2012). Many ADA cases are also considered under the West Virginia Human Rights Act, West Virginia Code § 5-11-9, which requires employers to make reasonable accommodations for disabled employees. Reasonable accommodation means reasonable modifications or adjustments to be determined on a case-by-case basis which are designed as attempts to enable an individual with a disability to be hired or to remain in the position for which he or she was hired. The Human Rights Act does not necessarily require an employer to offer the precise accommodation an employee requests, at least so long as the employer offers some other accommodation that permits the employee to fully perform the job’s essential functions. Syllabus Point 1, Skaggs v. Elk Run Coal Co., 198 W.Va. 51 ( ). In order to state a claim for breach of the duty of reasonable accommodation a plaintiff must allege the following: (1) Plaintiff is a qualified person with a disability; (2) the employer was aware of the plaintiff’s disability; (3) the plaintiff required an accommodation in order to perform the essential functions of a job; (4) a reasonable accommodation existed that met the plaintiff’s needs; (5) the employer knew or should have known of the plaintiff’s need and of the accommodation; and (6) the employer failed to provide the accommodation. Syllabus Point 2, Id. An employer may defend against a claim of reasonable accommodation by disputing any of the essential elements of the employee’s claim or by proving that making the accommodation imposes an undue hardship on the employer. Syllabus Point 3, Id. Once an employee requests a reasonable accommodation, the employer must assess the extent of an employee’s disability and how it can be accommodated. Syllabus Point 4, Id. When the employee cannot be accommodated in the current position, restructuring or other job opportunities within the company may be considered by the employee. Id. XVII. Alternative Dispute Resolution A. Arbitration People often assume that it is a foregone conclusion that binding arbitration is preferable to litigating a case in court. Lawyers tend to lean towards arbitrating claims based upon the assumption that procedural rules are more lax and that the overall process will be less contentious. This is not a proper assumption to make, and lax atmosphere rarely bodes well for a defendant. Before agreeing to arbitrate a case, or before deciding to enforce an arbitration clause, take into consideration the following items:
  • 78. 78  Venue. The tendencies of the judge and potential jury must be analyzed and weighed. A report should be generated by defense counsel that discusses the positives and negatives of the venue, along with whether it is preferable to proceed there or in an arbitration forum. In short, if dismissal is a realistic possibility in the civil venue, then arbitration may not be preferable.  Rules. Read the rules of the arbitration forum in which the matter may proceed. If there are concerns with the rules governing the arbitration, discuss them with counsel. If arbitration is the preferred method for resolution, but if there are concerns regarding the governing rules, negotiate the ground rules for the arbitration early. Make a call as to whether it is desirable to have the matter governed by the rules of civil procedure, rules of evidence, and/or trial court rules. Have the arbitrator establish a time frame order for submission of filings.  Arbitrator. This is perhaps the most crucial component of having a successful arbitration. Select an arbitrator who is well-versed in the law of the jurisdiction, preferably a former judge or a tenured lawyer. It is crucial to have a structure to an arbitration proceeding and understanding of legal issues and the legal process. A non-lawyer may allow the proceeding to run amuck. In addition to the considerations set forth above, the following strategies should be employed:  During the pendency of the arbitration proceeding, make a note of any and all grounds for overturning an adverse award, or seeking non- enforcement of the award. Make an objection on the record to any inconsistencies or inappropriate activities by the parties or the arbitrator. Upon conclusion of the proceeding, the attorneys should state on the record whether the proceeding was administered in a fair and just manner. Federal statutes (and many state statutes) that govern enforcement of arbitration provisions provide very limited circumstances under which an award will be overturned or unenforced.  Remember that an arbitration proceeding is pending before a single arbitrator or a panel of three arbitrators, not a lay jury. What may tend to influence a jury, will not likely influence a sophisticated tribunal. Some arbitration rules, such as those employed by the American Arbitration Association, require parties to specifically request the use of a court reporter. If not requested, the proceedings are not transcribed. Under no circumstance should you participate in an arbitration proceeding without requesting the services of a court reporter. This transcript may be needed in the event that post-arbitration filings are needed or required.
