Judge will hear claim of insurance discrimination, Justices say



CHARLESTON – West Virginia's human rights act prohibits discrimination in settlement of insurance claims, the Supreme Court of Appeals has ruled.

The Court on June 11 authorized Kanawha Circuit Judge Tod Kaufman to hear a claim that State Auto Insurance discriminated against a black family in Charleston.

Chief Justice Robin Davis rejected State Auto's plea that the family should have sued under the state's unfair trade practices act.

The human rights act and the unfair trade practices act provide different rights and remedies, she wrote, and they fulfill different purposes.

She wrote that "no conflict exists between them."

Temporary Justices Ronald Wilson and Herman Canady agreed. They replaced Brent Benjamin and Margaret Workman, who disqualified themselves.

Justices Menis Ketchum and Thomas McHugh dissented, arguing that the human rights act doesn't reach as far as the majority interpreted it to reach.

In 2006, State Auto insured Appalachian Heating, a contractor repairing climate control units for the Charleston-Kanawha County Housing Authority in South Park Village.

An apartment caught fire and destroyed all personal property of Doris Michael, adult daughter Kitrena Michael, and minor son Todd Battle.

The family stayed with friends for a week, and then spent more than three months in a smaller apartment in South Park Village.

They blamed Appalachian Heating for the fire. State Auto settled their property damage claims, paying about $20,000 to Doris Michael and about $3,500 to Kitrena Michael.

State Auto paid Doris Michael another $2,500 for general damages.

The final payment did not satisfy the family.

In 2007, mother and daughter filed separate human rights suits alleging that State Auto degraded them, embarrassed them, and caused them economic loss.

They claimed State Auto refused to extend to them the same opportunity and consideration it extended to persons not of African American descent.

State Auto moved to dismiss both suits, arguing that the unfair trade practices act provides the only method for bringing a third party action against an insurer.

In 2008, Kaufman consolidated the suits and denied the motion to dismiss.

Last year, both sides agreed that he should certify a question to the Supreme Court.

The Court accepted the question and decided that Kaufman ruled correctly.

Davis wrote that the human rights act applies to "any person, employer, employment agency, labor organization, owner, real estate broker, real estate salesman or financial institution."

She wrote, "The term 'person' is broadly defined in the human rights act as 'one or more individuals, partnerships, associations, organizations, corporations, labor organizations, cooperatives, legal representatives, trustees, trustees in bankruptcy, receivers and other organized groups of persons.'"

She wrote, "This plainly worded definition clearly includes an insurance company."

She wrote that the act prohibits a person from engaging in any act with a purpose of harassing, degrading, embarrassing, or causing physical harm or economic loss.

"Hence, an insurer settling a property damage claim with a member of a protected class in a discriminatory manner that causes economic loss violates the act," she wrote.

She wrote that the family could assert a cause of action for discrimination and added, "We make no determination regarding the merits of the underlying case."

Ketchum wrote in dissent that "in my 41 years of practicing law, I never had a client who felt that an insurance company hadn't discriminated against them in some way, shape or form in settling their claim."

He wrote, "Every person making a claim against an insurance company thinks they wrongfully got the short end of the stick."

He wrote, "Because of that, I think the majority opinion has created a situation ripe for abuse by a handful of litigation lawyers."

He wrote that "a mere allegation of discrimination can be a powerful weapon for negotiation of a spurious claim. Jurors do not like insurance companies."

Legislators explicitly created a remedy in the unfair trade practices act, he wrote.

McHugh wrote that the majority overlooked legal and logical impediments in deciding that legislators authorized a cause of action against insurers under the human rights act.

"As the act does not contain even one reference to insurance, it is illogical to reach the conclusion that the Legislature specifically included insurers among the potential discriminatory actors it was targeting by its use of the term 'person,'" he wrote.

"What makes infinitely more sense is to view the legislative omission of insurers from the designated list of potential discriminators as intentional," he wrote.

Cynthia Ranson and Michael Ranson of Charleston represented the family.

John Fowler, Anna Williams and Andrea King of Charleston represented State Auto.

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