BrickStreet lawyers say case protects state's business climate
Jessica M. Karmasek Dec. 7, 2011, 9:00am
CHARLESTON -- Lawyers at Charleston firm Spilman Thomas & Battle say a recent case involving their client, workers' compensation insurer BrickStreet Mutual, holds "great importance" for all workers' compensation insurance carriers operating in West Virginia.
Last month, the West Virginia Supreme Court of Appeals ruled that Jefferson Circuit Judge David Sanders incorrectly awarded Summit Point Raceway $1.2 million in a coverage dispute with BrickStreet.
In an opinion filed Nov. 18, the Court found Summit Point's policy clearly excluded coverage of "deliberate intent" injury suits that operate outside workers compensation law.
"Because the policy language is plain, and the plainly worded exclusion of deliberate intent coverage was conspicuous, plain, clear and obvious, the policy simply did not provide coverage for deliberate intent liability," Justice Robin Davis wrote.
The state's high court rejected Sanders' finding that BrickStreet had to cover a deliberate intent action because it didn't offer the coverage as state law required.
Davis wrote that "the Legislature merely required that such coverage be made available to insureds upon their voluntary request."
Spilman's Don C.A. Parker and Angela D. Herdman helped to secure the favorable ruling for BrickStreet.
"The Court's decision in the Summit Point case holds great importance for all workers' compensation insurance carriers operating in West Virginia. Absent this ruling by the Court, insurance carriers could have been expected to provide deliberate intent coverage to any employer they insured -- regardless of whether or not the employer actually purchased such coverage," according to a statement by the law firm.
"Allowing such a loophole to exist would have been a serious setback to the workers' compensation insurance privatization measures enacted by the state several years ago."
BrickStreet's lawyers said with the decision, the Court has effectively placed its "seal of approval" on the widely used National Council on Compensation Insurance form policy, which is the standard used by most workers' compensation carriers operating in West Virginia.
Workers compensation law keeps any injury claim out of court unless the employer knew that an unsafe condition presented a high probability of serious injury or death.
In the past, when a state commission provided workers compensation insurance, it offered deliberate intent coverage on top of coverage for regular claims.
In 2006, after the Legislature converted to private insurance and set up BrickStreet with a three-year monopoly, BrickStreet offered to continue every employer's coverage.
On BrickStreet's first business day, it sent a letter telling employers that if they previously purchased excess liability coverage, they could continue purchasing it.
BrickStreet told other employers how to apply for it if they wanted it. BrickStreet repeated the message in a letter three months later.
Summit Point received the letters and didn't buy excess coverage.
Then, in 2007, Summit Point employee Brandon Gregory caught a hand in a wood planer. He submitted a claim for workers compensation, and BrickStreet paid in full.
Gregory then filed a deliberate intent action against Summit Point.
Summit Point asked BrickStreet to assume its defense costs, and BrickStreet refused. Summit Point settled Gregory's claim and sued BrickStreet, alleging bad faith, breach of contract and unfair practices.
Summit Point moved for partial summary judgment on BrickStreet's obligation to make a commercially reasonable offer for deliberate intent coverage.
Sanders granted the motion last year and awarded Summit Point $1,201,080.30, for the costs of defense and settlement plus interest and attorney's fees.
BrickStreet argued on appeal that the ruling could extend to 30,000 employers who didn't choose deliberate intent coverage or pay for it.
The Supreme Court agreed. All five justices found BrickStreet fulfilled its obligations when it sent the coverage letters to Summit Point.
"The Court's decision protects the business climate in West Virginia by providing workers' compensation carriers the assurance that, when combined with the proper endorsements dealing with deliberate intent coverage, use of the NCCI form policy will not result in unexpected liability for the carrier," the lawyers for BrickStreet said.
Staff writer Steve Korris contributed to this report.