  • 79. 79 B. Mediation Hands down, mediation is the most common form of case resolution in West Virginia. Most judges require mediation to be conducted during the pendency of a case. In some instances, the judge will conduct a “settlement conference” prior to trial if a case fails to settle during mandatory mediation. During these conferences, the judge will essentially act as a mediator. As discussed below, prior to mediating a case, a few things should be considered. In most instances, the judge presiding over the case will permit the parties to select the mediator. When this is this case, the following items should be considered:  Don’t agree with the opposing counsel on just any mediator. Only agree upon a mediator with whom you and your selected counsel are comfortable.  Remember that the mediator is being paid to perform a job. Therefore, you should select a mediator who is active and involved in the process. If the mediator sees his/her role as simply relaying offers and demands, then he/she is nothing more than a line of communication and is not a worthy candidate.  Select a mediator who will study the mediation statements and do additional research on the issues presented, if necessary, in order to be informed and persuasive.  A good mediator is an experienced lawyer who has handled a variety of cases and issues, both simple and complex.  If the case has been contentious, an aggressive mediator may be necessary in order to keep the parties on task.  Select a mediator who is not afraid to work a case and who will not view mediation as a 9 AM to 5 PM prospect.  A good mediator does not quit the case simply because the mediation session has ended. A mediator should be willing to continue assisting with negations after an unsuccessful mediation session.  The mediator should be someone who will candidly communicate to the court the outcome of the mediation.  Don’t view your participation in mediation as a mandatory court requirement. Assuming settlement authority is set for an amount that is sufficient to settle the case, go into mediation prepared and with the intent to settle the case.  Decide in advance what information you do not want to be divulged to the opposition, as well as items that you are willing to disclose. It goes without saying that you can never be too prepared. At the very least, you should have the following information at your disposal:  Pre-mediation Evaluation Report. If any information provided is ambiguous, confusing or incomplete, request that the report be amended to clarify the issues.
  • 80. 80  Obtain and review copies of liability and damages reports from all of the parties’ experts.  For multi-plaintiff litigation, request counsel to prepare a breakdown of estimated damages for each claimant.  Map out a flexible strategy for the mediation in advance. It is important to have a game plan, but equally important to be able to amend it as the mediation proceeds.  Whenever possible, find out in advance how the mediation process will work. Each mediator is different and your strategy should be catered to how the mediator handles mediations.  If dispositive motions have not been filed, you need to have a detailed outline with argument as to which claims could be disposed of on their merits, with appropriate references to undisputed facts and law.  Review the West Virginia Trial Court Rules that govern mediation in order to determine if any additional steps need to be taken prior to mediation. XVIII. Privacy and Social Media in the Workplace  Under the United States Constitution, public employees are granted greater privacy rights than private employees. A public employee’s speech may be protected if it (a) pertains to a matter of public concern and (2) the employee is speaking as a citizen rather than an employee. Garcetti v. Caballos, 547 U.S. 410 (2006). If these facts are met, a reviewing court will conduct a balancing test to deterimine whether the public employee’s interest in maintaining an effective, non-disruptive workplace outweighs the public employee’s right to speak freely. Id. If these facts are not met, free speech protections do not apply. Id.  Along with the First Amendment protections public employees also receive considerable protections under the Fourth Amendment of the United States Constitution. Searches conducted pursuant to the Fourth Amendment must be considered under a totality of the circumstances to determine if the search is reasonable. United States v. Krisel, 508 F.3d 941, 947 (9th Cir. 2007). The expectation of privacy in their offices, desks, and file cabinets… may be reduced virtue of actual office practices and procedures or by legitimate regulation.” O’Connor v. Ortega, 480 U.S. 709, 715 (1987). Public employer intrustions on the constitutionally protected privacy interests of governmental employees for noninvestigatory, work-related purposes, should be judged by the standard of reasonableness under all the circumstances. Id. The United States Supreme Court recently considered the extent a public employee has an expectation of privacy in private messages on employer owned devices and declined to answer the question, saying “[r]apid changes in the dynamics of communication and information transmission are evident
  • 81. 81 not just in the technology itself but in what society accepts as proper behavior. At present, it is uncertain how workplace norms, and the law’s treatment of them, will evolve.” City of Ontario, Cal. v. Quon, 130 S.Ct. 2619 (2010). Thus, for the purposes of its holding in Quon, the Court assumed the employee had a reasonable expectation of privacy in his text messages, that the City of Ontario’s review of the transcript constituted a Fourth Amendment search, and that the principles applicable to a government employer’s search of an employee’s physical office apply as well in the electronic sphere. Id.  The Electronic Privacy Communications Act (“EPCA) (18 U.S.C. §§ 2701 et seq.) prohibits unauthorized access to stored data found on a computer’s hard drive or email servers. There is an exception for under the “provider” definition for employer -provided accounts, equipment, etc. Generally, an employer may monitor an employee’s use company provided email systems, internet usage, and the like.  Many states are now passing legislation to provide additional protections for employee’s social media usernames and passwords. West Virginia does not have similar legislation protecting employees. Even in states without these additional protections and employer may not take disciplinary action based upon an employee’s status in a protected calss or a medical condition, or a religious belief, if the employee blogs or posts about alleged harassment or discrimination at work, and/or the employee “whisteblows” about alleged company wrongdoing. In numerous civil cases around the country many judges are allowing defendants to have access to plaintiff’s social media, at least those portions of a plaintiff’s profile that are public and no steps are taken to protect the privacy of the information.  Section 7 of the National Labor Relations Act grants employees (with or without a union) the right to engage in “concerted activities for the purpose aid or protection.” This right is enforceable under Section 8(a) of the NLRA, which prohibits employers from interfering, restraining or coercing employees who exercise their rights under Section 7, or from discriminating against employees because of their protected activity. The NLRB has long held that employee communications amounting to concentrated activity for mutual aid and protection, having to do with wages, hours or terms and conditions of employment, is protected under the NLRA and cannot be restricted by the employer. The NLRB views blanket emplopyer prohibitions on employees discussing work are illegal since such actions infringeo on a worker’s right to discuss work conditions freely and without fear or retribution, regardless of where the conversations occur. An employee acting alone, however, may in certain circumstances be disciplined by the employer without violating the National Labor Relations Act. The NLRB issued a Memorandum OM 12-59 (May 30,2012), summarizing a series of memoranda from the Division of Advice involving social media policies. Under this Memorandum a rule will be found to unlawfully chill -protected activity if: (a) employees reasonably would construe the rule to prohibit such activity; (b) the rule was issued in response to union activity; or (c) the rule has been applied to restrict protected activity.
  • 82. 82 XIX. The West Virginia Judiciary The organizational structure of the West Virginia judiciary is defined by provisions in the state's constitution and supplementary statutory provisions. The Judicial Reorganization Amendment to the state’s Constitution, adopted in 1974 and effective in 1976, established a “unitary” or hierarchical judicial system within the state. The system was patterned after the system adopted in New Jersey in 1947. The amendment completely replaced the disorganized judicial system provided for in Article VIII, the Judicial Power article of the West Virginia Constitution. In comparison to many other states, the Amendment provided for a very simple assignment of judicial tasks. A. The Supreme Court of Appeals of West Virginia The Supreme Court of Appeals of West Virginia is the court of last resort for disputes arising under the laws of West Virginia and is the state's only appellate court. No intermediate courts of appeal have been created, although they are legislatively permitted. All petitioners must petition the justices to docket or list the case for consideration. There are five justices, each of whom is elected for staggering twelve year terms using a partisan ballot. Almost all of the justices elected to the Court during the past 20 years have been Democrats, and most of them were politically active in partisan politics prior to their election. They are highly engaged with the media and any controversial activities are highly documented. The current court consists of Chief Justice Margaret L. Workman, Justice Robin Jean Davis, Justice Brent D. Benjamin, Justice Menis Ketchum, and Justice Thomas E. McHugh. All Justices are registered democrats, although Justices Benjamin and McHugh previous private practices were primarily defense-oriented. Justices Ketchum and Workman were both prominent plaintiffs’ attorneys. Justice Davis is married to Scott Segal, one of the preeminent plaintiffs’ attorneys in the State of West Virginia. B. Circuit Courts The circuit courts are West Virginia's only general jurisdiction trial courts of record. Circuit courts have jurisdiction over all civil cases exceeding $300 in value; all civil cases in equity; proceedings in habeas corpus, mandamus, quo warranto, prohibition, and certiorari; and all felonies and misdemeanors. The circuit courts act as an appellant court with respect to appeals from magistrate court, municipal court, and administrative agencies, except workers' compensation appeals. The circuit courts also hear appeals from family court decisions, unless both parties to the case agree to appeal directly to the Supreme Court of Appeals. The circuit courts receive recommended orders from judicial officers who hear mental hygiene and juvenile matters. The Supreme Court of Appeals receives appeals of circuit court decisions.
  • 83. 83 As for the makeup of the circuits, West Virginia's 55 counties are divided into 31 circuits with 66 circuit judges. The circuits vary in size. For example, the 13th Circuit has seven judges, and eleven circuits have one judge. Although there are 31 circuits, each of the 55 counties has a courthouse where the circuit court judge presides. Circuit court judges are elected to eight-year terms in partisan elections. The only caveat is that judges must have practiced law for at least five years. When a vacancy occurs, the governor appoints the replacement. Any appointee wanting to remain in office must run in the next election. The current salary of a circuit judge is $116,000 per year. C. Other Courts In addition to circuit courts and the Supreme Court of Appeals, two other courts exist in West Virginia. The Constitution grants magistrates county-wide limited jurisdiction over criminal matters and civil claims with values of $3,000 or less. Magistrates cannot preside over matters involving equity, eminent domain, real estate titles and liens, false imprisonment, malicious prosecution, or slander and libel. The criminal jurisdiction of the magistrate courts is fairly broad, particularly with preliminary criminal issues. West Virginia is one of only two states, the other being Texas, that afford the right to a jury trial in the lowest court of the judicial system. The other court, the Court of Claims, is more or less a legislative agency, and is not part of the judicial branch of the State’s government. It is composed of three judges appointed by the President of the Senate and the Speaker of the House with the advice and consent of the State Senate. The Court of Claims hears alleging personal injury and property damage against state officers and employees, and also claims for unjust arrest and imprisonment. The Court of Claims equitably decides claims against the State which are otherwise barred by the doctrine of sovereign immunity. The majority of claims paid through the Court of Claims are vendor claims for nonpayment of goods and services provided to the State, claims by State inmates, and road hazard claims for damage to private vehicles from potholes in state.
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  • 87. 87 1st Circuit Martin J. Gaughan James P. Mazzone Arthur M. Recht Ronald E. Wilson 2nd Circuit Mark A. Karl David W. Hummel 3rd Circuit Tim Sweeney 4th Circuit J.D. Beane Jeffrey B. Reed Robert A. Waters 5th Circuit Thom as C. Evans, III David W. Nibert 6th Circuit Paul T. Farrell Alfred E. Ferguson David M. Pancake F. Jane Hustead 7th Circuit Eric H. O'Briant Roger L. Perry 8th Circuit Rudolph J. Murensky, II Booker T. Stephens 9th Circuit Omar J. Aboulhosn William J. Sadler Derek C. Swope 10th Circuit Robert A. Burnside, Jr. John A. Hutchison H.L. "Kirk" Kirkpatrick, II 11th Circuit Joseph C. Pomponio, Jr. James J. "Jim" Rowe 12th Circuit Paul M. Blake, Jr. John W. Hatcher, Jr. 13th Circuit Jennifer F. Bailey Louis "Duke" Bloom Tod J. Kaufman Charles E. King, Jr. James C. Stucky Carry L. Webster Paul Zakaib, Jr. 14th Circuit Jack Alsop Richard P. Facemire 15th Circuit Thomas A. Bedell John Lewis Marks, Jr. Jim Matish 16th Circuit Michael J. Aloi David R. Janes 17th Circuit Russell M. Clawges, Jr. Susan B. Tucker Phillip Guajot 18th Circuit Lawrence S. Miller, Jr. 19th Circuit Alan D. Moats 20th Circuit Jamie G. Wilfong 21st Circuit Philip B. Jordan, Jr. Lynn A. Nelson 22nd Circuit Donald H. Cookman Charles E. Parsons 23rd Circuit Michael D. Lorensen David H. Sanders Christopher C. Wilkes Gray Silver, III John C. Yoder 24th Circuit Darrell Pratt James H. Young, Jr. 25th Circuit William S. Thompson Jay M. Hoke 26th Circuit Thomas H. Keadle 27th Circuit Warren R. McGraw 28th Circuit Gary L. Johnson 29th Circuit Phillip M. Stowers O. C. "Hobby" Spauld- ing 30th Circuit Michael Thornsbury 31st Circuit Robert A. Irons West Virginia Circuit Court Judges *Democrat *Republication
  • 88. 88 Bailey & Wyant is a full‐service law firm dedicated to providing aggressive, effec ve legal representa on, while being ever mindful of our clients’ individual needs, goals, and economic interests. We strive to exceed your expecta ons and deliver dynamic representa on. If you would like to speak to an a orney about a claim, or poten al claim, please give us a call at 304.345.4222. dynamic representa on. General Civil Li ga on & Insurance Defense • Labor & Employment Law • Personal Injury Defense Li ga on • Product Liability • Oil & Natural Gas Law • Automobile Liability • Trucking & Commercial Fleet Vehicle Li ga on • State, County & Municipal Government Liability • Insurance Coverage—Unfair Trade Prac ces—Bad Faith Defense • Environmental Law • Coal, Oil & Gas Law • Medical Malprac ce Defense • Toxic Tort Claims • Administra ve & Regulatory Law • Construc on & Design Defect Claims • Business Li ga on • Contract Disputes • Workers’ Compensa on & Unemployment Compensa on • Consumer Protec on Defense • Estate Planning & Real Estate• Avia on • Pre‐li ga on & Liability Analysis • Educa on Law • Deliberate Intent • Premises Liability